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Vehicle import duty cuts proposed

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Customs clearance revenue on vehicles fell by 40 per cent in 2020 from a year earlier. Heng Chivoan

Vehicle import duty cuts proposed

Minister of Economy and Finance Aun Pornmoniroth has proposed an adjustment on vehicle import duty, to be effective from March 1, to revive the market and buttress the logistics sector after customs clearance revenue on vehicles fell by 40 per cent in 2020 from a year earlier.

In a February 1 letter addressed to Prime Minister Hun Sen and signed by Pornmoniroth, the ministry contended that while the adjustment could hive off 122.54 billion riel ($30.26 million) in customs revenue, the move would bolster demand for imports beyond last year’s levels and partially offset the perceived losses.

On February 4, the prime minister issued a consent letter to Pornmoniroth regarding the adjustment, voicing support for the transport sector and environmental protection, and hopes that the vehicle import market would be restored.

The ministry said in its letter that the import duty for “family cars” with cylinder capacity not exceeding 3,000cc would be trimmed by 10 percentage points – from 30 to 20 per cent and from 60 per cent to 50 per cent where applicable.

For those with engines exceeding 3,000cc in size, the rate will be slashed by 15 percentage points – from 65 to 50 per cent and from 70 to 55 per cent as the case may require.

Purely electric family and passenger cars will see import duty reduced from 30 to 10 per cent, in a nod to environment protection.

Customs duty on semi-trailers and heavy lorries (over five tonnes) will be cut from 40 to 25 per cent and 40 to 30 per cent, respectively, to contribute to a reduction in logistics costs.

And dump trucks, cranes and other specialised vehicles will have import tax lowered from 40 to 30 per cent in a bid to underpin physical infrastructure construction and logistics.

The letter said a sharp decline in automotive sector revenue and a sluggish economic recovery during and after Covid-19 are major concerns and pose significant hurdles for customs revenue collection.

Cambodia Logistics Association (CLA) president Sin Chanthy welcomed the move as a show of solidarity by the head of state and ministry for the Covid-19-strained transport and logistics sectors.

He said: “I am very happy that the government has made the tariff preferences, which will help reduce the cost of customs duties. I believe that all companies in the logistics sector will increase imports of lorries to fill the shortage,” he said.

Kong Ratanak, a traffic safety expert, told The Post that the measure would provide the people with more access to cars, but suggested that it be exclusive to new vehicles, which he said are built to higher safety standards, save money and help to protect the environment.

“I encourage and support the reduction of import duties on new cars,” he said, arguing that application to used cars would motivate the import of junkers into the Kingdom, which he stressed are less safe.

Phnom Penh is thoroughly choked by traffic congestion during rush hour, he said, calling for the tightening of traffic laws, improved management of motorist behaviour and spruced-up road infrastructure to stamp out the problem.

Last year, the General Department of Customs and Excise of Cambodia collected $2.4196 billion in revenue, down $795.5 million or 24.8 per cent compared to 2019. This was equivalent to 83.5 per cent of the 2020 plan.

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