Auto policy, accident vehicles, real victims of Customs border closure

General Manager of largest vehicle importing terminal; Ports and Terminal Multiservices Limited (PTML) Mr Tunde Keshinro in a chat with our correspondent disclosed that though there has been an increase in vehicle importation through the terminal, the calibre  of vehicles imported through the port were low grade, damaged and accident vehicles.

While dissecting the impact of the  border closure on vehicle importation, Keshinro explained that prior to the closure, the high earn, very expensive vehicles are the ones going through the borders and being smuggled because of the high import duty rate of the government and the high tariffs that the importers have to pay.

Recall that several stakeholders including the organised private sector had mounted pressure on the Federal Government to suspend the auto policy, which they argue, has fuelled smuggling of fairly used vehicles into Nigeria.

The policy raised the import duty of vehicles from 10% to 35% with an additional 35% surcharge.

Keshinro argued that the six-year-old auto policy has failed to achieve the desired outcome for the country’s industrialization bid in vehicle manufacturing and impact positively on businesses of auto manufacturers

“If you look at  the ports, the port is handling the regular and averaged quality grade of vehicles and this is why we have more of the accident cars and older vehicles, these are the common vehicles coming to Nigerian ports”

“But the very high-earn vehicles, you don’t see them coming to the port in large numbers, they come in trickles, these are the kind of vehicles that the border closure should redirect to Nigerian ports”

“One thing is the physical aspect of border closure, but to what extent would it impact on the nations economy in the long run?

“Government should focus on reducing the duty rate on vehicles, for the new vehicles, the duty rate is 70%, the car dealers at the car marts that Customs is raiding are the people dealing in sales of very expensive and brand-new 2018, 2019 vehicles”

“The common Nigerians are not going through the borders in that large number, the people going to the borders to smuggle are those wanting to avoid the 35% duty and 35% levy”

“What government should do is to ensure that while they are closing the border, they must have a long term sustainable policy, they must reduce the duty rate and review the automotive policy. Over time, it is clear to everybody that the Nigerian assembling plants have not been able to churn out that grade of  vehicles that the super-rich Nigerians would want to buy”

“The dealers go through the borders and are still able to sell to their customers at a price that they can afford”

“The common man is not complaining about the border closure apart form rice, the people that are affected by the closure are those dealing in expensive cars”

“The target of the closure is on dealers in new vehicles. The ground rule is affordability, people want products available at affordable prices
If the dealers import vehicles at the rate of 35%/increase and 35% levy, they would not be able to sell because people will not be able to afford it” Keshinro said

Also speaking with nigeriamaritime360.com, a senior freight forwarder that deals in imported vehicles, Mr Sunny Nnebe lamented that the federal government was over taxing importers of vehicles.

He said the Auto Policy is still being implemented at the port,   35% duty and 35% levy is still being charged in addition to other charges.

“By the time you calculate all the payments, you have paid for the vehicle two times, it is double taxation.
If you are now going for the registration if the vehicle, you will pay VAT, and you have paid VAT when you were clearing the vehicle at the port, it is the federal government that must look at the auto policy and correct it”

Nnebe said the closure of the borders has not had any impact on the importation of vehicles through the seaports because it is still very expensive to do business at Nigerian port.

He said “We have not felt any impact. If you check the customs revenue, it is not coming from cars, it is coming from containers”

“I have said it before, in order African countries where I have gone to practice this job, the older the vehicle the higher the duty, but in Nigeria context, it is not the same, the newer the vehicle the higher the duty, they want to kill you, so how do they expect people to buy new vehicles”

Recently, findings by our correspondent showed that accident vehicles were coming out of the seaport  in large numbers, some of them were reportedly circumventing customs revenue as importers sometimes declare clean vehicles as accident or damaged in order to get duty rebate.

Confirming this practice to our correspondent, Nnebe who is also Chairman of International Freight Forwarders Association (IFFA) said it happens.

“Maybe you have not done any job for the past six months and somebody gives you one, you went to customs for them to give you a compromise duty, the only way you can get it is by declaring it as accident so that the duty can come down”

“What we call Inspection Act is binding on everybody, if as at the time you release the vehicle, if you call it accident, then that is what it is. If the vehicle is going on the way and it gets arrested, then that is no longer the responsibility of the officer”

“For you to start paying duty on such vehicle again after enjoying the rebate is not helping the business and our nation. It is beyond corruption, the right hand must work with the left hand” he said

Meanwhile, he said the Federal Operations Unit (FOU) Zone A of the Customs now visit the port on a regular basis in the bid to intercept already cleared vehicles.

“We experience FOU troubles here and we have been talking about it, but one thing about customs is that they cannot speak against themselves, an officer would release the car, and an officer would impound the car, it is an insult to that customs command”

“There is an Area controller in charge of the command, and there is a DC and AC that man the terminals, after appending their news and service numbers, somebody that is a junior officer would now intercept it in the name of checks and balances”

On his part, Public Relations Officer of PTML Customs Command, Yakubu Mohammed explained the rational behind a vehicle being described as accident. He debunked insinuations that some vehicles were being smuggled out of the port under the guise of accident.

Normally, Customs grant duty rebate to any vehicle classified as damaged, this is why 70% of vehicles being imported into Nigeria are now accident cars.

The PTML spokesman in his reaction says “There is nothing like rebate, you cannot just call a car accident because it is dented from the back or sideways, before you can say that a car is accident, it has to have affected the chassis of the car, the airbag of the car, this is when you can say that a vehicle is accident”

“There is also a process of going about this before determining if the car is accident, you write a letter to inform the Customs that it is an accident car, examination is done on the vehicle to ascertain its nature”

“If the car was only hit on the side of bumper, you have to pay your normal duty, you cannot just wake up and call a car an accident vehicles because it has been marched from the front or sideways, the chassis of the car must be affected”

“It is also not based on the discretion of the officer, there is a process of doing all these, you have write a letter, the vehicle is examined”

In all of these, it appears that the real victims of the customs border closure are the investors in the auto shop businesses.

The terminal operators who are expected to take advantage of the closure to shore up there revenue are also complaining that the border exercise has had no meaningful impact.

No doubt,  the Nigerian economy keeps losing huge revenue, importers of vehicles are being overtaxed through the obnoxious Automotive policy of the federal government.

Meanwhile the FOU, Zone A, Operations and Lagos Roving Team officials of Customs have continued to intercept   exotic vehicles along the Lagos –Ibadan and Lagos–Ijebu-Ode Express way.

In his reaction to this, Adedoyin Ajibade, the President of Association  of Motor Dealers  of Nigerian (AMDAN) has condemned the exercise by the customs, saying that the service was killing its members businesses.

Ajibade urged the customs personnel to’’ treat  car dealers  with respect’’ adding that car marts belonging to his members were still on locked down despite the announcement by the Customs Comptroller General that the owners should come.forward and pay 25% penalty and take back their vehicles in addition to paying their correct duty.

The Customs Comptroller General had stated that over  90% of the vehicles on the various car marts across the country did not have the relevant import documents and therefore could not have paid  the appropriate  Customs duties.