FG Begins Review of Auto Policy over Serial Abuse by Assembly Plants

ABIOLA Seun

The Federal Ministry of Finance admitted that the National Auto Policy of the federal government has failed over serial abuse by assembly plants and is being reviewed.

The Minister of Finance, Hajia Zainab Ahmed who disclosed this in an exclusive chat with journalists said neighbouring countries are giving vehicle importers incentives to berth Roll On Roll Off (RORO) vessels in their ports.

She said that auto policy is yet to achieve optimum result and restore the automotive industry for indigenous vehicle production for Nigerians.

Recall that the automobile policy was introduced in October 2013 to encourage local manufacturing of vehicles and discourage importation of cars as well as gradually phase out used cars (popularly known as Tokunbo cars).

The policy makes provision for commercial vehicles to attract 35 percent duty without a levy. Cars are to attract 35 percent levy charged on the fully built units (FBU), in addition to the 35 percent import duty.

Also, the federal government gave incentives of zero percent, 5 percent, and 10 percent respectively to assemble plants who imported completely knocked down parts (CKD), semi knocked down parts I (SKDI) and semi-knocked down parts II(SKDII) to be used by local assembly plants attract.

Assembly plants importing FBU for cars pay 35 percent duty without a levy, whereas commercial vehicles attract 20 percent duty without a levy, in numbers equal to twice their imported CKD/SKD kits.

However, the federal government has identified abuse in the incentives given to assemble plants to one of the reasons for the review of the policy.

She said, “The auto policy is presently being reviewed because neighbouring countries are giving incentives to vehicle importers to bring in their vehicles through their port because of our own rate.”

Though, she said the policy was introduced to trigger growth in the nation’s auto sector but, the prevailing situation has shown that it hasn’t achieved the desired result.

“The auto policy was meant to trigger a growth in the auto industry and because of that policy, incentives were given to assemble plants by giving special rates to bring in Completely Knock Down) (CKD) to assemble in Nigeria.”

Speaking on the abuse of the special rates given to assembly plants, the Minister said, “we are seeing some abuse in that aspect (CKD special rate) but we have to do a holistic review of the auto policy to get optimum result and the target is to restore the automotive industry so that we have assemble plants being set up again that could lead to actively producing vehicles here in Nigeria for use of Nigerians.”

The former Minister of State for Trade and investment however disclosed that the review has started but the process is led by the ministry of industry trade and investment in partnership with the ministry of Finance.

“The review of the auto policy has started and the process is led by the ministry of industry trade and investment and we are working in partnership with them,” she stated.