The moratorium was imposed in June last year
The Lhengye Zhungtshog has approved to lift the moratorium on the import of Electric Vehicles (EVs) and hybrid vehicles costing above US$ 40,000.
The moratorium was imposed in June last year during the phase II monetary and fiscal measures.
“With the COVID-19 showing no signs of slowing down, the economic downturn continues to persist. In spite of zero local transmission our economy continues to face challenges. Hence, the government in its continued effort to boost domestic demand, increase economic activities, generate employment and ensure growth stability, has announced during phase II monetary and fiscal measures that to ensure adequate international reserves for purchase of essential items for one year as per the constitutional mandate, import of luxury motor vehicles and bikes of F.O.B value exceeding US$ 40,000 and US$ 10,000 or its equivalent respectively were suspended,” stated the letter announcing the moratorium.
However, the Lhengye Zhungtshog during the 103th session on September 28, 2021 approved lifting the moratorium on the import of EVs.
Further, the Lhengye Zhuntshog has directed the Ministry of Finance to discuss with the Royal Monetary Authority on the possible impact of lifting the moratorium for procurement of fossil fuel vehicles of above value on the foreign currency reserves and then take a decision.
An official from the finance ministry said that the moratorium was imposed to ensure adequate international reserves to cover the import of essential items for one year as per the Constitution.
The official said that since the import of luxury vehicles depletes international reserves, the moratorium was to ensure that there were sufficient international reserves to meet Section 7 of Article 14 of the Constitution which states that a minimum foreign currency reserve that is adequate to meet the cost of not less than one year’s essential import must be maintained.
“The government is currently consulting the Central Bank or RMA on the adequacy of international reserves for lifting the moratorium on the import of vehicles costing more than US$ 40,000,” he said.
When asked about how much of the foreign reserves were spent for importing vehicles valued above US$ 40,000 before imposing a moratorium, it was responded that the finance ministry is currently compiling the data.
According to the annual trade statistic 2020, the imports of passenger cars were included in the top ten import list with a value of Nu 2.02bn. It was imported from India, Indonesia, Japan, Thailand, Korea and Singapore.
According to the report, the major imported goods from India included petrol and diesel, passenger cars, rice, wood charcoal, ferrous products, cellphones, coke and semi-coke, soya-bean oil, electric generators and motors, parts for turbines, transport vehicle and bitumen amounting to Nu 51.19bn, which comes to around 77.04% of the total import.
One of the EVs dealers said that they have imported EV cars for a maximum amount of Nu 2.6mn and a minimum amount of Nu 1.2mn so far.
Dechen Dolkar from Thimphu