The government’s announcement to lift the moratorium on vehicle imports has brought relief to automobile dealers in the country. The moratorium, which was imposed in August 2022, had severely impacted the businesses, The Prime Minister (PM), Dasho Tshering Tobgay announced that the moratorium will be lifted by August 18, 2024 provided that the Royal Monetary A’s criteria are met.
Senior General Manager of Bhutan Hyundai Motors, Pema Lodey expressed his relief and optimism over the government’s announcement and lifting of the moratorium on the vehicles.
He said that during the moratorium the company incurred a loss of over Nu 2-3 million. However, the GM revealed that the company did not lay off has not laid off any staff members during this period, and instead, some sales staff had voluntarily resigned.
“We are pleased to see the moratorium lifted, and we can now run our business as usual,” he said. “While we may not expect an immediate surge in sales, we are hopeful that our business will see improvement in the coming months.”
The company is planning to recruit more staff and enhance marketing to generate revenue. With the current economic and market situation, the company is not expecting a sudden increase in sales, but is optimistic about the future. Bhutan Hyundai Motors is looking forward to a brighter future.
Similarly, Kumar Subba, General Manager of Shingkhar Pvt Ltd, Kia Motors, revealed that the company has been severely impacted by the moratorium, leading to a duplication of financial losses. He shared that for the financial year 2023 itself, the company ended with a loss of Nu 6,536,745.
In a bid to restore its financial health, Kia Motors had to lay off seven employees during the moratorium. “This move was part of the company’s action plan to overcome the challenges faced due to the moratorium,” the GM shared.
GM said, “We believe that lifting of the moratorium will be a good step towards restoring our losses for the past period and we are looking forward to a brighter future and are committed to making our business more sustainable.”
With the government announcement on the lift of moratorium, they are optimist about its future prospects and plans to recruit additional staff in order to boost its operations. “Furthermore, we are also planning to import 100 units of vehicles every month to increase its sales and revenue.”
The State Trading Corporation of Bhutan Ltd (STCBL), although less affected due to its diversified business portfolio, also welcomed the news. Chief Financial Officer, Chencho shared that the end of the moratorium would stimulate economic activities across the country.
He said, “With particular brand of vehicle–SMLI, we have incurred a loss of Nu 1.12 million in financial year 2023.”
He shared that they had already planned the business with an assumption that the moratorium on import of vehicle will be lifted by August 2024 and will follow the business strategy accordingly.
In August 2022, Bhutan imposed the moratorium on the import of vehicles, citing the need to conserve foreign exchange reserves and address the country’s macro-economic imbalance.
The PM said that the RMA will come up with a set of criteria which the financial institutions will have to follow on import of vehicles. The PM also urged the public to not place vehicle order now, as the study is underway on import of the vehicles and their carrying capacity in each district.
The moratorium was issued as Bhutan saw a sharp and significant decline in foreign reserves. The reserves decreased from 839.6 million USD (sufficient to meet15.08 months of essential import) in June 2022 to 772.3 million USD (sufficient to meet 13.87 months of essential import) in July 2022, a decline of over 67.3 million USD in just a month. According to reports from the country’s central bank, the Royal Monetary Authority (RMA), the total reserves in September 2022, stood at 729.7 million USD, enough to cover the essential import of 13.11 months.
In 2021, Bhutan imported 4,032 passenger cars, which cost Nu 2.6 billion (bn). 3,849 vehicles, at a total cost of Nu 2.15 bn were imported from India, and 183, at a total cost of Nu 449.33(million) were imported from other nations. In an earlier interview with the paper, the former Prime Minister (PM), Dr. Lotay Tshering said that the government would be able to save up to Nu 5 bn in the year by imposing the ban on import of vehicles.
In 2012, during the rupee crisis, Bhutan’s government banned vehicle imports starting from March of that year. This action was taken following a record level of vehicle imports. At that time, the country’s total reserve was USD 769.1 million.
After a period of two years and four months, the ban on vehicle imports was lifted, starting from July 2014. This decision was made as the total reserve improved to USD 978.8 million.
Meanwhile, figures from the central bank show that as of December last year, the total external reserve, which includes Indian Rupees and monetary gold, was almost USD 600 M.
By Nidup Lhamo, Thimphu
