Jordan Times
Tuesday, December 21, 1999
Customs Department mulls letting franchised car
dealers import used autos
By Mohammad Ben Hussein
AMMAN — With the market for used autos stuck in neutral, a customs official announced on Monday that his department was studying the possibility of allowing franchised car dealers to import and sell used cars.
The contemplated move would soften the impact of an earlier customs decision to permit showroom owners without franchises to deal in used autos, regardless of their date of manufacture.
Khalid Wazani, head of the Customs Department, said the department had formed a special committee to study the issue.
He said the department would determine the number of cars — if any — that such dealerships would be allowed to import after concluding the study.
The Customs Department research began after car dealers from various franchises asked for government permission to bring used autos into the country and sell them using their import licenses.
Several of the dealers said an earlier government decision allowing other businesspeople to import used cars had dealt them a heavy blow.
Salamah Jundi, head of Car Dealers Association, voiced support for a department decision in favour of the new rights for his members.
But traders and industry experts believe that such a decision, if taken, would do little to revive the dead market in Jordan due to public anticipation of further cuts to custom duties on used car imports. The public fears that this would pull the rug out from under prices, the experts said.
Used car lots in Amman and Zarqa are packed with all brands of cars. Most sellers want to unload their autos before their market value drops further, while others are trying to replace their ageing cars with new ones following a government decision to halve the 105-200 per cent customs duty previously levied on manufacturers.
Newspapers are also awash with advertisements by people trying to get rid of their cars at less than the market value.
“The market will continue to be paralysed until March 2000, the time expected for the customs reduction,” said one car salesman.
Dealers warn that Jordan could become “a dump” for the rest of the world following a government decision to allow imports of cars manufactured seven years ago, as opposed to a previous five-year limit.
The measure replaced a previous situation that began in 1989. In that year, due to the collapse of Jordanian dinar, the government began enforcing heavy customs duties on cars to discourage imports, hoping to trim the loss of foreign currency reserve.
But the government decision to establish free trade zones has opened new avenues for used autos to cruise into the country.
“The free trade zones will witness a dramatic increase in the auto trade,” said one dealer.
He called on the government to enforce “some sort of car standards regulations,” to protect the country from an influx of older models.
Trade liberalisation and tax reform, along with laws to protect Intellectual Property Rights, have repeatedly been cited as essential for Jordan's membership in the World Trade Organisation.
International Monetary Fund officials have been helping officials overhaul the Kingdom's tax regime and dismantle prohibitive customs tariffs, a main source of government revenue, calling the measures essential for the success of the Kingdom's structural reform.