THE COST OF ACCEPTING DUBAIS

Sir,

Swazis love their cars and, regardless of the size of their paycheque, they will proudly drive their cars to work - even if they have not had enough money to service them since the late Jurassic period.

There is perhaps no other country where the private sector so completely dominates transport. There are some public companies that still provide transport to their employees but they are vey few.
The options now are either shared public transport such as the use of minibus taxis or, increasingly, privately owned second-hand cars, commonly derogatorily referred to as Dubais. They are imported from Japan, the United States and the European Union and other Asian countries, and can be cheap, sometimes selling for as little as US$1 000 (E13 000). That, of course, is the price in Japan, and you have to add to that the cost of transport to Matsapha , high import duties and 14 per cent Value Added Tax (VAT), depending on the Southern African Customs Union (SACU) country.

The fact that the taxes are so high provides a considerable incentive for importers to undervalue the vehicle. Getting a false receipt is easy – you just ask for it.
In theory, the customs union could use an international reference, such as the Blue Book, which gives you a list of prices and values of cars. But customs officials know that the cars being imported are being undervalued.
The South African industry receives tariff rebates from the customs pool, which would other­wise go to the four other small SACU states – Botswana Lesotho, Namibia and Swaziland. The main countries subsidising the South African industry are Botswana and Namibia, which each lose about R5 billion annually from customs revenue.

But the growth of these second-hand cars is an economic disaster for much of Southern African countries including Swaziland.
Because the use of roads is free and second-hand cars are cheap, the growth of the market is distorting the development of infrastructure. Small cities such as Mbabane will soon require four-lane roads to accommodate the flood of second-hand cars, which is taking up the scarce funding that should be used for rural roads and infrastructure.

Africa is accepting scrap cars, and those importing them should pay for the environmental costs.
A substantial scrapping tax should be levied on all imported vehicles, which would rise from, say, one per cent for new cars to 40 per cent for the oldest, biggest engined used cars. This should be based on book values because undervaluation is so pervasive in the market.

Again, the Japanese have a cultural aversion to buying anything second-hand. So the Japanese government has organised a first-rate export certification system, which has led to the development of a multibillion-dollar used vehicle trade.
The biggest markets are Russia, Chile and the United Arab Emir­ates.
The fourth biggest is South Africa – that is, Durban – from where the vehicles are distributed to Africans other than South Africans.
The South African ban is to protect local manufacturers but, ironically, those who pay the price for this protection are the citizens of the SACU countries that import used cars.

The South African industry receives tariff rebates from the customs pool, which would other­wise go to the four other small Sacu states – Botswana Lesotho, Namibia and Swaziland.
The main countries subsidising the South African industry are Botswana and Namibia, which each lose about E5 billion annually from customs revenue. But there is a much bigger policy issue at stake in the Fong Kong trade. The importation of second-hand vehicles, like that of second-hand clothing, is emblematic of Africa’s place in the global value chains.

Africa will continue to produce nothing more than holes in the ground – it will sell ever more minerals to Asia and the EU to pay for ever more cheap cars, which, in turn, will be made from African minerals.

Anonymous

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