In conversation with Krishna Prasad Dulal, president of Nepal Automobile Dealer’s Association (NADA)Posted On: March 3, 2020 By : AutoLife Team
Nepal Rastra Bank is tightening the auto loan market even further to reduce the ballooning trade deficit. According to a recent directive issued by the central bank, banks have been told not to issue loans to customers not exceeding 50 percent of the individual’s income. However, under this type of loan, even though the bank retains the title to the goods, it allows the buyer to take possession of the goods on trust for resale before paying back the bank on the Trust Receipt (TR) due date. However, Nepal Rastra Bank officials said the government’s plan is primarily intended to address the problem of low implementation of commercial vehicles such as buses, trucks and other public transportation. The decision to lower the ratio of loan to value of vehicles purchased is likely to discourage customers from purchasing new vehicles as customers will have to foot a huge chunk of money as a down payment to purchase a car. To know more about the loan policy governed by the Nepal Rastra Bank, we interviewed Krishna Prasad Dulal, president of Nepal Automobile Dealer’s Association (NADA).
WHAT IS THE IMPACT FROM THIS POLICY?
The automobile business this year is down more than 20 percent compared to the previous year. People who are willing to buy vehicles are disheartened by the government’s policy. While companies themselves can offer bigger loans to customers, at the end of the day, customers still have to pay a heavy price. In my opinion, the government should have implemented these kinds of law slowly so that people can adapt and deal accordingly to the law. The immediate implementation of this law affected many people looking to buy a vehicle as well as automobile dealers. But from the government’s point of view, this law can reduce the number of vehicles on the roads and encourage people to use public transportation instead. The general public will face less traffic. But the main reason for introducing the new policy is to reduce the country’s ballooning trade deficit. While this law won’t solve the problem, it will certainly help.
DO YOU THINK ELECTRIC VEHICLES ARE THE FUTURE OF THE COUNTRY?
In my perception, the government is encouraging the general public to ride electric vehicles (EV) by applying very little import tax compared to fossil-fuelled vehicles. But the cost of manufacturing an EV is higher compared to its fossil powered counterparts. So if the government levied the same tax on EVs, only a handful will be able to make the shift to EVs. There are always pros and cons in every sector and I think the present condition of Nepal is not suitable for EVs because we don’t have proper roads for such vehicles. As we know, the ground clearance of most EVs is comparably lower than regular fuel-guzzling vehicles. But the government is slowly thinking about the pollution caused by petrol and diesel vehicles and to control the situation, I think EVs are the future of the country.
WHAT IS THE DEAL WITH VEHICLES STUCK AT CUSTOMS?
Many cars are stuck at customs due to the unavailability of an authorised dealership in Nepal. In my perception, this particular law by the government is a good sign to both authorised dealers and the general public. Firstly, the general public cannot be cheated by unauthorised dealers in the country. Secondly, having authorised dealers would have been meaningless if this law had not been implemented. As President of NADA, our committee even requested the government to implement this law in the vehicle spare parts sector many authorised dealers of spare parts in Nepal losing money as the sale of unauthorised spare parts is rampant. Even in the present context, many cars with unauthorised dealerships can be seen roaring in the street. But we are working with the government on a plan to bar vehicles imported by unauthorised dealers from entering the country. This will help authorised dealers to do their business transparently.
AS NADA PRESIDENT, WHAT DO YOU HOPE TO ACHIEVE?
I have three aims. Firstly, to stabilise and increase the automobile business by working with the tax office, authorised dealers and ministers. Secondly, to encourage fair trade in the automobile sector. When a vehicle is imported into Nepal, the government imposes a levy which causes prices to skyrocket. And when the vehicle is transported to the showroom in Kathmandu for example, the vehicle is stopped multiple times along the way where unauthorised checkpoints demand money for passage. I will be talking with automotive dealers and the government in all seven provinces to address this issue. Thirdly, to reduce road accidents. The main reason accidents happen is due to poor road conditions. People are not getting the facilities that they deserve despite paying road tax. So I will have a meeting with the Road Minister to improve the road conditions as well as improper traffic signals. The other reason is uneducated drivers driving public vehicles. Many road accidents involve uneducated drivers. I want to reduce the number of accidents.
LASTLY, IS THERE ANY NEW POLICY THAT YOU WANT TO INTRODUCE AS PRESIDENT OF NADA?
Talking about the present condition, I believe the government should implement either the EURO 4 or EURO 5 emissions norm for the betterment of the automobile industry and the environment. Currently, the government follows the EURO 3 standard which was introduced back in 2000. Twenty years later, we are still following an outdated standard. I will also work hard to persuade companies to start manufacturing automobiles in Nepal as I think this will help the sector grow. I feel Nepal has the ability to manufacture vehicles for domestic use. The government should give priority to international manufacturers thinking about setting up a plant in Nepal.