Igor Kossov and Pech Sotheary
The Phnom Penh Post, Tue, 20 October 2015
Cars imported as scrap metal and unofficially assembled in Cambodian garages violate the law and pose a safety risk, the General Department of Customs and Excise has said.
Customs officials have started paying more attention to the practice, which authorised importers have complained about for years. According to a statement released on Friday, the department recently seized and destroyed several cars made from scrap and spare parts.
“Using this type of vehicle would diminish safety standards and possibly cause an . . . accident,” customs stated. “Moreover, it also could cause damage to the infrastructure and loss of income to the Ministry of Economy and Finance.”
Duties on car imports bring in a third of all customs revenue collected in Cambodia, according to the Finance Ministry.
Peter Brongers, president of the Cambodia Automotive Industry Federation, yesterday welcomed the Customs Department’s statement.
“More people in the government are starting to understand that grey market [vehicles] can be dangerous,” he said. “Cambodia is becoming a dump for secondhand cars.”
Unofficial assembly shops can be found in Phnom Penh and other provinces, according to customs. Mechanics often weld together chassis and body segments from different cars. All kinds of components, from engines to blinkers, can be bought at unofficial dealers.
Many such cars are sold at used car lots to unsuspecting customers, who might have to contend with missing airbags, chassis cracks, fuel leaks and seatbelts with broken pre-tensioners, according to Antoine Jeanson, head of the automotive committee at the European Chamber of Commerce.
Industry experts say that spare parts and partial vehicles come into Cambodia from the US, Japan, Thailand and Malaysia, after being written off in their home countries due to damage from accidents or heavy use.
Importing cars to Cambodia is expensive. Between duties and value-added taxes, whole cars have cumulative fees of 122.75 per cent of their value, according to the customs schedule.
Some importers lowball the price of their cars to get around this.
Customs officials use attributes like engine capacity to determine a car’s value when prior sale documents are unavailable, an unreliable method that leads to an uneven playing field for those who are and aren’t playing by the rules, Jeanson said.
However, it’s even cheaper to bring in spare parts, pieces of cars or even whole cars that are labelled as scrap metal. Parts and scrap have cumulative duties and VAT between 0 and 45 per cent, according to Jeanson.
These savings are passed on to the cars’ end users and are a major reason why the government has been reluctant to crack down in the past, said Brongers. “You don’t want to make it harder for people to buy cars here,” he said.
However, that attitude seems to be changing. The owner of one of central Phnom Penh’s dozens of repair shops, who asked to be identified only as Mr Heng, said police have recently stepped up inspections.
“We [are allowed] to repair cars with little problems: change the door or replace some spare parts, but we can’t repair a car that has serious problems,” he said, gesturing to a mostly dismantled sedan.
“Like this car, it’s almost completely damaged, and in a few days, the authorities will come and inspect for legal documents, so we do not dare to repair.”