Parallel importers compete on a level playing field
WE would like to comment on the article "Distributors rue parallel import advantage" by Samuel Ee (BT, July 6) on the alleged advantage enjoyed by parallel importers. Based on the following points, you may agree with us that parallel importers are not given any special privilege or advantage but rather are competing on an equal playing field with the authorised distributors.
All OMVs declared are carefully assessed by Customs, and parallel importers are subjected to the same import rules and tax structure as authorised distributors.
There is no double standard in assessing a vehicle. The Additional Registration Taxes (ARF) are imposed by the Land Transport Authority (LTA) based on the declared OMV that is approved by Customs, according to the make and model as well as specifications of the vehicle. As for why PI cars are generally cheaper, this could be because parallel importers tend to make smaller margins due to the intense competition in the market.
It is not the intention of the CEVS (Carbon Emissions-based Vehicle Scheme) and the EC (Evolution Co-efficient) scheme to provide discounts but rather, to reduce Singapore's carbon footprint by offering incentives for low-emission vehicles. The spirit of the CEVS and the EC is to promote a greener and more sustainable environment.
According to the current European Union directive, cars that are not run-in can be entitled to the 0.92 co-efficient factor, subject to certain requirements as laid out by the LTA. Parallel importers need to apply for this according to the guidelines in order to qualify. This is a lengthy process which incurs additional expenses of up to S$2,000 per vehicle to test the vehicles at the Vicom test labs and gather the required readings. All numbers are then subject to approval based on standard benchmarks. Authorised distributors, on the other hand, typically run-in their vehicles to get better emission results. Therefore, the 0.92 EC factor is to level the playing field rather than to give parallel importers an unfair advantage.
Referring to the quote from Mr Wong, we would like to address his statement with regard to his questioning of the very existence of parallel importers and the implication that it is wrong for them to do business.
In the last few decades, the car industry was indirectly monopolised by authorised distributors, who are predominantly foreign-owned companies. The introduction of parallel importers helped create balance by injecting healthy competition, promoting greater product variety and better pricing by taking out fat margins from the otherwise monopolised market. This has not only benefited consumers, but also created business opportunities for our home-grown entrepreneurs, resulting in multiplying effects on our economy. To suggest that parallel importers should not be doing business not only shows ignorance but also poor economic knowledge. We strongly condemn his comments and dismiss his call for not allowing parallel imports.
Our local entrepreneurs are definitely not flies, and they are indeed here to stay. They deserve to be given basic recognition and respect, rather than being offhandedly labelled as "flies". These "flies" are Singaporeans, bred and born here. They are entrepreneurs who have their roots in Singapore and are contributing to growth in our economy.
Since the liberalisation of import rules in the 1990s, many parallel importers have grown to become substantial players, well-established names trusted by many in the industry today. Under the government's pro-enterprise policies, this would help create more opportunities for our local entrepreneurs and an even more level playing field for all.
An open economy like ours thrives on competition. To suggest that rules have to change to bring down the market share of parallel imports is anti-competition, and would possibly lead to higher market prices and poorer product variety. We should not be moving backwards to the time of a monopolised market. Rather, our markets are powered by demand and supply, and consumers should hold the right to choose.
Today, parallel importers have achieved the objectives of promoting healthy competition; and ultimately, consumers and our economy are the ones who stand to gain.
Jerry Low Honorary Secretary Automobile Importer & Exporter Association (Singapore)
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