Clearing agents say the Federal Government is losing revenue from the implementation of its Vehicle Identification Number policy, writes Anozie Egole
Clearing agents operating at the nation’s maritime sector have said that the Vehicle Identification Number introduced by the Nigeria Customs Service earlier this year has created revenue setbacks and loopholes for the government.
The agents in separate interviews with The PUNCH in Lagos on Monday urged the government to abide by the auto policy and ensure that used vehicles from 2010 were allowed to pay normal duties, rather than the 2013 duties which were imposed on all imported vehicles.
The National Automotive Industry Development Plan Bill, popularly known as Auto Policy, is central to the development of the automotive industry. The NAIDP represents the Federal Government’s boldest step at reviving local car assembly in over three decades, according to experts. The policy, which was introduced in 2014, seeks to encourage local manufacture of vehicles while phasing out the importation of used vehicles. The policy classifies private vehicles above 15 years as overage vehicles.
The acting National President of the Association of Nigerian Licensed Customs Agents, Mr Kayode Farinto, told our correspondent that VIN was supposed to recognise vehicles from 2010 instead of those from 2013 upwards.
He said that the policy had made a lot of people consider bringing in vehicles through unapproved routes.
“What happens is that they started their valuation from 2013. I remember sending a letter to the CG of Customs about this particular issue. I told him it was wrong that the policy was for 12 years. They are supposed to start from 2010 or 2011 and up till now they have not reversed it, which is very bad. The issue of the year is a very big one and that is what is discouraging the importation of used vehicles, with people bringing in these vehicles through the unapproved routes like Cotonou. If the Comptroller General of the Customs works with the Federal Government on that and brings down the VIN valuation to 2011 or thereabout, it will be fine. The loss is big because since they started the VIN valuation, they have not reversed it.”
Also speaking, the founder of the National Council of Managing Directors of Licensed Customs Agents, Mr Lucky Amiwero said, “VIN is not legal; it is not a procedural thing anywhere in the world. Vehicle Identification Number is chassis number and it is not tied to valuation. What Customs have done is in contravention of the law. There is a law, Act 20 0f 2003, passed through the Nigerian Shippers Council. That is the law that is based on value. The Customs do not have any other right to put value.”
He said that the VIN had created more problems, noting that the government needed to intervene, if not there would be more problems.
“What they have done is that they are creating a lot of problems. They call it VIN valuation, but it is wrong. It is the vehicle identification number, which is the chassis number. It has nothing to do with valuation. Government will lose more if the government does not intervene. I have written to the government on this issue to tell them that what they are doing is wrong.
“What they are doing is illegal. Customs don’t have the right to implement VIN without passing through the National Assembly. It is not legal, it has no legal bearing, and the sooner the government goes back to what they were doing the better. Customs introduced that thing and it has created a lot of revenue setbacks for the government. The government should look at it seriously and reduce it and cancel the VIN. It is illegal and should be cancelled.”
Meanwhile, a member of the National Association of Government Approved Freight Forwarders, Nnadi Ugochukwu, accused the government of punishing people unnecessarily with the policy.
He said that the government was forcing people to pay for vehicles of nine years old and above instead of 15years that the law stipulated.
According to him, “The government policy is 15 years, so, it is supposed to start from 2008 for private vehicles. So, the government is punishing people unnecessarily, breaking the laws that they made. Is it not the government that said the policy is 15years now? When you come, they won’t allow you to pay for the 15 years but will make you pay as if the vehicle is nine years old.”
High cost of second-hand vehicles
Agents say that importation of used vehicles into Nigeria has declined since the introduction of VIN.
According to Nnadi, “There is a drop in the importation of used vehicles generally. Some people’s vehicles are already at the ports and they don’t have any option than to manage to bring them out.”
The Punch had reported that most of the used vehicles coming into the country were mostly accidented.
The Ports & Terminal Multipurpose Limited Chapter Chairman of the National Association of Government Approved Freight Forwarders, George Okafor, said that accidented vehicles were still being treated as normal vehicles, explaining that this could be the cause of the reduction in vehicle imports.
“The issue of accidented vehicles is not yet captured in the new vehicle registration, which has been the problem because those vehicles are still being treated as normal vehicles. As of now, there is no particular information on ‘accidented’ vehicles. What we are doing now is the vehicle registration system valuation, so there is nothing in the system for accidented vehicles for now.”
However, TinCan Island Chapter Chairman of the Association of Nigerian Licensed Customs Agents, Ojo Akintoye, blamed the hike in foreign exchange, rather than VIN, as the reason for the reduction.
“The reason is not far from the hike in foreign exchange rate. I bought a Toyota Corolla when the dollar rate was less than N500 with a dollar. I bought that for about $3000. Now, the same car is over $5000 with the hike in exchange rate. When you bring the car back to Nigeria, you will still spend money to buy spare parts and put the car in order. So, all these cost a lot of money.”
Reacting to this, the Customs Area Controller in charge of TinCan Island Command of the Nigeria Customs Service, Comptroller Adekunle Oloyode, said that the values on the imported cars were fair enough, noting that there was actually a reduction in the importation of ‘accidented’ cars.
“I saw the valuation officer recently and I was telling him that I have not been seeing accident cars. This means our values are so good that no one is bringing ‘accidented’ vehicles. We only go and remove the bonnet, do one or two things and call it an ‘accidented’ vehicle.
“There was a cry for ‘accidented’ and ‘salvaged’ vehicles. We input this in the system, but today nobody is coming to my office to ask for the value of ‘accident’ and ‘salvaged’ vehicles, which means whatever values we have given are acceptable to the stakeholders.”
Recently, experts in the Nigerian maritime industry, including freight forwarders and terminal operators, raised an alarm, saying that over 35 per cent of imported vehicles destined for Nigerian ports were being diverted to neighbouring ports before being smuggled into Nigeria.
The Managing Director of Ports & Terminal Multipurpose Limited, Ascanio Russo, in a recent event, said since the introduction of automotive policy in 2014, Lagos ports had been the favourite port for vehicles importation but was surprised to see a turn in fortunes.
Russo said that the terminal had started seeing vehicle diversion to other ports.
He also blamed trade policies for making car importation expensive in Nigeria.
“I just want to mention an issue which is of particular concern to the RORO operator, of which PTML is one. In the last few weeks, we have started seeing something which we have not been seeing for years and that is diversion of importation of cars from Lagos to Cotonou.
“Since the auto policy of 2014, the Lagos ports were the favourites for vehicle importation in Nigeria. But recently, we have started seeing traffic going to Cotonou due to some trade policies which are making the importation of cars very expensive in Nigeria.”
He noted that the development was a huge loss to terminal operators.
“We do know the condition of the economy of Nigeria at the moment and people seem to be desperate and are still going back to Cotonou. They are finding a way to bring these vehicles into Nigeria. This is, of course, a huge loss to terminal operators and it will change the chain of importation of vehicles, which means all the mechanics, artisans and all those involved in the importation of vehicles will be affected.”
On his part, Farinto, said that importers now took older vehicles to neighbouring ports and then smuggled them to Nigeria.
Experts call for policy review
Farinto pleaded with the Federal Government to reduce the age limit of imported vehicles from 12 to 15 years so that cheaper, older vehicles could be accommodated.
“The 12-year age limit on vehicle, plus the implementation of VIN valuation, is affecting us as a nation. If you bring in a 2003 vehicle, the least duty you can pay is that of 2013. So, vehicles that are 2005 and below, which our people use for e-hailing, are now being taken to Cotonou and then brought back to Nigeria.”
Farinto suggested that by reducing this age limit, traffic would be redirected to Nigerian ports and vehicles would be cheaper.
“All the government needs to do is to reduce the age limit to 15 years to accommodate 2009. This will enable vehicles to start coming into the country and will bring back the traffic. We have about 35 per cent of our imported vehicles being taken to neighbouring ports before they are brought back to Nigeria.”
The Vice President of the National Council of Managing Directors of Licensed Customs Agents, Adeniyi Ajayi, said that every increase in tariff by the government must always come with its negative consequences.
“There is no increase in tariff that won’t have negative responses from neighbouring ports, especially Cotonou ports. I remember in 1997 when Abacha came in and said that vehicles from 15 years old up should not come in. I remember during that time, all the ships were diverted to Cotonou and from there all those vehicles were shipped to Nigeria.
“This time around, there is hardship all over the world and we are an import-dependent nation for any source of product, especially ‘Tokunbo’. It is going to affect the country and you cannot rule out that Cotonou will be having the cars and Nigerians will be going to get these products.”
Meanwhile, the President of Association of Motor Dealers of Nigeria, Metche Nnadiekwe, said that the association was currently recording zero sales due to this policy and tariff on imported used vehicles.
