Second-hand car imports halted

Second-hand car imports halted

MASERU-THE government has stopped issuing permits to garages importing second hand vehicles.
The moratorium which started on September 15 follows a preliminary investigation that revealed rampant corruption and fraud in the issuance of import permits.

The Ministry of Trade has since launched a thorough investigation.
The suspicion is that some car dealers are evading tax and siphoning foreign currency from Lesotho.
Some of the transactions appear to violate Lesotho’s foreign currency regulations while others have a whiff of money laundering, according to sources in the Ministry of Trade.

There are also allegations that some are working with their handlers in Japan and Singapore, the main sources of the cars, to muscle Basotho out of the business.
The ban however does not include individuals importing used cars from Asia.
Trade Minister Thabiso Molapo did not say how long the moratorium will last. Nor did he indicate when the investigation will be complete.

Molapo was however quick to point out that the ban is not targeting foreign car dealers, mostly Asians, who dominate the market.
He said the moratorium gives the ministry time to investigate how some of the import permits were issued.
“We did that so that investigations could be made, as we have noticed issues of corruption related to issuance of one trader’s licence to multiple individuals,” Molapo said.

The ministry’s principal secretary, Maile Masoebe, said some of the dealers appear to be involved in unfair trade practices that disadvantage Basotho car dealers.
“This is because the people running car dealerships here are merely representatives of companies based in Pakistan. The mother companies own warehouses at which these vehicles are stored before shipment,” Masoebe said.

“After auctions they ship their vehicles first and charge exorbitant storage fees to Basotho.”
This, Masoebe said, means Basotho in the same business end up selling the vehicles at a higher price.
He said it is unfortunate the government is being criticised for trying to level the playing field for Basotho to compete.
“If there is anyone who should have an added advantage it has to be a Mosotho,” he said.

“It is just unfortunate that even though we are doing this for the betterment and growth of our economy, certain individuals, even big people who are beneficiaries, are the ones making the loudest noise.”
Masoebe said some of the dealers appear to be trying to avoid tax by hiding their earnings.
“Their transactions are cash only and they do not do any digital payments because those can be traced. They are not growing our economy instead they are bleeding it with all the money that they take out which is supposed to be circulating in the country.”

Monaheng Monaheng, Director at the One-Stop Business Facility Centre (OBFC), said the rot is widespread.
“Clearing agents are involved as they are the ones who seek import permits on behalf of their clients,” Monaheng said.
“There are also those forging licences, resulting in duplication of licences,” he said.

Mohammed Razien, the president of the Import Car Dealers Association, said the ban has shocked them. He denied allegations of tax evasion and import permit fraud.
“We pay taxes on time with the assistance of the LRA. They have set a programme to help us comply,” Razien said.

“We invested in shades and paving as it was requested by the previous Minister of Trade. We engage in social investment projects because Lesotho is now home to us.”
“We work harmoniously with the Ministry of Transport, with the police and the Ministry of Home Affairs.”

Lemohang Rakotsoane

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