Imports, revenues slump as banks tighten lendingWith banks tightening lending due to a receding supply of loanable funds, imports of luxury automobiles and industrial raw materials have dropped markedly, leading to a sharp drop in revenue collection at Birgunj Customs.
With banks tightening lending due to a receding supply of loanable funds, imports of luxury automobiles and industrial raw materials have dropped markedly, leading to a sharp drop in revenue collection at Birgunj Customs.
The customs office actually missed its revenue collection target for the period mid-January to February 11.
Premium vehicles imported from India and third countries lie abandoned at the premises of the Customs Office as traders are reluctant to clear these costly wheels. Around 100 vehicles have been left across the border in Raxaul, India.
The import duty on automobiles is 225 percent, making auto imports a major revenue earner for the government. According to Sewantak Pokhrel, an officer at Birgunj Customs, the import of a single premium vehicle can contribute around Rs20 million to the government coffers.
The government had set the revenue collection target for the Birgunj Customs Office at Rs9.07 billion for the period mid-January to February 11. Due to slowed imports, revenue collection totalled Rs8.42 billion during the period.
Pokhrel said that this was the first time this fiscal year that the office had missed the target.
As per customs records, 85 cars, jeeps and vans were imported through the border point between mid-December and mid-January. Shipments dropped to 31 units from mid-January to February 11.
Imports of double-cab pickups, auto rickshaws, mini buses and auto accessories and lubricants too have dropped sharply.
An employee of a leading automobile dealer told the Post that their imports had dropped from 30 units to three last month.
“Financial institutions have stopped issuing auto loans, and this has hit sales,” the official said. “As we haven’t received any bookings, the vehicles that have arrived have not been cleared through customs.”
After the central bank expressed concern at the high loan exposure to unproductive sectors like automobiles and real estate, a meeting of 28 commercial banks made a ‘gentlemen’s agreement’ to cut lending to such sectors and concentrate on the productive sector.
Likewise, revenue collection at the dry port in Sirsiya, Birgunj, the main gateway for the import of raw materials for iron and steel industries, has shrunk.
“We used to collect Rs70-Rs80 million daily,” said Surya Sedhai, head of the customs office at Sirsiya. “Incomes have plunged to Rs10-Rs20 million from last week.”
The office too failed to meet its revenue collection target for the period mid-January to February 11.