Tariffs on Imported Tour Buses In Situ

Tariffs on Imported Tour Buses In Situ Tariffs on Imported Tour Buses In Situ

A proposal by Iran’s tourism authority to reduce the tariff on imported tour buses in order to renovate the aging fleet of substandard coaches has been rejected by the Ministry of Industry, Mine and Trade. Observers said this was a blow to the concerted efforts to develop tourism infrastructure.

While Iran’s well-established flight routes makes air travel to every corner of the country a breeze, many people still prefer to travel by land on Iran’s scenic routes. However, a lack of standard tour buses dissuades many from opting for land travel.

To remedy the problem, Iran’s Cultural Heritage, Handicrafts and Tourism Organization made an official request to the government in late 2014 to facilitate the import of 1,000 quality vehicles, including tour buses, by reducing their customs duty.

The proposal was doomed from inception. In addition to the crippling economic sanctions at the time, which prevented major companies and countries from trading with Iran, the ministry voiced opposition with the scheme. It argued that Iranian automakers are more than capable of rising to the challenge and meet the land transport needs of the fledgling tourism sector.

However, critics disagree. “Standard tour buses are vastly different from public transport vehicle, to the extent that one can’t really replace the other. We don’t have the means to produce (high quality) tour buses domestically and need to import them,” Saeed Shirkavand, deputy for investment affairs at the ICHHTO, told ISNA recently.

Destined to fail from the outset, the Cabinet rejected the proposal at a recent meeting, ICHHTO chief Masoud Soltanifar said.

“The Industry Ministry flat-out rejected our request,” he said, adding that tour buses can still be imported but with the present customs duties it would be an expensive endeavor.

  Empowering Domestic Automakers

Governments in Tehran have gone out of its way to help the inefficient, loss-making Iranian automakers, which are accused of producing low-quality, unsafe, and polluting vehicles sold at exorbitant prices. One observer put it simply: Iranian cars? Low quality and high price!

Last year, the Rouhani administration introduced a rare loan scheme in the hope of breathing new life into the ailing auto industry that has been used to subsidies and cash injections soon after its birth half a century ago.

The lending plan was met with public enthusiasm, as more than 110,000 gas guzzling low quality sedans were sold in four days because of the 250-million-rial ($ 8,600) loan per vehicle offered at 16% interest over four years.

It is said that the government was pushed to take action to save the controversial and hugely underperforming state-owned auto industry following an online campaign that started in August to dissuade the people from buying the overpriced domestic sedans.

Word also went around that the desperate auto industry was pleading to be salvaged as its warehouses were overflowing with unsold cars made mostly with Chinese spare parts.

According to ISNA, the ministry’s reasons for rejecting ICHHTO’s request were twofold: First, to help empower domestic carmakers by compelling tour companies to buy Iran-made buses; and second, to support government coffers by imposing high customs charges.

“They [the Industry Ministry officials] argue that reducing customs tariffs for imported buses will undermine the domestic automakers,” Soltanifar said. “They claim that we have the ability to manufacture the buses inside the country.”

This is while some, including Ebrahim Pourfaraj, president of the Iranian Tour Operators’ Society, say Iranian-made buses fail to meet international standards.

“They mount the body of a minibus onto a chassis made for a sedan, so how can you call that a standard vehicle?” he complained.

Supporters of the scheme say both inter- and intra-city tour buses must be renovated and brought up to standard.

The ICHHTO has reportedly put in a request for 500 vans, 300 minibuses, 150 off-road vehicles and 50 buses.

The ministry has promised that Iranian carmakers will be able to provide ICHHTO with all the 1,000 vehicles they have requested by September.

“Now we’ll have to wait and see if they can deliver,” Soltanifar said.

The country’s woefully underdeveloped tourism infrastructure is in dire need of renovation and expansion and while efforts are being made to build more hotels and renovate the aging air fleet, little if anything has been done to address the lack of quality buses.