Samson: REFUGEES GIVE BOOST TO CAR MARKET IN THE KURDISTAN REGION
27th May, 2017
Because of lower tariffs in Erbil compared to Baghdad, many Iraqi and Syrian car dealers have moved their businesses into the Kurdistan Region giving a boost to the local car market.
Musana Al-Rawey just a few years ago managed a car show floor in the city of Daraa in Syria. He has since opened a branch in Erbil. He imports cars from the United Arab Emirates, then sells it to other companies.
“We used to import 50,000 from the Emirates per year. Most of the cars were exported to Iraqi cities, but in 2016 due to the financial crisis, tax regulations, and some other obstacles, sales decreased so much that we imported only 1,250 cars,” Rawey, the General Manager of Al-Rawey Automobile Company, told Rudaw.
Al-Rawey believes that the reason that Iraqi car dealers come to work in the region is they are paying fewer taxes for importing cars through the borders of the Kurdistan Region compared to Iraq.
“We pay 100,000 Iraqi dinars [IQD] as import permit for per car, this amount is changed according to the car’s pistons,” he explained. “For example, we pay 2,214,000 IQD for four pistons saloon cars, we pay 2,629,000 IQD for four pistons station cars, and we pay 2,938,000 IQD for six pistons station cars which is much less compared to Iraq’s custom and tariff system.”
Taking advantage of the Iraqi system, many car dealers who used to work in Iraq and Syria have now set up their companies in the Kurdistan Region and export cars to other parts of Iraq.
“The Iraqi government receives 25 percent of the original cost of the car, for example, if we pay 2,000 USD for importing a car through Kurdistan Region borders, we need to pay 6,000 USD for importing the exact car through Iraqi borders, for this reason the Iraqi businessmen import cars through the Kurdistan Region companies,” Rawey added.
Many of the cars have plates from Kurdistan Region cities, allowing the other dealers in Iraqi cities to sell the cars without any difficulty.
“Cars holding temporary plate numbers at the Iraqi checkpoints are allowed to enter only under the condition of repaying tax,” said Rawey “But cars holding Erbil city’s plates are allowed after paying a small amount of money.”
So far in 2017, Rawey’s company has imported 750 cars and — after retaining the Kurdistan Region license plate — sold nearly 550 of the cars to other cities outside Kurdistan Region.
“Arabs prefer to buy cars holding Kurdistan cities’ plates, because they can be sold as much easier than cars holding Bagdad plates,” he added.
Since the start of 2017, automobile sales in the Kurdistan Region have increased by 67 percent compared to last year totaling 26,500 cars sold over the period according to the Kurdistan Regional Government’s Ministry of Trade and Industry.
“Supplying the market with that large volume of cars is incompatible with the market needs [of just the Kurdistan Region], it reveals that a large number of the cars are being exported to other cities of Iraq,” said Nawzad Adham, the General Director of Trade in the ministry.