It’s a year since government okayed the importation of right hand drive trucks, and commercial business vehicles, weighing 20 tonnes and above to boost competitiveness of the logistics industry.

The presidential law published on February 26 in the Official Gazette only covers trucks weighing 20 tonnes and above, cross-border public transport buses and tractors.

While transporters welcomed the initiative, they are now saying, the law does not address the problem at hand.

For example, according to Article 3 of the modified law, which covers steering apparatus, reversing gear system and security accessories, all motor vehicles to be registered in Rwanda must have a steering apparatus on the left hand side except trucks having at least 20 tonnes loading capacity, buses used for cross-border public transport and road tractors.

The new law modifies and complements Article 88 of the Presidential Decree n° 85/01 of 2/09/ 2002 regulating general traffic Police and road traffic.

However, transporters say that the new law only exempts the motor engine and not the trailer (container) which still makes business less competitive.

According to the new law, trucks are imported duty free and are only subjected to 18 per cent value added tax.

RRA speaks out

William Musoni, the Rwanda Revenue Authority, (RRA) head of operations and business unit, said the motor truck and the trailer are totally different and therefore treated differently.

More so the two are taxed separately because they are registered separately and in most cases come in other two different important products.

He advised truckers to look at the matter as a whole different issue and engage other relevant authorities for a waiver.

According to Abdoul Ndarubogoye, the vice-president of Rwanda Transporters Association, the law only exempts motor engine from import duty and not the trailer

"We still have to pay 10 percent import tax and 18 per cent VAT for the trailer,” Ndarubogoye, told Business Times in an exclusive interview last week.

Compared to our competitors in the region who don’t pay any tax, it leaves us with an unleveled ground and affects our competitiveness, Ndarubogoye, added.

This according to sector players defeats the whole logic of boosting competitiveness of the logistics industry.

Government has been working with private sector to support its local transport and logistics industry to be able to reduce the cost of doing business and enhance fair trade across the East Africa Community (EAC).

These efforts came as a response from freight forwarders and transporters, who complained that they were being pushed out of business by their regional counterparts.

However, Theodore Murenzi, the chairman of the Rwanda Long Distance Truck Drivers Association, says addressing the issue of tax imposed on RHD trailers will further ease the cost of doing business and boost the country’s logistics industry.

Efforts to address the issue are on going

Meanwhile, Steven Ruzibiza, the Chief Executive Officer, Private sector federation Rwanda (PSF), said the federation is aware of the matter and is currently engaging different authorities to have the matter resolved.

"We are in touch with both the truckers and other different institutions to make sure the matter is resolved which may however take some time,” Ruzibiza noted.

More than 200 cargo trucks have been imported into the country since the law lifting the ban on Right Hand Drive Trucks (RHD) came into force last year.

The waiver is expected to save cargo truckers up to $3,000 (Rwf2.2 million) on each truck bought compared to the cost of a similar left hand drive vehicle.

A recent research by Ministry of Trade and Industry indicated that by lifting the ban on the importation of RHD trucks, an estimated $500 million (Rwf362.6 billion) would be saved on road transport services annually.

Therefore exempting trailers according business experts will be another great milestone towards strengthening the country’s logistics industry.

editorial@newtimes.co.rw