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. Last Updated: 07/27/2016

Customs Warehouse Promises to Speed Traffic

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In an initiative expected to reduce car importers' headaches and boost state coffers at the same time, the State Customs Committee on Monday opened the country's first customs warehouse for automobiles.

The 3,500-square-meter warehouse, located on the 34th kilometer of the MKAD in southern Moscow, has space for 1,700 cars. It is to function as a non-commercial company owned by the State Customs Committee — so payments received for storage and services will go to the federal budget, committee spokeswoman Irina Skibinskaya said.

According to Skibinskaya, the dedicated automobile customs warehouse will speed up the clearance process.

"The clearance now will take no more than three hours if a dealer or importer presents the whole package of documents needed," she said.

Car dealers and importers will be able to store vehicles in the warehouse for up to three years prior to customs clearance. Until now, dealers have stored imported vehicles in warehouses near Russia's borders in Finland or the Baltic states, only bringing the vehicles into the country for customs clearance upon purchase. Cars that had not cleared customs could not be kept at any such warehouse within Russia, and clearance had to be completed within 10 days of the vehicle's arrival at customs.

Skibinskaya said that one of the reasons for opening the warehouse was so that payments for storage would go to Russia instead of its neighbors.

"Dealers also can reduce their expenditures, as customs duties can now be paid after a consumer has paid for a car," she said.

She refused to reveal the storage price, but said it is "rather competitive" compared to other bonded warehouses. The closest ones are in Finland and the Baltic states, because bonded warehouses for imported cars were not legal in Russia before now. The Customs Committee had to change customs legislation in order to open this bonded warehouse, Skibinskaya said.

But while the warehouse's opening might seem like good news for car importers, those contacted for this article expressed mixed opinions.

Dmitry Kolesnichenko, a senior manager at the Nezavisimost car dealership, said that those who regularly work with the same foreign warehouse can complete a customs clearance in six hours without any problems — and never face problems about having enough free space for cars.

"Car importers will think twice about using a state-bonded warehouse," said Kolesnichenko. "Giving something to the state for storage can end up like savings in Russian banks. You may never see your cars again."

Sergei Alekseychuk, board member for the automobile dealer Avtomir, said the warehouse was a good idea in general, "but at the moment it seems doubtful." He added that 1,700 car spaces is far from enough. For example, in three months Russia imports over 1,000 Skoda cars and even more Volkswagens, he said.

Russia should have many bonded warehouses, so that prices are competitive, which would allow importers to reduce prices in turn, said Alekseychuk.

The government has proposed that import duties on used foreign cars older than seven years should be equal to those for new imported cars.

Deputy Prime Minister Ilya Klebanov said last week that the government commission on customs and tariff policy has been asked to draft an appropriate resolution so that it could become effective on Jan.1, 2002.

This measure is intended to protect the Russian automobile market and stop from it turning into "a dump site for very old cars," Prime-Tass quoted Klebanov as saying last week.

Details are still unclear, but the proposal is expected to raise the sale price of old imported cars to a level closer to that of new imported cars. It is to be discussed at a Cabinet meeting in September.

Sergei Mitin, deputy minister of industry, science and technology, said that last year Russia imported 266,000 cars, of which 27 percent were new, 25.5 percent were three to seven years old, and the remainder were more than seven years old. According to Itogi magazine, every sixth car in Russia is an imported car more than seven years old.

"If the government proposal is effective, imported cars will become inaccessible," said Yulia Zhdanova, auto analyst at United Financial Group.

If the proposal becomes reality, domestic carmakers will relax and the local auto industry's development will stop due to the lack of competition from imports, she said. People will buy Russian cars due to lack of choice, but at the same time the cost of Russian cars will increase by between 30 percent and 40 percent, she added.

Meanwhile, the customs import duty on several types of cars with engines of 1,000 cubic centimeters to 1,500 cubic centimeters is to be temporarily raised by 5 percent, Interfax reported Saturday. The higher duties are to be in effect from Aug.11 to Sept. 30.