Call for tax relief to boost local vehicle assembly

The government has been urged to foster a more enabling business climate, including reviewing and lowering select taxes, to encourage the local assembly of motor vehicles.

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The appeal comes as the state rolls out the recently approved National Automotive Policy aimed at stimulating expansion in the sector.

Authorities are also weighing the introduction of a Sh13 billion affordable credit financing facility to support stakeholders in the automotive industry.

To streamline the importation of components such as batteries, the government has put in place incentives and tax measures under initiatives like the Duty Remission Scheme.

Kenya National Chamber of Commerce and Industry (KNCCI) Mombasa chapter chairman Abud Jamal said a supportive business environment would draw more investors and enhance the competitiveness of Kenyan firms in the region.

“My plea to the national government is to facilitate investments by creating an enabling environment for such ventures in our country, to ensure we provide a platform that makes them competitive across the East African region,” he said during an Iftar dinner hosted by TransAfrica Motors Limited.

Jamal said TransAfrica Motors remains a key player in transport and logistics as the main distributor of Chinese-made FAW trucks.

“FAW is among the most reliable vehicle brands from the Chinese market. They have captured a significant share of the East African market," he said.

"We appreciate their contribution because they play a vital role in ensuring logistics, essential services and goods are efficiently distributed across the country.”

Jamal said entrepreneurs are central to national development and require strong policy backing.

He highlighted the importance of promoting local motor vehicle assembly as a pathway to job creation and advancing the government’s manufacturing agenda.

“From a logistics perspective, importing completely knocked down (CKD) or semi-knocked down units helps save on freight costs and duties. This allows companies to offer more competitive prices to businesses seeking to invest in or purchase the units,” Jamal said.

Trans Motors general manager Faiz Abdallah said the company’s products have led the regional market over the past three years and that it is exploring opportunities for further growth, particularly around the upcoming Dongo Kundu Special Economic Zone, to reinforce its market leadership.

“We are encouraged by developments around the Special Economic Zone and hope to benefit in the near future. For now, we are satisfied with the current CKD importation arrangement,” he said .

Abdallah noted that while the logistics industry has made a strong recovery, additional government intervention remains necessary.

“The logistics sector is very robust and has bounced back. The government can do much more in terms of improving roads and lowering certain taxes. This will enhance uptake of our units and improve profitability for logistics players,” he said.

Abdallah said the firm employs more than 500 workers and currently ranks as the market leader in the logistics industry and the most preferred brand in East and Central Africa.

“If the economic situation improves, we intend to expand further and create more employment opportunities,” he pledged.

Instant analysis

The push for a more enabling business environment reflects growing private sector pressure on the government to align fiscal policy with its manufacturing ambitions. While the National Automotive Policy signals commitment to industrial growth, industry players argue that high taxes and operational costs still undermine competitiveness.