Few Applications For ’’Free Funds” Imports

Press, Volume CI, Issue 29898, 11 August 1962, Page 10

Few Applications For ’’Free Funds” Imports

(From Our Commercial Editor) WELLINGTON, August 10. The “free funds” scheme for imports has been a disappointment, to the Government and car firms alike. Cp to August 3, 338 applications had been received by the Reserve Bank for the use of funds involving £2.289,000. By that date 247 applications had been approved involving £1,626,000.

The scheme was announced on May 28 by the Minister of Customs (Mr Shelton). A feature of the scheme is that onefifth of the funds approved must be remitted through the banking system to swell the country’s overseas reserves.

Applications for the use of funds held abroad by business firms since before February, 1962, must be made by October 1 this year. Of the applications so far approved, some £325.000 has been, or will be, added to the country's reserves, while the balance —£1.301,000 —will be made available to firms for extra imports.

Inquiries made today at the Reserve Bank confirmed that by far the greater proportion of the applications was made in respect of motor vehicles If. as seems likely, total approvals under the scheme reach some £2m, the over, seas reserves will have benefited by some £400,000, leaving £l.6m in the hands of business firms. When the scheme was mooted. officials admitted that they had no precise knowledge of the amount of funds held abroad which would qualify under the

scheme, although an estimate of £4om was thought plausible. It is now believed that holders of only a small proportion of the elegible funds have chosen to make application. An increase of £400,000 even in the present attenuated state of the country’s overseas assets (£7om on August 1) ivould be scarcely noticeable, while an increase of £l.6m makes little impact on private imports ( £273m last year). Applications for import licences for motor vehicles have mainly been for cars, ranging from £3OO to £BOO in the overseas funds portion of the price. Taking £5OO as a rough average, and assuming, generously, that £l.sm would be approved for cars, it seems that a maximum of 3000 cars could be imported under the scheme.

This figure is less than 10 per cent, of the 34.000 cars.

assembled and completed knocked down, imported in 1961. It will be a useful addition to this year’s imports of vehicles, which would probably, in the normal course of events, have been reduced from the 1961 figure. The 1961 figure showed a rise of some 4000 vehicles, mainly because of the liberalisation of the private no ' - remittance scheme. But 3000 more cars will make little impression on the scarcity of new cars. North Island prices for low-mileage cars of popular makes are still well above list prices. The comparative failure of the free funds scheme is ascribed to various factors by business firms. Perhaps the main factor is the preferential treatment accorded fleet owners by the motor firms Most of the holders of the eligible free funds are fleet owners who prefer to hold these funds abroad. The few business firms who have decided to import ears under the scheme include some which claim to have had a “poor deal” from the motor firms they have dealt with. “I don’t like having to trade in my old car at the dealer’s price tn get one new car.” said one successful applicant today.