PM: Reforms to break monopolies, lower prices

Gov’t approves legislation to lower cost of cars, spare parts amid looming battles with Histadrut labor federation.

By
April 29, 2013 00:33
2 minute read.
Bibi 521

Bibi 521. (photo credit: OLIVER WEIKEN/REUTERS)

The government will push forward with economic reforms that will “bring down the cost of living,” Prime Minister Binyamin Netanyahu said on Sunday.

Massive battles loom with the Histadrut labor federation and others over the planned changes.

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The cabinet discussed wide-ranging reforms in the automobile sector to increase competition by opening the field to more car importers and decreasing regulation on spare car parts, approving legislation to overhaul the country’s car industry.

“We are committed to bringing down the price of living in Israel,” the prime minister said. “This government has made this a key goal, and will implement it.”

He said the government would implement economic reforms “in the air, sea and land – in every sphere.” The government would bring “great reform” to the ports, he said.

Netanyahu called on his ministers to bring about changes that would increase competition, improve services, increase effectiveness and bring down the prices of goods and services. The goal was to allow Israelis to buy goods and services at prices comparable to those abroad, he said.

“The main reasons for the high price of living in Israel are the monopolies and cartels that prevent competition and prevent a lowering of prices to where they could be,” he said.

Netanyahu added that those who suffer the most from the high price of goods and services were those in the lower economic brackets, because the wealthy were “less sensitive to the prices of basic goods and services.”

Transportation Minister Israel Katz said the proposed reform would broaden the variety of cars on the market and lower prices.

“I am convinced that implementing the reform, whose purpose is to remove market failures and barriers to competition such as allowing small importers that bring in 20 cars or fewer annually to operate.

Currently there are only 15 vehicle importers that bring in 200,000 cars a year, half of them from Japan and South Korea. The reforms would increase the variety of vehicles allowed for import, including trucks and buses through parallel importers and taxi cabs and other commercial vehicles through personal importers.

Under the bill, leasing companies would be able to sell new cars more easily and non-importers such as garages and car lots would be permitted to sell new vehicles. Israel’s standards for spare part importation would be set according to international standards, stripping them of special requirements presently in place; and the approval process for importation would be shortened.

Spare parts suppliers would have to publicize the stock and prices of their parts in a public database.

Independent garages would be allowed to compete with those associated with importers during a car’s warranty period.

Finally, addressing the used car market, the reform would require greater disclosures for significant damage and allow buyers to appeal appraisals more easily.

The cabinet also approved on Sunday the establishment of a ministerial committee on the cost of living, cartelization and encouraging competitiveness in the economy, to be chaired by Economy and Trade Minister Naftali Bennett.

After his appointment Bennett said that the government was determined to “open up the Israeli market and lower prices.

There are those who say we are galloping too fast, but I say the opposite: We need to gallop even faster and look at the upcoming year as a year of opportunity, a year that will change the face of the country.”


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