• Only 60% of imported vehicles have arrived so far
• LC ceiling raised from $ 1.2 b to $ 1.8 b this year
• Customs reports 250,000 vehicles cleared to date
• Importers face 35% surcharge under new rules

The Government has permitted Letters of Credit (LCs) worth close to $ 1.8 billion to be opened during the year so far for the import of vehicles, according to the Deputy Minister of Trade, Commerce, and Food Security.

Speaking to The Sunday Morning Business, Deputy Minister of Trade, Commerce, and Food Security R.M. Jayawardana stated that despite the Government permitting the opening of LCs up to an extent of around $ 1.8 billion, only around $ 1.2 billion worth of vehicles had been imported so far.

“Only around $ 1.2 billion worth of vehicles have come to the country. From the amount of LCs opened, only around 60% of the vehicles have arrived thus far,” he stated.

Jayawardana added that the Government had initially allowed vehicle importers to open LCs up to a value of $ 1.2 billion. However, as the total value of LCs approached this threshold, the Government progressively increased the limit to around $ 1.8 billion. He noted that, at present, LCs had reached this revised limit as well.

Speaking to The Sunday Morning Business, Sri Lanka Customs Media Spokesman Chandana Punchihewa revealed that around 250,000 vehicles had been imported to the country but stated that he was unaware of the exact amount of LCs opened.

Commenting further on the recent regulations issued by the Ministry of Finance to address the issue of hundreds of vehicles held by Sri Lanka Customs due to being imported through cross-border LCs, he stated that it remained to be seen whether these measures would effectively resolve the ongoing dispute between Customs and the vehicle importers who utilised such LCs.

Punchihewa added: “In terms of the gazette, the vehicle importers can take the vehicle. But the issue is whether they are agreeable to it, because under the gazette, they have to make an additional payment if they are going to register the vehicle. Or else, they can take the vehicle from the port and keep it at home without registering until the issue is resolved. 

“If they are willing to make the additional payment, they will have to pay an additional 35%. This is akin to a penalty fee. It will be collected and paid to the Imports and Exports Control Department. If they are willing to do so, they can register the vehicle.

“However, if they are not willing to make the additional payment, they can give a bank guarantee for that amount and take the vehicle and keep it at home without registering it.”

The dispute with regard to cross-border LCs stems from Sri Lanka Customs’ sudden enforcement of a clause in the English version of the aforesaid 2013 gazette notification, which purportedly requires import documents to be stamped by a corresponding bank in the export country and not from a bank in a third country.

However, vehicle importers have argued that this interpretation contradicts the Sinhala version of the gazette, which refers more broadly to the ‘exporting agent’s bank’ without such a geographic restriction.