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Govt. to review vehicle import restrictions by end-2021

24 Feb 2021

  • Vehicle importer industry says survival until end-2021 unimaginable 

  In response to a recent statement made by State Minister Ajith Nivaard Cabraal announcing that the ban on vehicle imports will be reviewed at the end of 2021, vehicle importers stated that the industry will not survive until then. During a recent press conference, Cabraal stated that the ban on vehicle imports is to remain, and the decision regarding this ban will be reviewed at the end of the year. Meanwhile, speaking to The Morning Business, Vehicle Importers Association President Sampath Merenchige stated that the Government should realise that it is mandatory to consult the relevant market leaders and discuss and provide solutions if an entire industry is suffering due to a particular parliamentary decision for a long period of time. “We have been out of stock for the past six months. We would be more than happy to work with the Government to provide solutions to this problem. We have even prepared an effective proposal for this matter. In the future, the economy can benefit from the decisions made by collaboration between market leaders and the Government,” Merenchige commented. The Vehicle Importers Association highlighted that all attempts to voice the challenges in the industry were futile. Furthermore, the discouragement of the market leaders were also expressed at the official request, where the associations’ pleas to the Government to provide a solution to this issue were reportedly not addressed by the officials. “The Government has to regulate trade in this country, as some local businesses now run a monopoly against importers. We understand what the Government is going through. However, our voices need to be heard regarding this matter. Just because there is a problem regarding the foreign reserves does not mean the Government is unable to provide other solutions to support this industry,” Merenchige stated. In addition to this, the President of the association said that assembling vehicles is not the only solution to the demand in the country, but a part of the solution. The Vehicle Importers Association also urged the Government to find different mechanisms where an entire industry does not have to suffer. “Thus, we request the Government to consult the market leaders, not only for the vehicle import industry, but other trades as well, when making decisions so that we can suggest solutions and come to an agreement where both parties are satisfied with the impact of the final decision,” Merenchige declared. Merenchige further added that the vehicle importing industry is one of the biggest sources of tax revenue in the country along with noting how it is pivotal for the Government to regulate trade in this country. “The Government needs to understand that 70% of the economy is led by the private sector. In this, companies have made monopolies to gain profit. Now, businesses have faced losses for so long. Regarding the tax and income tax structure, the Government has lost tax revenue as well.” The Vehicle Importers Association continued to state that another contributing factor to their discouragement includes the fact that Government workers are reluctant to work to the potential they were at prior to the pandemic. In addition to this, Merenchige highlighted that businesses in this industry are going through difficult challenges that are almost impossible to overcome. Thus, in similar instances, businesses and employees get into debt to pay for expenses and overheads. As it is unclear when this ban will be relaxed, firms and employees will likely not be able to pay these loans back. The association also suggested that the Central Bank works on creating solutions to these problems that are going to emerge. Furthermore, Merenchige revealed that the Vehicle Importers Association is supportive of the local manufacturing industry. However, it was also revealed that the majority of the local manufactured vehicles are inferior. “We are also happy to boost local manufacturing, but it has to be done genuinely. What is happening now is that completely manufactured vehicles are disassembled and brought down. These parts are reassembled here and sold as locally manufactured vehicles. There is an extra cost involved in the disassembling of the imported vehicle parts as well,” Merenchige commented. “If this is the case, rather than small-time manufacturers doing this, the Government should encourage a large-scale business to import vehicle parts to Sri Lanka and officially assemble it into vehicles to cater to the local demand and exports. Also, if Sri Lanka plans to locally manufacture vehicles entirely, only certain vehicles can be manufactured. High-end branded cars that consumers use require advanced technology that Sri Lanka does not currently have,” he added. The Vehicle Importers Association also mentioned that the local manufacturing sector is not advanced or large enough to manufacture high-quality vehicles. It was also suggested that to get to that level of international manufacturing standards, local manufacturers should start with vehicles such as lorries, trucks, and three-wheelers. It was also revealed that the association has prepared a proposal to locally manufacture four-wheeled electric cars similar to a Nano car, as a substitute for three-wheelers, as taxi drivers can save a lot of money on fuel if this proposal is taken into consideration. The Government implemented the ban on importing vehicles in March 2020. This ban was aimed at protecting the country’s economy and foreign reserves as the Sri Lankan rupee depreciated and the economy faced a series of challenges influenced by the Covid-19 pandemic in addition to the 2019 Easter Sunday attacks. The Government also extended the ban to all non-essential imports including vehicles in November 2020.


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