Sri Lanka import ban pushes motor traders out of business
View(s):Vehicle importers say import restrictions have put several vehicle traders out of business, forcing them to urge the government to consider their revival plan.
They made this appeal at a media conference held in Colombo recently pointing out that most of them are presently facing severe difficulties maintaining their business premises and paying off bank loans, rent and the salaries of their employees.
An import ban on vehicle imports to save much needed foreign exchange will drastically drop tax revenue this year with motor traders facing a threat of bankruptcy, a business analyst said.
Revenue generation from Excise duty on the importation of motor vehicles has declined to less than Rs. 50 billion last year Provisional data revealed that it was notably down by Rs. 43.1 billion in the first eight months of 2020, compared to Rs.81.5 billion recorded in the same period of 2019.
This restrained performance was mainly due to the sharp decline in motor vehicle imports in the first eight months of 2020 due to the restriction imposed on the importation of motor vehicles effective from March 2020.
In addition, an upward revision of Excise duty on motor vehicles in line with the budget 2019 has a negative impact on the importation of motor vehicles, he added.
New car imports and registrations plunged to significant lows amid import controls, official data showed.
Total vehicle registrations recorded 3,256 units in January down from 4,478 units the previous month and 34,475 units 12 months ago, an analysis of Vehicle Registrations issued by JB Securities revealed.
In the brand-new car segment of the 40 units registered in January, 27 units were Zotye – Z100, down from 48 units the previous month. This vehicle is assembled by Unimo, a subsidiary of United Motors.
In the SUV/crossover segment, of the 114 brand new units registered in January, Mahindra KUV 100 accounted for 61 units down from 72 units the previous month. This vehicle is assembled by Ideal Motors. DFSK accounted for 14 units in January down from 55 units in Dec, a vehicle assembled by Unimo, JB Securities disclosed.
Meanwhile the Vehicle Importers Association of Sri Lanka (VIASL) says they will be forced to close down their business and make all their employees redundant.
VIASL calculates that around 100,000 direct and indirect employees will have to be made redundant, while also placing the 350,000-400,000 dependants of these employees in dire straits.
The association is ready to put forward a reasonable survival plan that would enable them to meet their financial commitments.
VIASL in a media release noted that they are making a public request to the government for the first time as veterans in this industry with years of knowledge and experience, to present the various proposals they have prepared that would allow importers to survive while controlling the outflow of foreign currency. (BS)