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Luxury vehicle import plan for “fieldwork” suspended – not cancelled
The decision to buy a large number of tax-free SUVs using money from the Treasury was “held back or postponed” at the suggestion of Prime Minister Mahinda Rajapaksa to the Cabinet, Media and Information Minister Keheliya Rambukwella said.
“The subject initially came up when there was no COVID-19. It was decided to bring down vehicles instead of issuing permits which are usually sold. They were to be for various government institutions to be used as official vehicles and also maybe to give vehicles on permit to opposition members,” he said.
“But when covid cases escalated, the PM said we should not mix our priorities, that we should look at holding it back or postponing,” he pointed out, adding that the original proposal to import these vehicles came “a long time ago”.
However, documents seen by the Sunday Times show that the relevant Cabinet paper titled “Purchase of Vehicles for Fieldwork” was presented by Premier Rajapaksa in his capacity as Finance Minister as recently as May 18. The Cabinet decided to put off the proposal on May 24. The pandemic has raged since March last year and was in a heightened state during the time the SUVs were being sought.
Additionally, letters of credit for “227 units brand new Toyota Land Cruiser Prados” were opened on April 22 by the Bank of Ceylon, more than a month before the Cabinet paper was presented and well before the proposal was deferred. This newspaper did not see the LCs for other categories of vehicles.
These facts were also questioned by Janatha Vimukthi Peramuna Leader Anura Kumara Dissanayake, at a news conference this week. He asked: How were LCs opened before Cabinet approval was granted?
The answer is in the Cabinet paper presented by the Premier, where he asks for approval to be backdated–calling it “awarana anumethiya” or “covering permission”–to encompass all steps taken thus far in the acquisition of these vehicles. He also requests sanction to empower the Treasury Secretary to waive the taxes on these vehicles.
Minister Rambukwella alluded to this in a talk show this week when he said it might not be possible to unilaterally cancel the LCs. He appeared to know that LCs had already been opened. None of this was officially revealed to the public.
Treasury officials now say the order will not go through, although the Government will still bring the ambulances and tractors. “For the contract to be honoured, goods have to be supplied and documents must be pressed to the bank to make the payment,” a banking source said, requesting anonymity. “If they don’t import the vehicles, there is no transaction and the papers will not be submitted.”
He added that the
Sri Lanka Government of was one of Toyota’s biggest customers and the company was unlikely to compromise the relationship.
There has been widespread concern that the administration even attempted to spend billions of rupees on buying hundreds of vehicles at a time of austerity brought on by COVID-19. Wide-ranging import controls are still in operation, ostensibly to save foreign currency and ease pressure on the rupee.
The Cabinet paper states that a large number of State institutions are in need of vehicles but cannot find them locally owing to the suspension of vehicle imports. The Speaker of Parliament, too, has requested President Gotabaya Rajapaksa for vehicles for MPs to do their field work and the Government was considering providing these to them on payment basis.
There was a requirement for 50 ambulances, 50 bowsers and 50 double-cabs. It was necessary to import vehicles also for new MPs for their fieldwork as the duty-free permits scheme was now suspended.
The Government intended to continue curbs of vehicle imports to preserve financial stability, the Cabinet paper continues. Therefore, Premier Rajapaksa said he had given instructions to Treasury officials to take necessary steps in view of the need to speedily import “a limited number of identified vehicles”.
The Cabinet paper says that if LCs are opened, the supplier provides 180 days of credit for 85 percent of the LC value. This, it maintains, will allow for the import of vehicles with comparatively less impact on the exchange rate rather than if an upfront payment was made.
It is proposed, also, that, once the vehicles arrive, they are leased from the Bank of Ceylon–the relevant financial institution–which typically charges an interest rate of 7.5 percent from the Government.
Bank of Ceylon Chairman Kanchana Ratwatte refused to comment.