Financial Times

Reconditioned vehicles which require an ‘export inspection certificate’ from August 1 are expected to rise by at least Rs 200,000 but on the other hand the new rule would stop ‘junk’ imports, government and industry officials said.

Berty Widanagamage, Managing Director of Tokyo Express (Pvt) Ltd an importer of reconditioned vehicles, said the regulations would increase the price of vehicles because the certification and inspection is done at the exporting country-end.

"In my opinion, it is of no use. This is an obsolete thing. Much more developed countries don't require these things (such regulation)," Widanagamage, past president of the Reconditioned Vehicle Importers Owners Association told The Sunday Times FT adding that laws should not be brought in because of the ‘improper actions’ of a few.

But new car importers are supportive. Ranjan de Silva, Chairman of the Motors Traders Association, believes the new regulations have improved the standards of reconditioned vehicles. "We think it is a good idea because now, there is some standard that is being required by the government and it prevents junk from coming in," De Silva said, observing that there might be a marginal increase in the price of vehicles but overall, the quality and standards will be much improved.

The Ministry of Trade, Commerce, Consumer Affairs and Marketing Development recently issued a gazette notification saying export inspection certificates would be compulsory for the import of reconditioned automobiles with effect from August 1. The Imports and Exports (Control) Regulation No. 01 of 2006, says that "all used motor vehicles falling under H. S. codes 87.02, 87.03, 87.04 and 87.05 being imported to Sri Lanka shall be subjected to a pre-shipment inspection and shall have a certificate of export inspection issued by the relevant authorized inspectors appointed by the Secretary to the Ministry of Finance."

Motor Traffic Commissioner B. Wijayaratne said the new rules aim to curtail imports of automobiles entering the country with falsified certificates of registration pertaining to the date of initial registration, fuel type, engine capacity and vehicle class. “This is a positive step taken by the Minister as forgeries and falsified documents were being produced for registration of vehicles," he said. "These individuals pay less custom duty by producing fraudulent documents which indicate they have paid the stipulated custom duty. The issue was initially brought up by the Auditor General which instigated the new regulations."

Wijayaratne also added that the Department of Motor Vehicles has developed a software program linking its computer system with that of the Sri Lanka Customs Department, facilitating the sharing of information in its database. The new regulations are of particular importance to the Department of Motor Vehicles because it will enable them to verify the specifics of vehicles not only from the Customs Department but from the country of export. Wijayaratne believes there have been no irregularities in the number of vehicles entering the country due to the regulations coming into effect and that the current annual growth rate of 2% should continue.

Widanagamage said if Customs “did their job properly, all this junk will not come into the country. Why are we depending on the Japanese to do all these jobs?"

He said according to the new requirements, cars have to be fitted with new air cleaners, oil filters, batteries, etc… by the Japanese exporter. “Scrape marks, dimples, and dents of a certain size also have to be taken care of by the Japanese exporter. There are also other requirements pertaining to cars such as the chassis having to be painted black. These costs have to be borne by the Sri Lankan importers and amount to roughly Rs.200,000 per car. This is why foreign exchange is leaving the country,” he said adding that around 200,000 reconditioned vehicles are imported a month.

“The work of the Japanese is not to our standard. If it is not satisfactory and does not meet our standards once the vehicle arrives in Sri Lanka, then we must do the repairs here again and the costs are again borne by us,” he said adding that several importers are protesting against the move. (NG)