By Madhusha Thavapalakumar
Amidst stringent restrictions on vehicle imports and the absence of relief measures for the industry from the Government, over 25% of the vehicle dealerships have gone out of business and closed down their showrooms permanently, the Vehicle Importers Association Lanka (VIAL) told The Sunday Morning Business.
VIAL President Indika Sampath Merenchige stated that this number is expected to increase over the coming months when existing stocks at vehicle sales get sold out.
“Only about 20 dealers out of over 500 vehicle dealers who are with our association are established ones with decades of presence in the field. Others have loans to settle but the authorities have assumed that all these dealers are established like the leading 20 dealers,” Merenchige added.
Speaking further, he expressed his dissatisfaction over the way the vehicle industry is being treated by the Government despite the colossal sum of tax revenue the Government made through vehicle imports.
Debt moratoriums and financial relief packages that were announced following the Easter Sunday incident last year were not made available to the vehicle industry even though the industry has been facing a financially tough period since late 2018.
Exacerbating the industry’s misery, the Government restricted imports following the local spread of Covid-19 in mid-March this year to avoid a possible foreign exchange crisis amidst a crippled global and national economy.
Even though the initial ban on vehicle imports were imposed only as a short-term measure, the Government later on announced that vehicle imports would be restricted for another two years. They also ruled out a possible vehicle shortage by stating that the country has enough vehicles in stock for the next two years.
Merenchige stated that his industry understands the concerns of the Government over foreign exchange loss and added that the Government should have at least introduced a stable long-term policy which would convert their now virtually redundant industry into an export-oriented one.
Merenchige noted that local vehicle importers have strong ties with international vehicle dealers and auto part manufacturers which could be leveraged to establish export businesses in Sri Lanka.
“These export businesses could include vehicle components and spare part manufacturing. We could even discuss with global companies and commission their plants here in Sri Lanka. If our Government implements long-term policies to do so, we will invest in these businesses,” Merenchige noted.
He added that such a policy would immensely help about 50,000 workers who are directly and indirectly employed by the industry as they would be shifted into these new businesses.
On a further note, he stated that after bringing in stability to foreign reserves after tourism reopens, the Government must consider providing vehicle importers a certain quota of vehicle imports per annum as a compromise. He believes this would help prevent all importers being driven out of business while not completely draining the Government’s valuable foreign exchange coffers.
In 2019, Sri Lanka spent about $ 815.7 million on vehicle imports, compared to $ 1.5 billion the previous year.Import restrictions: 1/4 of car sales shut down
06 Sep 2020
Import restrictions: 1/4 of car sales shut down
06 Sep 2020
By Madhusha Thavapalakumar
Amidst stringent restrictions on vehicle imports and the absence of relief measures for the industry from the Government, over 25% of the vehicle dealerships have gone out of business and closed down their showrooms permanently, the Vehicle Importers Association Lanka (VIAL) told The Sunday Morning Business.
VIAL President Indika Sampath Merenchige stated that this number is expected to increase over the coming months when existing stocks at vehicle sales get sold out.
“Only about 20 dealers out of over 500 vehicle dealers who are with our association are established ones with decades of presence in the field. Others have loans to settle but the authorities have assumed that all these dealers are established like the leading 20 dealers,” Merenchige added.
Speaking further, he expressed his dissatisfaction over the way the vehicle industry is being treated by the Government despite the colossal sum of tax revenue the Government made through vehicle imports.
Debt moratoriums and financial relief packages that were announced following the Easter Sunday incident last year were not made available to the vehicle industry even though the industry has been facing a financially tough period since late 2018.
Exacerbating the industry’s misery, the Government restricted imports following the local spread of Covid-19 in mid-March this year to avoid a possible foreign exchange crisis amidst a crippled global and national economy.
Even though the initial ban on vehicle imports were imposed only as a short-term measure, the Government later on announced that vehicle imports would be restricted for another two years. They also ruled out a possible vehicle shortage by stating that the country has enough vehicles in stock for the next two years.
Merenchige stated that his industry understands the concerns of the Government over foreign exchange loss and added that the Government should have at least introduced a stable long-term policy which would convert their now virtually redundant industry into an export-oriented one.
Merenchige noted that local vehicle importers have strong ties with international vehicle dealers and auto part manufacturers which could be leveraged to establish export businesses in Sri Lanka.
“These export businesses could include vehicle components and spare part manufacturing. We could even discuss with global companies and commission their plants here in Sri Lanka. If our Government implements long-term policies to do so, we will invest in these businesses,” Merenchige noted.
He added that such a policy would immensely help about 50,000 workers who are directly and indirectly employed by the industry as they would be shifted into these new businesses.
On a further note, he stated that after bringing in stability to foreign reserves after tourism reopens, the Government must consider providing vehicle importers a certain quota of vehicle imports per annum as a compromise. He believes this would help prevent all importers being driven out of business while not completely draining the Government’s valuable foreign exchange coffers.
In 2019, Sri Lanka spent about $ 815.7 million on vehicle imports, compared to $ 1.5 billion the previous year.Kapruka
Discover Kapruka, the leading online shopping platform in Sri Lanka, where you can conveniently send Gifts and Flowers to your loved ones for any event. Explore a wide range of popular Shopping Categories on Kapruka, including Toys, Groceries, Electronics, Birthday Cakes, Fruits, Chocolates, Automobile, Mother and Baby Products, Clothing, and Fashion. Additionally, Kapruka offers unique online services like Money Remittance, Astrology, Medicine Delivery, and access to over 700 Top Brands. Also If you’re interested in selling with Kapruka, Partner Central by Kapruka is the best solution to start with. Moreover, through Kapruka Global Shop, you can also enjoy the convenience of purchasing products from renowned platforms like Amazon and eBay and have them delivered to Sri Lanka.Send love straight to their heart this Valentine's with our thoughtful gifts!
Discover Kapruka, the leading online shopping platform in Sri Lanka, where you can conveniently send Gifts and Flowers to your loved ones for any event. Explore a wide range of popular Shopping Categories on Kapruka, including Toys, Groceries, Electronics, Birthday Cakes, Fruits, Chocolates, Automobile, Mother and Baby Products, Clothing, and Fashion. Additionally, Kapruka offers unique online services like Money Remittance, Astrology, Medicine Delivery, and access to over 700 Top Brands. Also If you’re interested in selling with Kapruka, Partner Central by Kapruka is the best solution to start with. Moreover, through Kapruka Global Shop, you can also enjoy the convenience of purchasing products from renowned platforms like Amazon and eBay and have them delivered to Sri Lanka.Send love straight to their heart this Valentine's with our thoughtful gifts!