Sri Lanka to assemble Volkswagen diesels for domestic market
Apr 11, 2016 09:58 AM GMT+0530 | 3 Comment(s)
ECONOMYNEXT - Sri Lanka's investment promotion agency said Senok Automobile (Pvt) Ltd, will be given land to build a plant that will assemble diesel Volkswagen cars for the domestic market for three years.
The agreement with the Board of Investment was signed by Chairman Upul Jayasuriya and Senok Automobiles President Noel Selvanayagam for a section 17 agreement.
The plant will assemble 1000 cc to 2000 cc engine capacity diesel vehicles including Sport Utility Vehicles (SUV), Multi Utility Vehicles (MUV) or commercial vehicles.
Volkswagen got into hot water over falsifying test results for diesel. Diesel is a dirtier fuel than petrol and has also found to be carcinogenic.
In Sri Lanka diesel is priced lower than petrol despite it being more expensive to import, due to interventionist bad economic policy.
The statement did not say how the cars would be taxed.
Sri Lanka has excise duty as well as import duty on cars and cars are an important source of state revenue.
The BOI statement said export were planned after three years.
Though it is a good policy in general to allow all export companies to sell domestically like in Vietnam, when the administration first announced the Volkswagen plant, it was supposed to be an export plant.
Even true export firms like apparel face barriers and additional taxes when selling in the domestic markets.