Motorcycle import ban greatly affects middle-class Sri Lankans: Opp. leader
ECONOMYNEXT – An ongoing import ban on motorcycles has affected a large number of middle-class Sri Lankans, Opposition Leader Sajith Premadasa said.
The ban has negatively affected rural and urban populations as well as state and private sector employees, Premadasa told parliament this morning.
The motorcycle is the transport mode of choice for a majority of Sri Lanka’s vehicle owners. According to statistics by the Department of Motor Traffic, ove 370,000 new motorcycles were registered in 2015 – over three times the number of new motor cars – accounting for 55% of total vehicle registrations that year.
With the arrival of the COVID-19 pandemic, Sri Lanka in May imposed sweeping import controls not seen since the 1970s in a bid to limit currency outflows. The ban extended to the import of vehicles, and, earlier this month, the government announced that the country will not import vehicles for a further year. This was notwithstanding requests by the Vehicle Importers Association of Sri Lanka (VIASL) for a detailed plan as to when the ban would be lifted.
Regarding the import of motorcycles, Premadasa told parliament today that there is no discernible obstacle to lifting the ban as soon as possible. When considering the period of import, he said, money flows out of the country six months after issuing the letter of credit.
“The motorcycle is the most popular vehicle used by middle-class families for their day-to-day activities. It is a vehicle used mostly by small and medium entrepreneurs for their business activities. Even state and private-sector employees use motorcycles to commute to and from their workplace,” Premadasa said.
During the COVID-19 lockdown, small businesses used motorcycles extensively and almost exclusively to deliver essential goods and services.
“It would not be inaccurate to say that it was the motorcycle that helped reinstate the rural and urban economies that had suffered a setback due to the pandemic,” he said.
The Samagi Jana Balavegaya (SJB) leader noted that the ban has also impacted motorcycle importers and trading companies, leaving workers at those businesses destitute as their employers are unable to pay their salaries.
“This could lead to a situation where thousands end up losing their livelihoods,” he said, adding that the government has lost a reasonable amount of tax income due to the ban while banks and financial institutions are also adversely affected.
Responding to Premadasa’s remarks, State Minister of Money & Capital Market and State Enterprise Reforms Ajith Nivard Cabraal defended the import control, arguing that in the face of the pandemic the government had to impose certain restrictions in order to avoid a collapse of the entire economy.
“It is no secret that every country in the world including Sri Lanka has been facing many economic issues due to COVID-19. Under such circumstances as a responsible government if we did not act to search for immediate solutions the entire economy could have collapsed due to the loss of import income, foreign remittances and payment of foreign debt which would affect the foreign exchange,” he said.
Therefore, said the minister, the government had to use different tactics to manage the economy, which led to a ban of not only motorcycles but all the other non-essential goods.
“We had two options either to avoid payment of debt or to temporarily suspend the import of motorcycles and other non-essential goods, So in order to save the reputation of the country, we decided not to avoid payment of debt but to go ahead with an import ban,” said Cabraal.
However, he said, the government will periodically loosen the restrictions in a way that will not exert pressure on foreign exchange rates at once, subject to strategies which will empower the local economy.
“We have to balance the economy, we have to balance the different competing interests. In that sense we have to make sure that certain temporary measures are taken to take the economy forward in a very clear manner,” he added. (Colombo/Sep24/2020)