Sri Lanka auto garages lobby regulations for domestic protection

ECONOMYNEXT – Sri Lanka should bring regulations to control the fixing of cars with spares and body parts by dealers instead of repairing and repainting, which results in job losses to service workers, an industry official has said.

“Car dealers doesn’t provide the tinkering or other repair services because even for a small repair what they do is replacing the parts,” Sri Lanka Automobile Services Providers Association President, Amal Piyatilake said at group’s annual general meeting.

“The tinkering craft is no longer there in foreign countries. That is why they sell their vehicles if they get damaged after using it for several years. It is much cheaper than repairing it.”

“This has affected the livelihood of the laborers that are working in this industry.

“Sri Lanka is still a developing country and we still need this craft, there are still people who are depending on it.”

Piyatilake claimed that parts imports were depreciating the rupee.

However economists and analysts have called for central bank reforms to stop rapid depreciation which began in 1951 with the setting up of a so-called soft-peg where the exchange rate and interest rate is simultaneously targeted.

Changing World

In the last two decades, small garages started to fix cars using second hand parts brought from Japan, instead of using brand new parts saving time but reducing the time spent on repairing individual parts by mechanics.

In Sri Lanka especially during import controls of the 1970s, it was the practice to turn out parts at lathe machines which take time, leaving cars idle at garages for long periods.

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A car owner whose bumper had been damaged in a mishap with a three wheeler said he had no problems with parts being replaced instead of repainted.

“The insurance company was willing to pay for it,” he said. “It looks completely new, so I have no problem with it.

Auto repairers say they are losing business to the main agents and wants regulations to maintain their position.

Another official said from the total accident cases of private vehicles, 80 to 88 percent come to the individual garages and workshops but from the total insurance claim value 60 percent will be acquired by the car agents in Sri Lanka.

Regulations to save tinkers

Meanwhile Piyatilake said the SLASPA will discuss with the state Motor Traffic Department to bring new regulations.

“There are 17 different industries related to the automobile services. We are planning to get every sector under one regulated industry,” he said.

Sri Lanka Motor Traffic Department, Assistant Commissioner, J.A.S. Jayaweera said the regulating of the industry will be done in the near future as soon as the new laws pass.

“There was no regulation for this industry from 1951,” Jayaweera said. “There for we decided to do that now. The rules and regulations were too narrow to do that earlier.”

Many people are leaving the mechanic and tinker business. Jayaweera blamed this on lack of regulations.

“Because there is no job recognition in the industry,” he claimed. “To get that recognition we should regulate under someone.”

Jayaweera said within the next two month the industry will be regulated under the Motor Traffic Department.

It is not known whether an opinion survey had been done to find why people are leaving the industry, whether it is due to lack of regulation or there are also other reasons, which cannot be solved by regulations.

In Sri Lanka many sectors including construction and factories are finding it hard to find workers, with young people no longer wanting to engage in blue collar jobs, either due to pay, working conditions, or different aspirations.

It is not clear whether regulations will change the outlook of job seekers.

Regulatory Capture

It is also not clear whether the regulations, lobbied for by a section of the regulated will benefit the consumer or whether it will simply benefit a section of the auto industry by reducing competition.

Due to lack of a permanent and independent public service, many agencies in Sri Lanka have been subject to regulatory capture – serving special interests – and had ended up backfiring on consumers, critics have said.

Similar situations have occurred in other countries, requiring de-regulation to promote change, innovation, lower costs, and efficiency.

“The regulatory capture means that the regulations imposed by governments for the benefit of the public are being captured by those who are to be regulated or by others who stand to gain out of regulatory mechanisms,” economist W A Wijewardene explains.

“Since the regulations now serve not the public but those who are supposed to be regulated, the whole regulatory mechanism has been captured by them and that process is termed regulatory capture.

“Hence, by allowing these groups to run an economy, societies lose on two counts. Count number one is that the objectives of the regulatory mechanism are not realized and they simply become a waste of public funds.

“Count number two is the more stressful development: It says that the regulatory mechanisms, however much they are well-intentioned, create a class of people who prey as predators on the honest work of the members of the society.

“This class consists of politicians who are paid for by groups intending to capture the regulators, people on the regulatory agencies themselves and businesses and people who capture the regulators. (Colombo/ Mar01/2020)

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