ECONOMYNEXT – Sri Lanka is proposing the re-export of used cars older than five years to ease congestion on already overcrowded roads, according to the latest budget unveiled by Finance minister Ravi Karunanayake.
The minister was offering a tax incentive for exporters who can ship a minimum of 20 cars at a price of $200,000 (at the rate of $10,000 each).
Exporters will be offered a 50 percent duty waiver on the import of a new vehicle costing (CIF) below $50,000.
"There are over six million vehicles in the country, of which a considerable number are very old, causing many environmental problems," the minister said.
"Therefore, I propose tax incentive on exporting vehicles that are more than five years old."
It is unclear how Sri Lanka can be competitive with Japan and Singapore, which offer used cars at rock bottom FOB prices.
A 2011 Toyota Axio costs less than $5,000 in Japan. A similar car in Sri Lanka will cost about Rs4.5 million, or about $30,000. The disparity underscores the unrealistic nature of the proposal, car dealers said. (COLOMBO, Nov 11, 2016)