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Saturday April 20th, 2024

Sri Lanka vehicle import ban threatens 100,000 jobs, tax revenues: industry group

ECONOMYNEXT – A vehicle import ban in Sri Lanka is threatening 100,000 jobs and 350,000 dependants as well as a number of industries and services which need mobility and transport, a motor vehicle industry association has said.

The import ban is also losing the government revenue which is being raked in by assemblers through tax-arbitrage, the Vehicle Importers Association of Sri Lanka said.

“As per the calculation carried out by VIASL, around 100,000 direct and indirect employees will have to be made redundant if the ban is to continue further,” the VIASL said.

“This would mean around 350,000-400,000 dependents of these employees would be facing severe financial difficulties threatening survival.”

“Vehicle importers provide various employment opportunities ranging from accountants, sales executives, marketing executives, drivers, cleaners (and) security staff.

“Furthermore, service areas such as clearing agents, interior cleaners, mechanics, car carrier operators and service centers are directly dependent on importation of motor vehicles.”

Vehicles are a top source of revenue for the government.

Other than vehicles imported for politicians and state workers, tax revenues from vehicle imports are about three times the dollars spent as taxes are sometime around 270 percent or more.

However due to lack of knowledge of classical economics and wide beliefs in Mercantilism Sri Lanka’s policy makers blame imports rather than liquidity injections for currency troubles, and external trade is restricted.

Vehicles are a favourite target of Mercantilsit bureaucrats which ultimately worsen the budget deficit and delays a recovery, critics say.

Mercantilists in the last administration also controlled vehicles and gold imports.

Most of Sri Lanka’s economic troubles comes from a Latin America style soft-pegged central bank built in 1950. The peg has worsened after call money rate targeting was brought in taking away the limited protection offered to the exchange rate from a policy rate corridor.

Most the central banks created by the Latin America unit of the Federal Reserve or advised by Raul Prebisch the creator of Argentina, or Robert Triffin, a follower has ended up with import substitution, dollarization, re-denomination, sovereign default or a combination of the crises, critics have said.

The association said domestic vehicle assembly has quality issues as well as a loss of tax revenues.

“VIASL strongly believes that this process does not add any value to the country’seconomy and is merely designed for tax evasion and higher profit,” the grouping said.

“Evidently the government is not getting the due tax income while the foreign currency
outflow might even be greater.

“The ultimate victim in this process is the general public who is deprived of a higher quality
vehicle as they are forced to purchase a low quality Chinese or Indian product at an inflated
price.”

Comments (15)

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  1. Arjuna Dassanayake says:

    Oh another set of crybabies

  2. Muhammad Ramzi says:

    In economic perspective there are cons and pros over importation of vehicles vs outflow of Currency, but restriction of import vehicles doesn’t create much more economic value as those are consumable goods but we loss tax can be compensated by import of more capital goods generate more about industry which create employment and lower cost goods and services , we can make assembly line of vehicles here and can export generate more revenue and FOREX earning make BOP strength, decline inflation, specially can purchase garment raw material and stitch and export instead of import of vehicle where can control cost too.
    In a short run we may face some financial losses and redundant employment but in the long run we may have positive economic impact would be greater, So, importation of vehicles is good decisions and future opportunities e have to manufacture or at least assembly the vehicle is must be our priority

  3. wimal ellepola says:

    YES, It may be true about the jobs. What about the foreign exchange drain, the pollution and the traffic congestion. the government need work on improving public transport, roads an set up industries that earn foreign exchange and also provide jobs, with the private sector. Import and sales only drain foreign exchange where, I believe , only few importers are massively benefitted.

  4. u rajapakse says:

    hard earned foreign currency by our overseas workers wasted on non commercial vehicles.It will be interesting to find how many of these so called employees pay EPF and how many pay income tax.

  5. Jayantha Ranatunga says:

    What a silly argument. To earn few Rs as import duty, are we to spend our meager foreign currency to import cars? The loss of jobs are in the non productive sector of sales and marketing.

  6. Sambo says:

    Just cause some may lose jobs @ the government looze tax revenues one cannot import vehicles. There has to be a limit according to the size of the country and road facilities. Already most areas are congested with traffic and the average speed 9 KMPH. Best keep this ban for a few more years. Vehicles are not the priority of the day.

  7. Bren Sosa says:

    Our roads are too narrow. Vehicles in the main towns crawl bumper to bumper. What we require is a very good public transpot system with an effective shuttle service from the station or stand to the city centrr.

  8. Anoj Tennakoon says:

    We should not import vehicles and also we have enough of vehicles in our sales

  9. Nalintha Chandrasekera says:

    we have enough of vehicles here in Sri Lanka and also why should we pay more money to Japan and we become poorer and poorer

  10. Don Abeywickrama says:

    Dear freinds how many people imported the cars and how many owners of the car sales … just take eg sample government allows imported and prefabrication so it’s matter of new or reconditioned vehicles are not allowed so when starting resemble these vehicles there will be same job opportunities so only few people only loosing the business day today drivers and cleaning and life will be rolled it’s good decision has took by the government

  11. Tony says:

    I think the govt is right in temporarily halting imports of vehicles. The businessman are only looking for their angle.
    There are too many vehicle running on the roads causing enormous pollution and traffic jams.
    Restricting non-essential imports seems ok considering the foreign currency reserves that are swindling causing the depreciation of the rupee.
    The govt should also set an example by stopping imports of luxury vehicles for govt MP’s and ministers.

  12. Given up says:

    There is widespread economic ignorance here. That is why they controlled imports in the 1970s.

    The false beliefs are among policy-makers as well as the general public. Importers are demonized. Car owners demonize people who try to get a car or a three wheeler and say what is in the country is enough.

    This country will not get anywhere. Vehicle importers are railing against a blank wall of economic ignorance.

  13. Bandula Alwis says:

    Stop importing vehicles at least for 10 years thus giving a boost to locally assemble vehicle manufacturers. If we took this decision 5 or 10 years ago we could have saved billions of foreign exchange and use that hard-earned money to more meaningful projects and generate more employment opportunities to our youth. Importing vehicles didn’t do any good to the country except to few people. Back in the 70s, we used to have assembled Mazdas, fiats and Mitsubishi colts successfully in our country. If we continued like that up to now we may have had a thriving auto industry by now.

  14. Kanishka says:

    Didn’t you see the 2nd hand market prices ??? How middle class people buy a vehicle even saving money for years to buy the dream vehicle

  15. Unknown says:

    But the no point of doing this without take action to facilitate the reassembling opportunities in the country. That is why policies in 1970 were failed.

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Comments (15)

Cancel reply

Your email address will not be published. Required fields are marked *

  1. Arjuna Dassanayake says:

    Oh another set of crybabies

  2. Muhammad Ramzi says:

    In economic perspective there are cons and pros over importation of vehicles vs outflow of Currency, but restriction of import vehicles doesn’t create much more economic value as those are consumable goods but we loss tax can be compensated by import of more capital goods generate more about industry which create employment and lower cost goods and services , we can make assembly line of vehicles here and can export generate more revenue and FOREX earning make BOP strength, decline inflation, specially can purchase garment raw material and stitch and export instead of import of vehicle where can control cost too.
    In a short run we may face some financial losses and redundant employment but in the long run we may have positive economic impact would be greater, So, importation of vehicles is good decisions and future opportunities e have to manufacture or at least assembly the vehicle is must be our priority

  3. wimal ellepola says:

    YES, It may be true about the jobs. What about the foreign exchange drain, the pollution and the traffic congestion. the government need work on improving public transport, roads an set up industries that earn foreign exchange and also provide jobs, with the private sector. Import and sales only drain foreign exchange where, I believe , only few importers are massively benefitted.

  4. u rajapakse says:

    hard earned foreign currency by our overseas workers wasted on non commercial vehicles.It will be interesting to find how many of these so called employees pay EPF and how many pay income tax.

  5. Jayantha Ranatunga says:

    What a silly argument. To earn few Rs as import duty, are we to spend our meager foreign currency to import cars? The loss of jobs are in the non productive sector of sales and marketing.

  6. Sambo says:

    Just cause some may lose jobs @ the government looze tax revenues one cannot import vehicles. There has to be a limit according to the size of the country and road facilities. Already most areas are congested with traffic and the average speed 9 KMPH. Best keep this ban for a few more years. Vehicles are not the priority of the day.

  7. Bren Sosa says:

    Our roads are too narrow. Vehicles in the main towns crawl bumper to bumper. What we require is a very good public transpot system with an effective shuttle service from the station or stand to the city centrr.

  8. Anoj Tennakoon says:

    We should not import vehicles and also we have enough of vehicles in our sales

  9. Nalintha Chandrasekera says:

    we have enough of vehicles here in Sri Lanka and also why should we pay more money to Japan and we become poorer and poorer

  10. Don Abeywickrama says:

    Dear freinds how many people imported the cars and how many owners of the car sales … just take eg sample government allows imported and prefabrication so it’s matter of new or reconditioned vehicles are not allowed so when starting resemble these vehicles there will be same job opportunities so only few people only loosing the business day today drivers and cleaning and life will be rolled it’s good decision has took by the government

  11. Tony says:

    I think the govt is right in temporarily halting imports of vehicles. The businessman are only looking for their angle.
    There are too many vehicle running on the roads causing enormous pollution and traffic jams.
    Restricting non-essential imports seems ok considering the foreign currency reserves that are swindling causing the depreciation of the rupee.
    The govt should also set an example by stopping imports of luxury vehicles for govt MP’s and ministers.

  12. Given up says:

    There is widespread economic ignorance here. That is why they controlled imports in the 1970s.

    The false beliefs are among policy-makers as well as the general public. Importers are demonized. Car owners demonize people who try to get a car or a three wheeler and say what is in the country is enough.

    This country will not get anywhere. Vehicle importers are railing against a blank wall of economic ignorance.

  13. Bandula Alwis says:

    Stop importing vehicles at least for 10 years thus giving a boost to locally assemble vehicle manufacturers. If we took this decision 5 or 10 years ago we could have saved billions of foreign exchange and use that hard-earned money to more meaningful projects and generate more employment opportunities to our youth. Importing vehicles didn’t do any good to the country except to few people. Back in the 70s, we used to have assembled Mazdas, fiats and Mitsubishi colts successfully in our country. If we continued like that up to now we may have had a thriving auto industry by now.

  14. Kanishka says:

    Didn’t you see the 2nd hand market prices ??? How middle class people buy a vehicle even saving money for years to buy the dream vehicle

  15. Unknown says:

    But the no point of doing this without take action to facilitate the reassembling opportunities in the country. That is why policies in 1970 were failed.

Sri Lanka discussing giving extra land, water for Chinese oil refinery

ECONOMYNEXT – Sri Lanka is in discussions with China’s Sinopec to give extra land and assure water supplies after the company decided to expand the capacity of a planned oil refinery in Hambantota, Energy Minister Kanchana Wijesekera said.

“There are concerns on how the water supply is going to be provided for the refinery,” Minister Wijesekera told reporters Friday.

The refinery will need more land and also revise conditions in a Board of Investment agreement, he said.

Read more
Sinopec to double capacity of new refinery in Sri Lanka’s Hambantota

Recommendations and decisions from Sri Lanka’s side had already been sent and Sinopec is expected to revert back in May.

“We are hoping to sign the agreement once everyone has agreed,” Wijesekara said.

The principle agreements are expected to be signed by June, he said.

The refinery could sell up to 10 percent of its output in the domestic market.

“There is no commitment by the government to purchase anything,” Minister Wijesekera said. (Colombo/Apr19/2024)

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Sri Lanka rupee closes weaker at 302.00/50 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 302.00/50 to the US dollar in the spot forex market on Friday, down from 301.50/302.00 a day earlier, dealers said.

There was increased demand for dollars after the central bank bought 715 million dollars from forex markets. In the previous two months it was buying on average about 200 million US dollars, leaving market participants and bank in a ‘oversold’ position.

There were some official dollars sales Friday dealers said.

READ Sri Lanka rupee quoted wide to US dollar as peg inconsistencies flare up

Bond yields were broadly steady.

A bond maturing on 15.12.2026 closed at 11.30/40 percent down from 11.35/40 percent.

A bond maturing on 15.09.2027 closed at 11.95/12.05 percent up from 11.90/12.05 percent.

A bond maturing on 15.12.2028 closed stable at 12.15/25 percent.

A bond maturing on 15.09.2029 closed stable at 12.30/40 percent.

A bond maturing on 01.10.2032 closed stable at 12.40/50 percent. (Colombo/Apr19/2024)

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Sri Lanka stocks close down, banks trade down

ECONOMYNEXT – The Colombo Stock Exchange closed down on Friday, data on its site showed.

The broader All Share Index closed down 0.38 percent, or 44.80 points, at 11,753; while the S&P SL20 Index closed down 0.53 percent, or 18.46 points, at 3,456.

Turnover was at 1.4 billion. The diversified financials (Rs366mn) and banks (Rs266mn) sectors continued to see selling pressure.

“This was possibly due to uncertainty around the bond discussions,” market participants said.

With the exception of Sampath Bank Plc (up at 77.50) all other banks traded down in the day. Commercial Bank of Ceylon Plc was down at 104.50, Hatton National Bank Plc was down at 188.50, and DFCC Bank Plc was down at 77.00.

LOLC Finance Plc saw the most trades and closed up at 6.40. Another LOLC company, Browns Investments Plc, also saw high traded volumes and closed up at 5.60.

Softlogic Capital Plc was up at 7.00, and Softlogic Holdings Plc was up at 11.20. A trading suspension imposed on SHL.N0000 was lifted effective today as the company submitted the annual report for the year ended 31st March 2023.

However, shares of the Company will remain in the Watch List “due to Qualified Audit Opinion and Emphasis of matter on going concern in the Independent Auditor’s Report in the Audited Financial Statements for the year ended 31st March 2022.”

Dialog Axiata Plc, which announced its merger with Bharti Airtel Thursday, saw its share price close up at 11.90.

“There was some traction on index heavyweights,” market participants pointed out.

Top contributors to the APSI included Aitken Spence Plc (up at 134.50), Ceylon Tobacco Company Plc (up at 1,245.25, and Lion Brewery (Ceylon) Plc (up at 1,048.50).

There was a net foreign inflow of 5 million. (Colombo/Apr19/2024)

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