The Vehicle Importers Association of Sri Lanka (VIASL) issuing a statement has condemned the vehicle import ban imposed by the government.
The import ban has negatively impacted the Sri Lankan economy as well as vehicle importers and all related industries. As purchasing a quality vehicle is a dream for most Sri Lankans there is a massive supply chain built around it. Vehicle importers provide various employment opportunities ranging from accountants, sales executives, marketing executives, drivers, cleaners, security staff, etc.
Furthermore, service areas such as clearing agents, interior cleaners, mechanics, car carrier operators and service centers are directly dependent on importation of motor vehicles. Vehicle importers as well as related service providers have faced severe difficulties maintaining their business premises, paying off bank loans, rent and paying the salaries of their employees.
Since the industry was only at the recovery stage after the Easter attack, most vehicle importers carried out importation with minimum stock, as the holding cost of our industry is substantial. Hence currently there are a large number of showrooms and importers in the country who are without a single vehicle in their showrooms and are struggling to survive and to pay their employees.
If the ban is to continue further, they will be forced to close down their business and make all their employees redundant. 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. This would mean around 350,000-400,000 dependents of these employees would be facing severe financial difficulties threatening survival.
The government officials have been provided with blatantly overestimated figures regarding current motor vehicle stock levels. Hence, lifting the import ban immediately is paramount for the survival of our trade.
Negative Impact on the Economy
For our economy to move forward transportation and mobility is essential. As per the people-centric economic development vision of our President Gotabaya Rajapaksa. Fisheries Sector, Milk Products, Tourism Industry, Construction Industry as well as Small & Medium scale Industries need to be boosted and developed. For this to materialize vehicles such as small and medium size vans, trucks, buses, smaller motor-cars etc need to be imported into the local market at a very affordable price. At present there is a huge vacuum in these motor vehicles as the importation has been completely banned.
Issues with local assembling
Local manufacturing and assembling however not the solution for the issues detailed above is. VIASL strongly believes that this process does not add any value to the country’s economy and is merely designed for tax evasion and higher profit margins. Furthermore, setting up a vehicle manufacturing plant is a lengthy process with extensive planning and research and development. Hence this cannot be set up overnight and needs to be carefully planned in stages.
The local assembling companies mainly import an almost finished product and add minimal value to it. Hence the CIF (Cost, Freight & Insurance) value or the amount of foreign currency sent out of the country is perhaps more than the CIF value of a good quality Japanese vehicle; due to economies of scale and lean production mechanisms used in large scale manufacturing. However the import tax paid for a locally assembled vehicle is far less compared to the import tax paid for a car imported by our dealers.
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.
Evidently the government is not getting the due tax income while the foreign currency outflow might even be greater. Due the inferior quality of the vehicle, lacking adequate safety and emission standards, sold by these assembling companies the Sri Lankan citizen is at a loss. Strongly condemns the statement made by an unendorsed association with very similar abbreviations.
VIASL was inaugurated in the early 1980’s as the Vehicle Importers Association of Sri Lanka (VIASL). Our members are the pioneers of the motor vehicle trade in Sri Lanka. However, an unendorsed association with very similar abbreviations appears to be making contradictory statements misleading the general public as well as government officials.
They have given a statement to the print media on 20th November 2020 supporting the motor vehicle ban, which is atrocious. Hence we urge the public to disregard any statements made by any other so- called associations apart from the Vehicle Importers Association of Sri Lanka (VIASL).
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