The Government should consider a staggered relaxation of vehicle imports with the introduction of a new Customs Import Duty of 130% on the CIF value, an official of The Ceylon Motor Traders Association (CMTA) said.
“We propose to reduce the additional Customs Import Duty percentage by 15% every quarter over the next 24 months, which will result in a substantial reduction in the landed cost of a vehicle for each quarter,” said Chairman, Ceylon Motor Traders Association, Charaka Perera.
“Such a method will ensure that no importer will overstock or import excessively as it will not be viable to sell stocks after a three-month period. It will also encourage consumers to postpone purchase unless it is essential to purchase a new vehicle, as they will be able to purchase at a lower price in the future.”
CTMA, the only trade body that represents global vehicle manufacturers through their locally appointed franchise agents, said “This method would provide the highest tax revenue per dollar consumed by any industry and will self-discipline vehicle importers as well, resulting in a lower outflow of forex.”
“This proposal would also ensure that vehicles will not flood the country but will be imported only for the actual need and also ensure that the much needed Government revenue is collected,” he said.
Perera said that due to the ban, the used vehicle market has skyrocketed and created a very unethical situation. “If you take a popular second hand motorcycle, today its price is around Rs. 600,000. But a new bike of the same model and brand was sold for around Rs. 300,000 before the import ban.
“If the ban is removed, used vehicle prices will gradually come down which will make the second hand vehicle more affordable for the consumer. By permitting planned imports Government revenue per unit will increase,” Perera said.
He said that one main concern of the Government to temporarily hold automobile imports was the high outflow of forex. The companies which actually invest in the industry for the long term are still continuing their retail operations while maintaining their employees and showrooms/after sales centres.
“Hence we propose to regulate the vehicle imports industry by registering such companies with the Import Controller Department and issuing import licences to only those companies. This will further prevent unnecessary imports by individual importers who do not add any value to the economy or the country but drain valuable forex.”
The CMTA members and their network alone has lost over 15,000 jobs while over 2,000 SMEs which operated around the country as dealers have closed down.
