The government’s hidden agenda of continuing the vehicle import ban is to promote the motor car assembly industry and second hand vehicle dealers, motor traders alleged.
The present authorities will be contemplating granting permission to set up vehicle assembly plants with a view to extending support to their business cronies involved in spare part production business including a leading supplier of motor car seats in Hambantota, they said.
In order to assist vehicle assembly, the government is mulling to revise the requirement 30 per cent local value addition vehicle assembly to 15 per cent while allowing vehicle component imports for investors entering the industry, informed sources said.
Around 32,000 people both directly and indirectly employed in the motor trading sector would lose their earnings and even jobs as motor vehicle dealer companies move towards closure within months, motor traders warned.
The government has decided to suspend vehicle imports for a year in a bid to stop currency outflow, Cabinet spokesman Keheliya Rambukwella said.
He told reporters at the weekly Cabinet press briefing that an assessment of the vehicle market has shown that there are enough vehicles imported into the country to last a year.
Vehicle sales revenue of motor traders was zero during the countrywide curfew period during COVID-19 between mid March to May 2020 and there was a significant drop in sales of all vehicle dealers up to now.
As the COVID-19 pandemic situation is still uncertain, it is difficult to predict the future business impact on auto trading companies, they added.
To remedy the ailing industry, the Ceylon Motor Traders Association (CMTA) has urged the government to impose CIF restrictions for all imports (maximum of US$ 30,000) and allow imports based on LC method where the bills will be paid after one year or six months.
It has also suggested the government introduce a quota system for vehicle imports based on the number of company employees.
The government has lost over Rs. 68 billion in revenue due to the suspension of vehicle imports of franchise dealers which is only about 30 per cent of total vehicle imports.
Meanwhile, the Cabinet this week approved the allocation of provisions from the Department of National Budget to state institutions that lack allocations to repair the vehicles that can be used after undergoing an overhaul.
A considerable number of vehicles in Government institutions lie unutilised at present due to lack of proper maintenance whereas the number of vehicles that can be used after renovation has been calculated at 4,116, while the number of vehicles that can be discarded amounts to 5,588.
The hidden aim of this move is to support motor vehicle garage owners known to top brass, several leading motor traders said adding that the situation would also create a good opportunity for the second-hand vehicle market.