Wednesday, October 5, 2022

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CB’s dollar revenue proposal to allow vehicle imports puts into to back burner   

The Central Bank’s proposal to allow vehicle imports for persons who can pay in foreign exchange to import vehicles and pay taxes in hard currency has been placed under the carpet by the Finance Ministry, informed sources said    

The proposal was made by Central Bank Governor Ajith Nivard Cabrall with the aim of increasing tax revenue and resurrect the local motor traders (importers) bankrupted by import restrictions and earn much needed foreign currency.

But the letter sent by the Central Bank to the treasury three months ago is still in the back burner without taking any action to find a solution to  the present crisis in motor trade and  drop in tax revenue.,    

.He noted that Non-Resident Foreign Currency (NRFC) account holders – now called Personal Foreign Currency Accounts – would be permitted to use their resources to import a vehicle provided they would pay the applicable duty in hard currency.

 “If the vehicle is paid for in hard currency and not converted rupees, and the duty also accrues to the government in hard currency, I don’t see any harm, in fact it would be good,” he said.

It would also mean that there’s are new vehicles coming into the country not paid for by rupees converted into hard currency plus a hard currency duty stream, an analyst said.

Banning vehicle imports on account of the present foreign exchange crunch has cost the government an immense revenue stream further it has hit local motor traders and also Sri Lankan expatriates in Japan who are in the same vehicle trade. 

 The Sri Lankan Automobile Association of Japan (SLAAJ consisting of over 100 members, boasts a presence in more than 40 markets worldwide.

 Unfortunately, even such an impressive collection of businessmen is not immune to the overwhelming effects of the sudden import ban. 

With 1,364 units of stock specifically bought for the Sri Lankan market prior to the embargo, SLAAJ members are forced to re-sell them at less than half the purchase price due to the drop in demand. 

For a lot of them, it’s nothing short of stripping away half of their capital, an irrecoverable blow to any business. 

Although based abroad, as an organisation consisting of only Sri Lankans, each member contributes to re-investments in Sri Lanka, and supports over 2,000 Sri Lankans living in Japan, all of whom are facing an uncertain future.

 The continuing ban on vehicle imports has jeopardized the jobs of around 100,000 employees directly involved in the industry and its ancillary services.In terms of indirect dependents on the industry, 400,000 persons face the risk of losing their livelihoods as the import ban will ultimately sound the death knell to the trade”, s Arosha Rodrigo, Hony. Secretary of the Vehicle Importers’ Association of Sri Lanka (VIASL) disclosed

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