Govt still lukewarm in allowing vehicle imports wary of balance of trade

By Sanath Nanayakkare

The government has decided to allow the importation of all goods except for motor vehicles from the first week of September, and it is going to consider how it would gradually ease the ban on vehicle imports according to a ‘strategic plan’. It is said that as a start, the government’s focus is on removing the import ban on electric vehicles before allowing the importation of conventional gasoline cars.

The new policy on importation will come into effect in the first week of September, allowing a broader range of goods to enter the country. The government reached this decision during a discussion held last week between Sagala Ratnayake, Chief of Presidential Staff, and Presidential Adviser on National Security, officials of the Ministry of Finance and officials of the International Monetary Fund.

However, certain categories of vehicles such as tractors are permitted to be imported depending on the farmers’ requirements.

It has also been decided to conduct a weekly review regarding the proposals of the International Monetary Fund.

Import restrictions have been lifted on 286 goods, allowing their importation into the country. However, the import ban on another 930 goods, including vehicles, will remain in effect, maintaining the previous restrictions on these items.

Steps have been taken to remove the import ban on 250 of the 500 items including essential food items that were in the prohibited import category.

Accordingly, it has been decided in this discussion to gradually remove the import restrictions of the banned items. The process will be conducted in two stages and is due to be completed by the first week of September.

Importation of vehicles is still receiving a lukewarm response from the government obviously because of the fact that a widened balance of trade would influence currency exchange rate through its effect on foreign exchange supply and demand, analysts said.

Sri Lanka banned imports of most automobiles including three wheelers and motorcycles which give large revenues to the state as money printing ratcheted up from February 2021 creating foreign exchange shortages.

However, 2,384 SUVs in 2021 and 176 in January 2022 had been registered in the Vehicle Registry of Sri Lanka, according to a Colombo-based equities brokerage firm.