Permit Holders Excluded as Sri Lanka Reopens Vehicle Imports

COLOMBO (News 1st); Sri Lankan President Anura Kumara Dissanayake revealed that vehicle permit holders will be given an opportunity this time, when the country resumes vehicle imports after a five-year suspension.

"In 2018, Sri Lanka imported vehicles valued at nearly 2 billion US dollars, and in 2019, the value was approximately 1.4 billion US dollars. On average, the country imports vehicles worth between 1 and 2 billion US dollars annually. The decision to resume imports was made not due to strong foreign reserves but to stimulate the country's economy. It is crucial to ensure that this move has minimal impact on the country's dollar reserves to avoid economic collapse. Therefore, the vehicle market will be reopened cautiously," said President Dissanayake on the Satana program on Sirasa TV.

"Currently, the market has vehicles imported at the 2019 dollar rate, which was around Rs. 190. However, with the current dollar rate nearing Rs. 300, vehicle prices are expected to rise by about 40% due to the rupee's devaluation. Additionally, the country has a significant number of second-hand vehicles, many of which were purchased through leasing facilities. If the price gap between new and second-hand vehicles narrows significantly, it could create a new crisis. For instance, if someone buys a vehicle for Rs. 8 million and finds a better one for Rs. 8.5 million, they might abandon their purchase, leading to market instability. Therefore, it is essential to balance the prices of new imports and second-hand vehicles to prevent a crisis in the second-hand market, which could also affect leasing companies and banks," he explained.

The President said that discussions have been held with the Central Bank regarding the allocation of dollars for vehicle imports, and it has been decided to phase out imports throughout the year to avoid putting immense pressure on the dollar reserves in February when imports are opened.

"If vehicle imports worth approximately 1.2 billion US dollars occur in February alone, it could lead to another crisis. Hence, this issue needs to be approached from multiple angles," he added.

Regarding permits, it is unlikely that vehicle permit holders will be given an opportunity this time. 

"In 2018, permit holders used 1.9 billion US dollars to import vehicles. The goal is to maintain vehicle imports at around 1.2 billion US dollars. Initially, prices may increase, and based on market performance, further decisions will be made. This decision is risky and requires careful consideration from multiple perspectives. Discussions on vehicle prices indicate that prices will indeed rise," said the President.