Sri Lankan used car dealers mull shifting business to Africa
Sri Lanka government is mulling the grant of tax concessions for motor traders to export used or reconditioned vehicles to a growing African market for the survival of this sector in the island, official sources said.
The Treasury is weighing the pros and cons on used vehicle exports to African region as it will be a massive window of opportunity to generate revenue for the country while getting rid of 10 to 20-year old cars.
The Vehicle Importers’ Association of Lanka (VIAL) has made a proposal some time back to the Finance Minister to support them to shift their business to African countries by devising a clear-cut policy towards this end.
VIAL Chairman Indika Sampath Merinchige told the Business Times that their association has made a suggestion to appoint a high powered committee comprising representatives of the Treasury, Sri Lanka Customs, Motor Traffic Department, Exchange Control Department and motor traders associations to devise a re-export policy for used and old vehicles.
The government should issue a licence to motor traders for this purpose and such licence holders should be given tax concessions to trade in old vehicles in the country.
This re-export business should be beneficial for the state, motor traders and the sellers of old and used vehicles, he said adding that the government should carefully prepare a policy to free the roads from old vehicles.
VIAL successfully entered the vehicle market in Myanmar which in turn has become a major source of foreign exchange for Sri Lanka and therefore it is not difficult for Lankan vehicle importers to penetrate the African market as well, he added.
Mr. Merinchige noted that there is an immense potential in African countries for used passenger vehicle exports.
Unlike in Sri Lanka, where mostly nearly new used passenger cars are imported mainly from Japan, in most African countries the maximum age for importation of a used vehicle is 10 years.
Sri Lanka presently imports over 25,000 used vehicles a year and there is no proper mechanism to get rid of un-roadworthy vehicles, he said adding that vehicles beyond a certain age are scrapped in developed countries.