Business Times

Vehicle importers get shock treatment with new state plans

By Sunimalee Dias

While the government continues to discuss openly plans to divert all vehicle imports to the Hambantota port the motor vehicle industry that is in the dark, expressed concern over the possibility of costs to businesses running into several millions should this be implemented.

Should the government take this decision the industry will have to spend several millions in money to establish staff and machinery in this area with costs increasing further due to the need of transporting these vehicles to Colombo over 200 kms from Hambantota, Ceylon Motor Traders Association (CMTA) Chairman Tilak Gunasekara told the Business Times.

Procedure at time of importation
Once a vehicle is unloaded at the Colombo port the vehicles are then sent to the workshops that is located in close proximity. At the workshop consisting of staff and machinery the pre-delivery inspection is carried out by local engineers.
Upon completion of inspection the reports must then be sent to the principals at which time the warranty period commences.

He noted that while the government had not intimated any of these planned moves there has not been any discussion with the industry on the matter yet. A number of logistical issues are likely to come up due to lack of any infrastructure or facilities in lace, Mr. Gunasekara said. About 1000 - 2000 vehicles are imported monthly into Sri Lanka.

Further, shipping lines should also need to be agreeable to this kind of move and in this respect, it was observed these moves are unlikely to happen immediately. In June this year vehicle registrations amounted to 5,069 cars, 22, 690 motorcycles and 13, 753 three wheelers.

Mr. Gunasekara said that this would result in transporting vehicles on car carriers that could only accommodate about eight at a time.

Moreover, issues pertaining to the insurance cost, pre-delivery inspection (PDI) required to be carried out at time of importation that requires local engineers and machinery to be in place as well as a result of which vehicles cannot be sold in Hambantota, he said.

The additional costs are likely then to be passed onto consumers resulting in a surge in vehicle prices unless the government is ready to provide some solution in this regard pertaining to these costs, Mr. Gunasekara pointed out.

Sri Lanka Ports Authority (SLPA) Chairman Dr. Priyath Bandu Wickrama speaking with the Business Times noted that due to the increased congestion at the Colombo port with only one hectare of land area there is a need to get this move underway.

However, the industry notes that the recent congestion at the Colombo port was due to a dispute between the authorities and the car importers that had opened Letters of Credit (LCs) on vehicles of over two years prior to the issuing of a government circular stating that only vehicles of two years can be imported. Dr. Wickrama also noted that they are in discussion with the “big operators” noting that “one is currently working closely with us.” This will result in the establishment of a transshipment centre at Hambantota where 50 hectares of land is available for this purpose.

Industry experts believe however that should the government ensure a more efficient process of operation at the Hambantota port there will not be any issue with regard to the shifting of vehicle imports to the South.

While 60% of vehicle imports are currently registered and used in Colombo the rest are scattered across the country with the South owning only about 10% of these imports. As a result, only vehicle importers in the South will be directly benefited by this move, said Prof. Amal Kumarage, a transport specialist attached to the Moratuwa University.

He pointed out that while Colombo should be increasingly used for transshipment of containers this will clear up space for it. On the other hand, if the handling and leverage charges are substantially lower it will then attract business in that part of the country, he said.

“If the service for importers is only as good or as bad as in Colombo then there will not be any benefit,” he said adding that with the right systems in place it will then prove to be more attractive to investors.
Car importers argued that this move is meant to pull business out of Colombo and shift it to Hambantota in a bid to showcase activity in the southern district.

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