Will vehicle prices go down with change in government?
By now a complicated situation is seen in the vehicle market because of new regulations that have been enforced affecting vehicle imports with a view of controlling the value of the Rupee coming down in comparison to the American Dollar. As a result of this what vehicle importers say is that in future there is a possibility that imports of vehicles to this country could come to a total standstill, vehicle importers have sounded an alarm a few weeks before this.
Whatever it is, as a consequence of the political change which took place recently many people eyesand ears open to see whether there would be some change in the vehicle market too. A discussion which took place with Mr. Indika Sampath Merenchige, president of Sri Lanka Vehicle Importers' Association as to what type of change would take place in that connection in the face of the budget of 2019 which is to be presented in parliament in a few more days' time. The dialogue that ensued is published below:
Mr. Mahinda Rajapaksa was appointed by orders of the President as Prime Minister. Swearing in of ministers of the new government too is underway these days. Prime Minister Mr. Mahinda Rajapaksa assumed duties as the new Finance Minister recently (31). How do you as a businessman view this political turnaround in the country?
I believe that the political change which has occured in the country will be a favourable one. Because during the past the economy of the country had been rapidly collapsing. What I think is that Prime Minister Mahinda Rajapaksa would be able to once again rescue this economy which was sinking.
This political revolution took place when there was only a short period to present budget proposals to parliament for the year 2019. Will there be some sort of a change in proposals brought forward by vehicle importers in the case of the budget as a result of a new government coming into force?
We forwarded our proposals for the budget this time to the previous regime. In that instance a point that was informed us by the Finance Ministry was that no confrontation could be allowed for any party in connection with these proposals. But that is not the procedure usually adopted. But just because there is a change in government there will not be any change in the proposals we bring forward. Under the circumstances that money going out of the country in the face of economic crisis faced by the country today as a result of the Rupee decreasing in comparison to the Dollar should be controlled. At the same time the country needs funds at the present time. It is proposals of topical interest that both aspects are balanced that we hope to forward to the new government at the budget this time.
What kind of benefits are included in it?
There are two major proposals among our proposals. One proposal is to import vehicles to Sri Lanka in a manner that less foreign exchange is expended for this purpose the period of importing vehicles to Sri Lanka be extended from 3 to 7 years. By now it is vehicles high in standard with quality control that are brought to Sri Lanka. Even in more developed countries, even old vehicles of about 10 years are imported taking into consideration the standard of the vehicles. So if a vehicle as old as 3 to 7 years is brought from Japan, a price reduction of about 75% could be claimed and we have suggested a levy of 15 lakhs tax more for such vehicles. If foreign exchange is reduced through this course of action ... the government gets an income.
Because the responsibility of the government is to develop a favourable environment within the country for a business for the other proposal. When doing a business, we have to face a big expenditure. By now anybody in our country can import and export vehicles. With that freedom the vehicle market has weakened and a situation has arisen where it cannot be continued. About 70% of the economy of the country is in the hands of the private sector. Only if their earnings increase that money goes for development of the country. This cannot be thought of as a problem affecting only our field. Attention should be paid to this and according to the correct methodology businessmen in the field of vehicles should be registered and a license should be issued ... which is one of our proposals. Apart from these two main proposals, our other proposals include common demands of ours. Some people say that in order to control the Rupee collapsing and before the previous regime enforced regulations, vehicle importers had got down a stock of vehicles fit enough for 5 years.
Is that true?
It is a misconception. As time goes types of vehicles coming into the market keep changing. Customers to a large extent search for modern types of vehicles. Because of that if old-fashioned vehicles are brought ... it becomes a difficult task to sell those. If that happens, as businessmen we are defeated. If it is the other way round ... there will be vehicles sufficient enough for about 6 months. Saying that vehicles have been brought for a period beyond that is entirely false.
- Krishan Kananke -