Promote SOPs for vehicle assembly and manufacture - Auto industry exprt | Sunday Observer
Save drain of forex

Promote SOPs for vehicle assembly and manufacture - Auto industry exprt

21 February, 2021

Sri Lanka must promote Standard Operating Procedures (SOP ) as a viable alternative for the production, assembly, and manufacture of vehicles in the country to importation of vehicles to save the much needed foreign exchange said Ideal Group Founder and Executive Chairman Nalin Welgama.

He said policy measures to promote SOPs must be expedited without delay to support the automobile industry to get to the next level which will be a turning point in the vehicle assembly industry in the country.

Minister of Industries Wimal Weerawansha recently said that Cabinet nod had been given to SOPs presented by the ministry for the production, assembly, and manufacture of vehicles in Sri Lanka as an alternative to the ban on import of vehicles. Several rounds of discussions between auto importers and the minister were held in this regard as parent companies of certain importers of vehicles are keen to invest in the vehicles assembly industry in Sri Lanka.

“There are no two words that importation of all non-essential goods must be brought to a halt to save the drain of foreign exchange from the country as all sources of foreign exchange inflows such as worker remittances and tourism have dried up,” Welgama said.

Sri Lanka earns around USD 7 billion annually from worker remittances. “We also need to focus and empower local component manufacturing which is yet not up to the mark. Experts in this sector must be identified and supported,” Welgama said, adding Sri Lanka also has the talent and potential to be an Original Equipment (OE) manufacturer. Ideal has created two OE manufacturers in seats and exide batteries.

He said vehicle imports went beyond control in the past due to the former regime introducing excise duty on vehicles based on a unit rate for cc capacity which paved the way for parallel importers (non franchised importers) to import any vehicle freely under a market liberalised system.

He said previously franchised operators imported nearly 75 percent of new vehicles. However, the unit rate of taxation changed this landscape, wherein, parallel importers now import 75 percent of vehicles and franchised operators a mere 25 percent. Therefore, in the past five years, a vast number of car importers set up car yards and showrooms throughout the island. He said a major drawback of this unregulated imports was the importation of cars which didn’t have any aftercare backup. For example, some 7000 Nissan Leafs and other EVs arrived in SL without any service/ spare parts backup. The owners of these vehicles are now faced with insurmountable problems. According to the Vehicle Imposters Association of Sri Lanka there are less than 3,000 vehicles imported which is not sufficient to meet even two and half months of demand.