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VIASL frowns on EV local assembly without value addition

by malinga
September 24, 2023 1:00 am 0 comment 255 views

Vehicle Importers Association of Sri Lanka (VIASL) officials say there may be a negative impact on the economy if the Government permits the assembly of electric vehicles (EVs) in Sri Lanka without any value addition.

At a press conference on Thursday they said that they have received information that a Cabinet paper is to be forwarded soon by the Ministry of Investment Promotion to impose a zero percent Customs tariff on the CIF value to import electric vehicles with power up to 500kw or Plug In Hybrid Electric Vehicles (PEHV) up to 3000 CC in semi-knockdown (SKD) form for local assembly.

This is for a minimum investment of US$50 million by companies which have already signed agreements with the BOI or new companies entering into agreements.

“However, there is no value addition required on these vehicles in the first two years, which is designed to benefit a single company which claims to have fulfilled these requirements via investments made in 2021,” the members said.

There is no expected future inflow of USD from this venture hence the Government will not benefit in any form due to the following reasons.

“We request the government to evaluate the proposal thoroughly before granting cabinet approval. If this gets approved by the cabinet, this will have a severe impact on the already deteriorating economy affecting our foreign currency reserve and the national income,” they said.

The proposal is mainly seeking for a bizarre zero percent flat tariff on CIF value instead of the prevailing thirty percent (30%) tariff for the importation of brand-new semi knocked down kits for assembly of electric vehicles.

The big question arises as to what the government would gain in the event the request of the 0% tariff is granted. “We had on prior occasions highlighted the massive leakage of vital foreign currency with minimum government revenue in the form of customs duty even under the existing tariff of 30% where companies claiming to assemble vehicles have rather made use of this loophole to bring down complete vehicles in several fragments and putting it together in basic plants which lack any sophistication.

“This has resulted in minimal value addition and on the other hand it has deprived the Government of billions of rupees in Ccustoms revenue in comparison to the actual applicable Customs duty to import such a motor vehicle,” they said. – MFJ

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