Vehicle imports will be considered only under strict guidelines: Minister

Cabinet Spokesman and Minister Vijitha Herath 

• Vijitha Herath acknowledges high demand, but stressed it will be considered only under streamlined procedure 
• Clarifies, Govt. has neither imported vehicles nor allowed any with tariff concessions, despite prior Cabinet decisions allowing importation

By Charumini de Silva

Cabinet Spokesman and Minister Vijitha Herath yesterday confirmed the Government’s stance in favour of vehicle importation but stressed that it would not jeopardise the country’s foreign reserves or trigger another financial crisis.

“There is a significant demand for vehicles, and we acknowledge that. However, any import process will be considered only under a controlled and well-regulated procedure to avoid further pressure on foreign reserves,” he said in response to a question raised during the weekly post-Cabinet meeting media briefing. 

Herath clarified that since taking office, the Government has neither imported vehicles nor allowed any with tariff concessions, despite prior Cabinet decisions allowing importation.

“We are of the view that vehicle imports should be allowed, but strictly under a streamlined and a controlled procedure,” he reiterated.

The import ban on vehicles, introduced in March 2020, was aimed at curbing the outflow of foreign exchange amidst the country’s deepening economic troubles. 

In September, the previous regime announced that it has decided to lift the temporary suspension on motor vehicle imports, effective 1 October 2024. In a statement issued by the then Government, it noted that Sri Lanka will begin importing motor vehicles again, starting in stages, as part of a broader economic recovery strategy tied to the Extended Fund Facility (EFF) Program of the International Monetary Fund (IMF).

“Having considered the current economic and environmental factors, the Government has decided to make the following proposals for the consideration of the Cabinet of Ministers: 1. The removal of the temporary suspension on the importation of motor vehicles and non-motorised goods, classified under a total of 304 HS Codes, will be done in three stages: Stage 1: The importation of public passenger transport vehicles, special purpose vehicles, and other non-motorised goods will be allowed starting 1 October 2024, Stage 2: The temporary suspension on the importation of commercial or goods transportation vehicles will be lifted on 1 December 2024, Stage 3: The importation of personal usage motor vehicles (including cars, vans, sports utility vehicles, pickups, etc.) will be permitted starting 1 February 2025.”

According to the then Cabinet Memorandum, the phased lifting of restrictions is anticipated to inject much-needed energy into the auto industry and the broader economy, addressing challenges like an aging vehicle population, declining fuel efficiency, and rising maintenance costs.

The prolonged import restrictions had left Sri Lanka with an aging fleet of vehicles, characterised by declining roadworthiness and environmental concerns due to poor fuel efficiency. 

“Importation of new vehicles is expected to stimulate economic activity by increasing Government revenue, particularly from vehicle imports, which have historically been a significant revenue stream for the country. However, while the reintroduction of imports will put pressure on foreign exchange reserves, measures have been implemented to balance this, including additional duties on motor vehicle imports,” the statement issued by the PMD under the previous administration noted.