Motor traders call for policy consistency from Govt.

Wednesday, 7 October 2015 00:04 - - {{hitsCtrl.values.hits}}

By Charumini de Silva

Ahead of Budget 2016, the Ceylon Motor Traders Association (CMTA) yesterday called for policy consistency to continue healthy growth in the industry and raised concerns over recent policy changes made by the Government.

Noting that the ad-hoc policy changes were disturbing the free-trade flow of the industry, the association said it hoped to see long-term policy measures in the upcoming Budget.

“A stable policy framework will greatly enhance the development of the industry and we hope that these are temporary measures to curtail the current situations in the economy especially with regard to vehicle imports,” CMTA President Gihan Pilapitiya told the Daily FT.

He commended the recent policy decision announced by the Finance Ministry on the loan-to-value (LTV) ratio being revised upward to allow more than 90% from leasing facilities.

Previously, the Central Bank directed finance companies not to provide any vehicle loan amounting to more than 70% of LTV ratio of the price of a vehicle, particularly affecting the lower end of the market.

However, he pointed that 100% margin on import Letters of Credit (LCs) for vehicle imports will affect the industry significantly.

Elaborating on the expectations on the upcoming 2016 Budget, Pilapitiya said that they were looking forward to concrete positive policy directives on vehicle imports.

Leasing Association of Sri Lanka (LASL) President Nishaman Karunapala also praised the recent directive of the Government on LTV.

Non-bank finance companies are the key financiers of vehicles with leasing and hire purchase the driving force behind many financial institutions.

“The industry does not require a high upfront payment on vehicle imports and there were many concerns from the industry, therefore we did not want to curtail the growth of the internal vehicle market,” Treasury Secretary Dr. R.H.S. Samaratunga told the Daily FT.

He also noted that before imposing the new directive of 90% LTV the Ministry had a series of discussions with vehicle importers.