Prados that run on blood and tears of Middle East workers

• A country that is importing her way into bankruptcy

You’d say that the latest Prados, Lamborghinis, Porsches and Hummers that we see on the roads today only run on fuel. Theoretically they do. However, the dollars spent on importing them are mostly earned by any of the following – the women who toil in Middle Eastern countries, young workers in garment factories or the tea pluckers on the estates. Considering the difficulty these women undergo to earn this money, the country has a moral, social and economic responsibility to use the foreign exchange without excesses.

I do not call for the banning of the importing of cars to Sri Lanka. The country should encourage the middle class to purchase vehicles which reflect on their upward mobility in life. What we cannot forget or overlook, however, is that some of the vehicles imported to the country cost $ 30-50,000 apiece, which is more than a year’s salary earned by some housemaids. If we are a country which, like India, exports software, technology and machinery, etc., then there is a justification to import such vehicles. In addition, these high spenders change their vehicles so often that the country has to keep on importing super luxury cars to satisfy their whims and fancies. 

The only way the Government has tried, and continues to try to control the massive outflow of dollars that is used to import cars, is to increase the duty payable or to control the level of debt financing available for such imports. What is called for is to restrict the import of cars that are above 1,500 cc. My view is that a maximum of 5,000 such cars would be more than enough for a year. This number could be auctioned with a minimum bid, so that the import duty revenue lost, due to the curtailing of the import of high end cars, could be recouped. 

To encourage earning of foreign exchange, the companies that export non-traditional items could be allowed to spend approximately 2% of their net export earnings to import such vehicles, if required. People who have private income from overseas could be allowed to import such vehicles as long as they do not use the country’s dollars to do so.

The issue of permits to import vehicles on concessionary rates should also be stopped forthwith. Anyone who peruses the Sunday papers could see that these permits are openly sold for around Rs. 1 million apiece. While the Government employees and politicians get a windfall every four years or so, the country loses approximately $ 30,000 or more for each of these permits.

While one can comprehend importing bulletproof vehicles for politicians whose lives are in danger, what is the purpose of importing high-end luxury vehicles for them? It is rumoured that one ex-senior politician used these permits to ‘purchase’ allegiance from well-known priests. It is better to give Government employees/politicians Rs. 1 million as an ex gratia payment rather than letting the country lose foreign exchange.

The duty free concessions given to inbound passengers are also designed in a way that benefit the traders and importers, rather than the people. Most of the white goods and liquor sold in the duty free shops are leaked to the local market. 

For a few extra rupees, the Middle East returnees use their hard-earned dollars to buy these items, according to the arrangements made via the middlemen based in Sri Lanka. If the Central Bank, which borrows dollars, could arrange to buy the dollars from the Middle East returnees through a State bank and give them a Rs. 5 premium, many of the returnees would sell their dollars to the Government. 

To avoid another system of illegal enrichment by the middlemen, the amount purchased (at a premium) by the Central Bank could be limited to the documented earnings by that person in foreign employment. This, together with banning the sale of white goods and foreign liquor for Sri Lankan passport holders, would save millions in the way of foreign exchange for the country. 

In the presidential election campaign, many speakers on the Opposition platform claimed that the country is spending over Rs. 5 billion worth of foreign exchange on the import of vegetables and fruits which could easily be grown in Sri Lanka. I wonder why the Government is being lax in delaying to try to rectify this. Most fruits and vegetables have a gestation time of less than six months. If properly explained to the people, they would cooperate with the Government if the import of such items that can be grown here is banned.

When vegetables are imported, it is only the importer and the reseller who are benefitting, while the country loses dollars. If they are grown here, farmers, traders and resellers will benefit and there will not be an outflow of dollars. Rather than spending billions on providing Samurdhi to the poor, banning the import of vegetables, fruits and also low end rice (other than basmati, etc., that is not grown here) would generate billions of rupees, which would trickle down to the masses. This will be a good starting point for the Prime Minister’s dream of Sri Lanka becoming the food supplier to the region’s growing population. 

Another previous opposition speaker (Sujeewa Senasinghe) claimed that the country is not even manufacturing its requirement of coconut scrapers. We are a country blessed with people who can make many things. However, as long as there are mass producers (such as China), nothing could be manufactured in a small country like ours, at a cost below the cost of importing them. 

The governments are only trying to curtail imports by imposing duties. This does not work all the time, as there could be under-invoicing, hand carrying, bribing the Customs’ officers and many other ways to circumvent the payment of the correct import duty. The country needs a central authority (ideally a commission, independent of politicians and political influence) to grant authorisations to import items. 

Unlike in the past, this will not be a major issue, as importers could simply fill out a form on the internet. The approvals granted can also be displayed on a web page for the information of the public. If anyone intends to produce an item that is now imported, such persons also could apply to the independent commission to limit or ban the import of an item. 

The main purpose of this commission would be to limit the outflow of dollars for imports and to encourage locals to manufacture the requirements of the country, locally. Household equipment such as refrigerators, air conditioners, etc., can easily be manufactured here. (Fridges, ceiling fans, etc. that are now imported were manufactured in Sri Lanka way back in the 1970s). Such an approach would gradually develop local products, which ultimately can be exported to other markets in the poorer African continent.

Until the day when we have developed to the level of India and the USA, where high value-added items such as soft products (software programs etc.,) are exported, we cannot be liberal with the small amount of foreign exchange earned by the lowest segments of society.