Govt. revises vehicle import rules to ease Customs delays

 Some of the vehicles which came in the first ever shipment on 27 February to the Hambantota International Port following the relaxation of the ban on import – File photo

• Accepts Bureau Veritas inspection certificates for vehicle imports from all countries
• Introduces mandatory online authentication for import documents to streamline Customs clearance 
• VIAL Secretary Prasad Kulatunga says new Gazette corrects previous oversight but challenges remain
• Asserts affordability remains key issue due to high import taxes and stagnant income levels
• Says 1,500 vehicles arrived, with another 1,000-1,500 expected before 5 April
• Analysts say only below $ 200 m LCs opened so far, though Govt. allocated $ 1 b for vehicle imports
• Realisation of projected Rs. 300-400 b tax revenue from vehicle imports under question

By Charumini de Silva

In a bid to resolve the ongoing delays in releasing newly imported vehicles, President Anura Kumara Disanayake in his capacity as the Finance Minister has issued an Extraordinary Gazette notification amending key import and export regulations.

The Gazette, dated 19 March, introduces critical changes to streamline the import process, including the acceptance to Bureau Veritas inspection certificates for vehicle imports from all countries and a mandatory online authentication process for import documents.

As per the latest Gazette notification, it addresses these concerns by instructing Sri Lanka Customs to ensure that all documents endorsed by a Licenced Bank undergo authentication through online verification. This measure is expected to eliminate procedural delays and facilitate the swift release of vehicles currently held at Customs.

The move comes after weeks of controversy, with the vehicle importers claiming that nearly 400 vehicles had been stuck at Sri Lanka Customs for over 20 days due to a shortcoming in import regulations. The main issue cited was the manufacturing date which importers argued was difficult to comply with under the previous regulations.

On Tuesday, Cabinet Spokesman and Minister Dr. Nalinda Jayatissa assured that the Government will intervene to rectify any shortcomings in the system (https://www.ft.lk/front-page/Govt-assures-to-address-delays-in-releasing-imported-vehicles/44-774518).

He defended the Government’s decision to lift the ban on vehicle imports after five years, stressing that if there were flaws in the mechanism, necessary adjustments would be made.

Commenting on the new Gazette, Vehicle Importers Association of Lanka (VIAL) Secretary Prasad Kulatunga downplayed its significance, noting that it was merely a correction of an earlier oversight by the Government.

“Although acceptance of Bureau Veritas inspection certificates would help clear some of the vehicles currently stuck at Customs, other challenges remain,” he told the Daily FT.

On the broader state of vehicle imports, Kulatunga noted that while the demand remains high, affordability is a major concern due to steep import taxes.

“Despite the hype surrounding the resumption of vehicle imports and expectations of a surge in pent-up demand, the economic conditions are limiting purchasing power as income levels have not seen significant improvement though inflation has come down. Higher vehicle prices compared to pre-ban levels also mean that automobiles remain out of reach for most middle-class buyers,” he explained.

He said so far around 1,500 vehicles have arrived in the country, with two more shipments expected before 5 April bringing another 1,000-1,500 vehicles. “Of this total 3,000 vehicles, about 500 are luxury vehicles,” Kulatunga said, adding that a more comprehensive assessment of market demand would be possible in the coming weeks.

Analysts opined that only below $ 200 million worth of Letters of Credit (LCs) have been opened so far. The Government said around $ 1 billion has been allocated for vehicle imports this year. They also added that the resumption of imports has not created pressure on the foreign exchange market, with the US dollar remaining below Rs. 300 levels.

However, given a possible decline in imports compared to pre-ban levels, analysts cautioned that the Government’s projected tax revenue from vehicle imports might not be fully realised. The Government estimates generating Rs. 300-400 billion from vehicle imports in 2025.