Automobile Industry jobs at stake - Pilapitiya | Daily News

Automobile Industry jobs at stake - Pilapitiya

The import ban on automobiles has crossed two years now and all stakeholders of the trade are having issues of survival leave aside making profits, opined Gihan Pilapitiya, industry expert and Past President Ceylon Motor Traders Association(CMTA).

Speaking to Daily News Business he said the legitimate importers employ up to 12,000-15,000 individuals both direct and indirect and most of their jobs are now at stake due to longstanding import ban.

Excerpts of the interview

Q: What is your perspective of the motor industry today?

A: We quite understand the challenges the government has to face due to the unforeseen negative effects to the economic front.

The import ban has now crossed two years now and all stakeholders of the trade are having issues .

The challenge now is survival leave aside making profits. The legitimate importers employ up to 12-15,000 individuals both direct and indirect and all their jobs are now at stake due to longstanding open ended import ban.

Q: What are the consequences importers face due to the import ban?

A: Covering the overheads of the business, payment of salaries and servicing the borrowings has been an impossible task as a result for most companies.

On top of this foreign currency restrictions affect the importation of spare parts that are essential for repair and servicing of vehicles on the road.

Q: What are your suggestions to revive the industry?

A: Any country needs at least a reasonable volume of vehicles coming in to the market every year. This will help renew (at least) part of the fleet that will support management of cost structures and minimize environmental issues etc.

Also this is a very good opportunity for the government to regularize the industry.

A vehicle should be imported only by a government registered and an authorized organization that can support warranty offers and after sales servicing of them. It is also critical to keep to the latest safety standards, invest into new technology that is essential in managing a complicated today's automobile.

It may be an ideal time to set up a regulatory body in order to regulate the automobile industry.

However, before all these it is essential to reopen imports with an import quota system, maybe considering the number of employees as a yardstick until the economic challenges are settled to reasonable levels.

Q: How has the Corona pandemic affected the livelihoods of motor stakeholders?

A: Due to closure for COVID most companies have not been able to carry out their operations and currently there is a serious concern with regard to importing spare parts due to non availability, lack of foreign currency. On top of this the overall productivity levels in technical teams have dropped to very low levels due to COVID related issues and the output of workshops have dropped to low levels.

Q: What do you expect at this moment from the government?

A: Regularize the industry.

Do not allow illegal entry such as allowing illegally imported vehicles to be registered, specially four-wheelers. Introduce a quota system for imports for all legitimate importers.

Q: What are the relief and concessions the industry needs at this juncture?

A: In addition to the above suggestions of a quota system and spare parts import support to allow vehicles that were ordered and LCs opened prior to the import ban to be cleared without surcharges, waive off the Social Security Contribution for the automobile trade as there are no imports.

Q: How have these stringent measures affected your relationships with vehicle manufactures?

A: There were vehicles manufactured for specific orders by manufacturers, when the import ban came into effect. These were not allowed to be imported despite even opening the LC’s. Most manufacturers have already lost faith in the system in Sri Lanka.

Also most local bank LC’s are now not accepted by the international manufacturers/trading houses. Some importers have managed to dispose of some of these ordered stocks at heavy losses to other countries. Other vehicles are still lying at export yards or the local port yards.

Q: How will the non imports affect development activities in the country?

A: Imports have to be allowed at some space to keep the economic activities going. Specially, commercial vehicles have to be allowed to be imported as the cost of maintenance climbs higher than replacement cost after certain parameters of age of vehicle/mileage etc.

Q: What are the social impacts of the prohibition of vehicle imports?

A: Frustration among the masses and high cost of maintaining old vehicles. Also the market prices of available vehicles have skyrocketed and most prices are artificially held.

Q: Will there be a relaxation to import curbs by the government?

A: Not in sight.

Q: Is assembling vehicles a practical measure in Sri Lanka?

A: This looks to be a good initiative but has to be done on a long-term plan. Same as the fertiliser issue.

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