Auction "magadiya"

Ginger · September 22, 2015

It is good that some are throwing ideas on this piece of writing. It is also a kind a research too. There are many issues here and some guys have raised questions that need to be addressed with a study of macro and micro economic factors of a country, if to understand how capital outflows are controlled / re-directed for economic development. This is a long story. To cut the story short – Sri Lanka has at least to turn to “die quote” – What Lee Kuan Yew of Singapore and Mahathir Mohamed of Malaysia did for their countries as economic visionaries. -- “Export or die”. Sri Lanka needs to take a similar path for economic development. “A car for every family” is an “economic myth” that was propagated by opportunistic politicos – a dream for the general public to live for. This has created a “loan trap”, that most of the families got caught. Car users are end-customers and are helpless to work against any well-organized commercial goons of any industry. Our auto industry only one of those that has gone astray and the general public is screwed at will. This is not possible at all, unless these commercial goons are in collusion with politicians. If we take number of vehicles per 1000 people as an indicator – Singapore stands at 176 per 1000, Sri Lanka 76. Asian coming up economy – Indonesia only 69 in 2012. As of June/2014 – Beijing, “the Super city of China” - had only 183 vehicles per 1000. Our Maruti exporter - Asian economic giant India only has 18 vehicles per 1000 people in the same year. Japan itself is 588 only, Belgium 559. There are about 1200 car sales points in the country and 20 million population. 15 million are adults. There are 5.5 million vehicles in the country already. Every year we register around 350,000 to 400,000 vehicles. (very close to Belgium figures , but with vast difference in standard of living) In this way, if this Sri Lankan figure is increased by at least 20 vehicles per 1000 every year during past 03 years – SL would have reached near 250 vehicles per 1000 by now!!!. Nearing giant oil and gas exporter – Oman. Are we in the right economic direction ??. I work in an office as CFO where major two funding agents (IMF / WB) monitor the funding framework for Asia and Africa. It has been 03 years since we predicted Rs 150 forex rate per $, but the rate was held down using reserves and Chinese Yuan loans. How long a country can go on like this, throwing reserves for political advantage, keeping the economy at stake ? Even the Yuan has appreciated against rupee, from 15, seven years back to 22 today, without any significant international trading in the currency and with high demand only for loans. Do we need to become another Greece ??? How can Japanese second hand car market mostly depend on poor Sri Lanka and African countries. There is a big economic miss-match with economic growth indicators and capital outflows in Sri Lankan economy.

H.C · September 22, 2015

For starters I am no expert...just a guy with too much time on my hands when in Japan <br />

<br />

Oh..so what you have gotten might very well be a manufacturing date...but the car could have been in some stock yard or someplace until it got sold. So the first year of registration...which is what most authorities, etc.. go by could be much later than February 2015...</p></blockquote>

I got it wrong mate. It was manufactured in August.

H.C · September 22, 2015

No mutual friends.. you told this story back then in the presea thread

Ahh.. during your Presea hunt days!.

xXx · September 22, 2015

It is good that some are throwing ideas on this piece of writing. It is also a kind a research too. There are many issues here and some guys have raised questions that need to be addressed with a study of macro and micro economic factors of a country, if to understand how capital outflows are controlled / re-directed for economic development. This is a long story. To cut the story short – Sri Lanka has at least to turn to “die quote” – What Lee Kuan Yew of Singapore and Mahathir Mohamed of Malaysia did for their countries as economic visionaries. -- “Export or die”. Sri Lanka needs to take a similar path for economic development. “A car for every family” is an “economic myth” that was propagated by opportunistic politicos – a dream for the general public to live for. This has created a “loan trap”, that most of the families got caught. Car users are end-customers and are helpless to work against any well-organized commercial goons of any industry. Our auto industry only one of those that has gone astray and the general public is screwed at will. This is not possible at all, unless these commercial goons are in collusion with politicians. If we take number of vehicles per 1000 people as an indicator – Singapore stands at 176 per 1000, Sri Lanka 76. Asian coming up economy – Indonesia only 69 in 2012. As of June/2014 – Beijing, “the Super city of China” - had only 183 vehicles per 1000. Our Maruti exporter - Asian economic giant India only has 18 vehicles per 1000 people in the same year. Japan itself is 588 only, Belgium 559. There are about 1200 car sales points in the country and 20 million population. 15 million are adults. There are 5.5 million vehicles in the country already. Every year we register around 350,000 to 400,000 vehicles. (very close to Belgium figures , but with vast difference in standard of living) In this way, if this Sri Lankan figure is increased by at least 20 vehicles per 1000 every year during past 03 years – SL would have reached near 250 vehicles per 1000 by now!!!. Nearing giant oil and gas exporter – Oman. Are we in the right economic direction ??. I work in an office as CFO where major two funding agents (IMF / WB) monitor the funding framework for Asia and Africa. It has been 03 years since we predicted Rs 150 forex rate per $, but the rate was held down using reserves and Chinese Yuan loans. How long a country can go on like this, throwing reserves for political advantage, keeping the economy at stake ? Even the Yuan has appreciated against rupee, from 15, seven years back to 22 today, without any significant international trading in the currency and with high demand only for loans. Do we need to become another Greece ??? How can Japanese second hand car market mostly depend on poor Sri Lanka and African countries. There is a big economic miss-match with economic growth indicators and capital outflows in Sri Lankan economy.

Ginger that is a very interesting analysis, especially the number of vehicles per 1000 people figures. I do agree it is not realistic to provide a car for every family. But I do believe the buying power of the middle class is a true indicator of a countries property as oppose to the number of highways or airports.

Your point on artificially managed exchange rate is a great example of the point I raised on not having a long term monitory or fiscal policy.

What are your thoughts on the government servant car permits? This has been one of the main driving forces behind bolstering the car import numbers for the past decade or so now. And this is a service extended to the already loss making, inefficient public sector.

Ginger · September 24, 2015

Thanks XXX,

There are around 15000 - 20000 car permits in the country for renewal every year. Also Every year new permits are issued. Other than for certain professional categories there is no clear policy for issuing them. That time, All what needed was, only to be good with PB.. He was the super man. But his professionals at the ministry of finance & planning have been so negligent that they were unable to assess the impact of floating them in the auto market. First they allowed to sell them freely. Secondly they came up with control measures - to bring a letter from the IR as proof of tax clearance. Thirdly they imposed 10% tax. These car permits are ever increasing an a burden to the country economy. It is an issue of privilege and also be a human rights case. As 99% of vehicle buyers have to pay 300% tax while 1% only pay a negligible tax on imports. In the 2014 budget they proposed a similar scheme for foreign employed Sri Lnkans, but was not implemented. All these indicate lack of vision in the auto industry & economy. If we look at how European countries came up - initially they all used products manufactured in their own country. After WWII, Russia was reduced to ashes, but it took only 10 years for them to become the second powerful economy in the world. Other European countries are, also same. Even there are many success stories around us, in Asia too.