Sri Lanka CB to propose dollarized vehicle imports

[Skyonline]

Sri Lanka’s central bank is looking at a proposal to allow persons who can bring foreign exchange abroad to import vehicles and pay taxes in dollars, Central Bank Governor Nivard Cabraal said 

https://www.google.com/amp/s/economynext.com/sri-lanka-cb-to-propose-dollarized-car-imports-amid-money-printing-87128/

[Quiet]

They have started collecting Vehicle values and maximum facility amounts granted for selected vehicles - Vitz, Wagon R etc with YOM 2015/16/117/18/19 from Banks and Finance companies, I think a price control on vehicles are on the way

[Gummybr]

When you think that these jokers stop joking around this happens.

https://www.dailymirror.lk/business-news/CB-to-propose-resumption-of-car-imports-paid-via-foreign-currency/273-222729

Its just a way of telling people to bring in their foreign currency. IMO there will be a lot of background work to be done. This statement has been going around for sometime and this has slowed down the used car market a bit as well. Thing is he never says when it will be implemented, just goes to say that he is suggesting to the government (and who exactly is he? the Central Bank Governor and not the Minister, and no vehicles doesn't fall under the central bank purview).

This will just invite the crooks and underhand people to bring in vehicles and not the people who need them. I saw a video of VIASL talking about getting two years credit from Japan if they are given a chance to import.

Being in the industry with manufacturer agents it has been very disheartening to see what is happening around, we still dont know what to do, we dont know what to tell the principals and dont know if they will revoke the authorization given by them to be their agent. A lot of agents had to dishonour the L/C's last year. Most have gone into the buying and selling business to stay afloat but these kind of stories create chaos in the market.

20 minutes ago, Quiet said:

They have started collecting Vehicle values and maximum facility amounts granted for selected vehicles - Vitz, Wagon R etc with YOM 2015/16/117/18/19 from Banks and Finance companies, I think a price control on vehicles are on the way

There has been a talk about the prices of these models, hence the reason the Wagon R's which were quoted at 7.0mil have dropped to 4.5 - 5.0mil range now. The vehicle valuers had started giving lower values in line with the Punchi Car Nivasa guys video and there was a talk of the CB changing the LTV on vehicles.

Do you think people in Sri Lanka will stick to the price controls? They couldn't even stick to the price controls on essentials such as sugar, rice, coconut etc...

[Quiet]

1 hour ago, Gummybr said:

When you think that these jokers stop joking around this happens.

https://www.dailymirror.lk/business-news/CB-to-propose-resumption-of-car-imports-paid-via-foreign-currency/273-222729

Its just a way of telling people to bring in their foreign currency. IMO there will be a lot of background work to be done. This statement has been going around for sometime and this has slowed down the used car market a bit as well. Thing is he never says when it will be implemented, just goes to say that he is suggesting to the government (and who exactly is he? the Central Bank Governor and not the Minister, and no vehicles doesn't fall under the central bank purview).

This will just invite the crooks and underhand people to bring in vehicles and not the people who need them. I saw a video of VIASL talking about getting two years credit from Japan if they are given a chance to import.

Being in the industry with manufacturer agents it has been very disheartening to see what is happening around, we still dont know what to do, we dont know what to tell the principals and dont know if they will revoke the authorization given by them to be their agent. A lot of agents had to dishonour the L/C's last year. Most have gone into the buying and selling business to stay afloat but these kind of stories create chaos in the market.

There has been a talk about the prices of these models, hence the reason the Wagon R's which were quoted at 7.0mil have dropped to 4.5 - 5.0mil range now. The vehicle valuers had started giving lower values in line with the Punchi Car Nivasa guys video and there was a talk of the CB changing the LTV on vehicles.

Do you think people in Sri Lanka will stick to the price controls? They couldn't even stick to the price controls on essentials such as sugar, rice, coconut etc...

I think there is a LTV cap coming on selected vehicle models, CBSL is collecting price and LTV data for last 03 years

[iRage]

2 minutes ago, Quiet said:

CBSL is collecting price and LTV data for last 03 years

Shouldn't these guys be spending their time in working witht he government to actually come up with strageties to improve the country's economy (like..for example...trying to build up tech services, etc...) rather than waste time on compiling lists of vehicle prices ? Easiest is do what we do in pharmaceutical supply chains...set it at cost + a %

[Quiet]

13 minutes ago, iRage said:

Shouldn't these guys be spending their time in working witht he government to actually come up with strageties to improve the country's economy (like..for example...trying to build up tech services, etc...) rather than waste time on compiling lists of vehicle prices ? Easiest is do what we do in pharmaceutical supply chains...set it at cost + a %

There is a bubble in the vehicle market. Finance institutions are funding people purchasing these vehicles at exorbitant prices. The debt burden on vehicle buyers are too high and down the line when vehicle prices drop they will stop paying.

These institutions are already stretched with Moratorium contracts. I would forecast a high Non performing asset ratio come March 2022 when debt moratorium end so the entire finance industry is at risk at the moment. If one company fail there will be a run on the deposits.

Bit too late by CBSL i guess for corrective action. Bunch of theorists who act as if they know everything but no practical action.

[iRage]

8 minutes ago, Quiet said:

Bit too late by CBSL i guess for corrective action. Bunch of theorists who act as if they know everything but no practical action

Thus...why waste time listing out vehicle prices when there are greater and more serious problems at hand. Bringing down the vehicles prices is not going to solve the problem that we are bankrupt as a country

[Gummybr]

1 hour ago, iRage said:

Thus...why waste time listing out vehicle prices when there are greater and more serious problems at hand. Bringing down the vehicles prices is not going to solve the problem that we are bankrupt as a country

True enough, a lot of daily wage earners are having a hard time trying to purchase essentials and here the CBSL is looking at car imports and on how to limit the damage that financial institutes will have on the long run. It was the Finance Minister who instructed the banks to give leases without looking at the crib and to not cease vehicles, initially when banks were reluctant to give leases based on the moratoriums that they had (of course they made money out of it through the interest).

In keeping with the topic you will see a lot of underhand work happening if they are to go ahead with it and they might bring it to a stop within a month or two as the case of all the decisions taken lately. Then brand new importers will have a lot of issues as they need atleast 3months to produce a vehicle and import it, unless its sourced from the stocks. When the cars are produced the rules change and those orders will have to rot in origin country until we open up again.

Its high time the Finance Ministry or whoever is doing the planning sort of give a road map with time frames so that people can adjust rather than announce things on a adhoc basis.

[mazdaspeed]

2 hours ago, Quiet said:

There is a bubble in the vehicle market. Finance institutions are funding people purchasing these vehicles at exorbitant prices. The debt burden on vehicle buyers are too high and down the line when vehicle prices drop they will stop paying.

These institutions are already stretched with Moratorium contracts. I would forecast a high Non performing asset ratio come March 2022 when debt moratorium end so the entire finance industry is at risk at the moment. If one company fail there will be a run on the deposits.

Bit too late by CBSL i guess for corrective action. Bunch of theorists who act as if they know everything but no practical action.

So very true --- this was on the cards & if CB did not see this .. well then too bad. 

over the past few months - leasing companies where on the path giving 90% leasing ..... at the same time they also complained that exiting leases were not getting paid.....

[iRage]

1 hour ago, Gummybr said:

True enough, a lot of daily wage earners are having a hard time trying to purchase essentials and here the CBSL is looking at car imports and on how to limit the damage that financial institutes will have on the long run. It was the Finance Minister who instructed the banks to give leases without looking at the crib and to not cease vehicles, initially when banks were reluctant to give leases based on the moratoriums that they had (of course they made money out of it through the interest).

In keeping with the topic you will see a lot of underhand work happening if they are to go ahead with it and they might bring it to a stop within a month or two as the case of all the decisions taken lately. Then brand new importers will have a lot of issues as they need atleast 3months to produce a vehicle and import it, unless its sourced from the stocks. When the cars are produced the rules change and those orders will have to rot in origin country until we open up again.

Its high time the Finance Ministry or whoever is doing the planning sort of give a road map with time frames so that people can adjust rather than announce things on a adhoc basis.

I am sorry..but maybe I am too skeptical. I see this whole import cars on foreign exchange as nothing but a rouse for their goons to bring in a few cars, horde it and sell it at exorbitant prices. Who in this country would have extra forex just laying around ? Not even the large companies do as they have reinvested any residual forex or are keeping it to stay a float.As for Sri Lankan expats, at least those I know, simply do not want to send in money to the country as we are already having trouble getting what we have out of the country no matter what the need is. Whatever is actually being sent is to support families. I know quite a few who are actually paying tuition fees for their relaives' kids because family in Lanka cannot do anything.

As for the whole list, again, I think as Quiet said, it is just a bunch of theoreticians theoretising rather than coming up with solutions. I mean...the ship has already sunk right ? Isn't this just a mute excercise to see how fast the already sinking ship has already sunk ?  

[TheClutch]

On 10/18/2021 at 6:54 PM, iRage said:

I am sorry..but maybe I am too skeptical. I see this whole import cars on foreign exchange as nothing but a rouse for their goons to bring in a few cars, horde it and sell it at exorbitant prices. Who in this country would have extra forex just laying around ? Not even the large companies do as they have reinvested any residual forex or are keeping it to stay a float.As for Sri Lankan expats, at least those I know, simply do not want to send in money to the country as we are already having trouble getting what we have out of the country no matter what the need is. Whatever is actually being sent is to support families. I know quite a few who are actually paying tuition fees for their relaives' kids because family in Lanka cannot do anything.

As for the whole list, again, I think as Quiet said, it is just a bunch of theoreticians theoretising rather than coming up with solutions. I mean...the ship has already sunk right ? Isn't this just a mute excercise to see how fast the already sinking ship has already sunk ?  

this will lure the crooked exporters and undiyal people to bring down their residual forex to country. no proper exporter or expat will do this. The people looking forward to import vehicles and pay taxes in FCY are already offering their dollars at 240  - 245 rupees , that is almost 20% more than the quoted rate.  There are no reasons for them to change the dollars at 200 rupees and price the vehicles at Rs. 200 per dollar instead they will convert the dollars at 200 but price the dollars at 240/245 when selling the vehicles. This might create negligible impact on forex inflow but not with reduction of the vehicle prices.

Being in the financial industry I have already noted small - medium level crooked exporters and undiyal people have started to save their dollars in foreign countries anticipating to import vehicles with that money and sell it at huge margins. 

Theories works well only with educated genuine government and people. after all we have a crooked government with crooked people 

[iRage]

1 hour ago, TheClutch said:

this will lure the crooked exporters and undiyal people to bring down their residual forex to country. no proper exporter or expat will do this. The people looking forward to import vehicles and pay taxes in FCY are already offering their dollars at 240  - 245 rupees , that is almost 20% more than the quoted rate.  There are no reasons for them to change the dollars at 200 rupees and price the vehicles at Rs. 200 per dollar instead they will convert the dollars at 200 but price the dollars at 240/245 when selling the vehicles. This might create negligible impact on forex inflow but not with reduction of the vehicle prices.

Being in the financial industry I have already noted small - medium level crooked exporters and undiyal people have started to save their dollars in foreign countries anticipating to import vehicles with that money and sell it at huge margins. 

Theories works well only with educated genuine government and people. after all we have a crooked government with crooked people 

and there lies the second problem...this is just to make the forex black market even stronger and the messed up prices for cars will still continue.

[Gummybr]

 

With all these threads on vehicle imports its very hard to think of where to put this, the VIASL has come up with their proposals for the vehicle imports and to regularize the prices and this has been sent as a budget proposal (the budget is in two days, and by now budget is already prepared)

 

 

Call me mad I went through the whole thing and am made to understand that they are condemning what they do when they talk about seasonal car sales, malpractices carried out etc. Also the US Dollar imports are coming from within their association and they say its bad. Arent they making irrational profits from car sales? Why just point fingers at the Vehicle Assembly saying they have big margins (While I acknowledge that there is no proper assembly happening in Sri Lanka, I believe the pricing and profits are based on them paying out their work force and sales and service teams, but still very less than what they make).

On regulations yes we need regulations and it has been highlighted to all past governments and present seems that they have other pressing matters to take care of.

On the US Dollar imports I was told that although you can import using your US Dollar accounts, legally you cannot pay the duty in USD as it goes against the customs ordinance. If they are to give a green light they have to put it to parliament and change the customs ordinance which will take a long time. 

Fingers crossed as we wait to know the future of the automobile industry in Sri Lanka.