The Vehicle Importers Association of Lanka (VIAL) announced plans to restart vehicle imports by February 2025, contingent on the government lifting the long-standing personal vehicle import ban. This declaration was made by Indika Sampath Merinchige, President of VIAL, during a press conference yesterday.
While the new government has yet to officially confirm its intentions, indications suggest it may proceed with the framework established by the previous administration. The current economic climate appears conducive to vehicle imports, albeit under specific restrictions.
Deputy Minister of Economic Development, Anil Jayantha, recently outlined the government’s approach to vehicle imports.
“Permissions will be granted across several categories, particularly for commercial vehicles, within the framework of foreign exchange limits. We are carefully assessing reserves and have established a buffer reserve with the Central Bank,” Jayantha said. He emphasized that vehicle import opportunities will be introduced in phases during the first quarter of 2025 to ensure economic stability.
The phased approach involves three stages:
- Stage 1 (from October 1, 2024): Importation of public passenger transport vehicles, special-purpose vehicles, and non-motorized goods.
- Stage 2 (from December 1, 2024): Importation of commercial and goods transportation vehicles.
- Stage 3 (from February 1, 2025): Importation of personal-use motor vehicles, including cars, vans, SUVs, and pickups.
The gradual lifting of restrictions is part of a stabilization process aligned with the Central Bank’s reserve management strategy. Currently, reserves stand at USD 6.4 billion, allowing measured adjustments without destabilizing the market.
Central Bank and Policy Considerations
The Governor of the Central Bank of Sri Lanka (CBSL), Nandalal Weerasinghe, reiterated that the economic conditions influencing the previous government’s decision to lift the ban remain consistent. Speaking in October, he confirmed that the CBSL’s recommendations are based on technical analysis, adding that maintaining the February 2025 timeline is feasible if financial conditions remain favorable. However, the final decision rests with the Ministry of Finance.
New regulatory measures aim to address potential market risks. According to a senior Treasury official, vehicle dealers will be restricted from bulk imports to prevent hoarding, which could destabilize the exchange rate. Furthermore, a 3% tax on the CIF (Cost, Insurance, and Freight) value will be levied on importers who fail to register vehicles within 90 days. The sale of vehicles with garage number plates will also be prohibited.
Policy Priorities and Conditions
The previous administration had outlined a comprehensive policy framework for vehicle imports:
- Environmental Standards: Priority will be given to environmentally friendly vehicles, with a shift from Euro 4 to Euro 6 emission standards. Electric vehicles and local assembly of electric three-wheelers will be promoted, while petrol and diesel-powered three-wheelers will be prohibited.
- Age Limits: Imports of motor cars, SUVs, motorcycles, and pickups will be restricted to vehicles less than three years old. Public passenger and commercial vehicles will have a five-year age limit, while special-purpose and defense vehicles can be up to ten years old.
- Regulation and Licensing: An annual licensing system will be introduced for importers, manufacturers, and traders to ensure compliance with national tax requirements.
With the framework in place and economic conditions stabilizing, the gradual resumption of vehicle imports aims to balance market demand and foreign exchange management while supporting the country’s long-term development goals.