Growth of motor trade industry closely linked to growth of national economy

By Sheran Fernando

One hundred years is a significant milestone in life. The Ceylon Motor Traders Association (CMTA) is one of the oldest trade associations in Sri Lanka and one of the oldest automotive associations internationally. The CMTA is affiliated to the Ceylon Chamber of Commerce, the senior trade chamber in Sri Lanka. 

The association’s vision is to ‘ensure sustainable long term growth for the industry’. The last decade shows overall healthy growth for the industry. Measured in terms of vehicles per 1,000 people, Sri Lanka leads the South Asian region behind only Indonesia and Malaysia.

The growth on the industry is closely linked to the growth of the national economy. The years that the industry has contracted, have been years that the national economy has been plagued with balance of payment deficits. History shows that the industry grows when the national economy grows. The industry can record sustainable growth only if the economy is also recording sustainable growth.

The IMF predicts the world economy to decline. Some economists quote a possible decline of global growth to be as much as 10%. In Sri Lanka, economists are forecasting declines in growth of around 2%. Given this scenario, the automotive industry needs to exert patience and resilience. The industry should explore means of achieving sustainability, and coping with the ban on import of motor vehicles. 

Whilst the association bears this burden, in support of the national economy, there are four areas that the CMTA seeks the Government’s assistance on;

1.Curtailing the implementation of ‘ad-hoc’ policy

a.For example, the sudden ban on vehicle imports has created an issue where our members have vehicles that were on order at the point of the imposition of the ban.

b.Converting these LCs to 365 days credit is not possible when dealing with the manufacturer as their business processes do not allow for changes to terms of trade on an ad-hoc basis

c.This could lead to banks not honoring confirmed irrevocable LCs which brings the trading reputation of the country and our banks into jeopardy

d.Disallowing the import of selected spare parts, causing significant strife to our members

2.Creating a level playing field

a.CMTA members are respected corporates, ensuring their dues to the department of Inland Revenue (IRD), statutory obligations are fully paid and that they are fully compliant with required disclosure to their Registrar of Companies under the Companies Act.

b.If the Government requires that all motor vehicle importers have to be ‘registered’ and makes the above compliance a requirement for registration, this would ensure all importers were competing under the same set of rules.

c.This registration could also ensure that consumers were adequately protected.

3.Ensuring transparency in the levying of customs duty

a.Transparency of custom duty is invaluable for a level playing field within the industry.

b.Value based taxation can be manipulated, and a duty regime that safeguards circumvention will ensure a more level playing field within the industry.

4.Recognition of CMTA

a.The CMTA represents all major international automobile manufactures through their local agents. Our members are in effect the ambassador of the manufacturer in Sri Lanka.

b.Our members have invested significant funds in training their staff, in industry global best practices, making them all internationally employable at premium wages.

c.Our members have also invested significantly in creating international infrastructure and customer support facilities.

d.CMTA members purchase stock directly from the manufacturer and this stock is supported by manufacturer warranty and service and recall action where applicable. This makes the CMTA members imports more cost effective in terms of foreign exchange. 

e.The CMTA seeks recognition and engagement with the Government on policy related areas.

 The CMTA has supported mobility in Sri Lanka over the last 100 years, and stands ready to do so over the next century. The challenge going forward will be to ensure all stakeholders are ready to face an environment where mobility is Autonomous, Connected, Electric and Shared (ACES). The adoption of ACES in Sri Lanka will help curtail pollution, congestion and also significantly reduce the nation’s expenditure on oil to fuel mobility (as electric vehicles can be powered by solar generated energy). 

In conclusion I thank the association for electing me to lead them for the last two years and thank the outgoing committee for all the support they extended towards our initiatives. I congratulate the incoming Chairman and committee and wish them every success in leading the CMTA into the future.

 (Sheran Fernando, relinquished his role as Chairman Ceylon Motor Traders Association, (CMTA) at the AGM held on 30 June. He is the Co-Founder/Director of SML Frontier Automotive Ltd. succeeded by Access Motors Ltd., and an independent consultant and mobility expert.)