Sri Lanka seeks remittances jumpstart from electric cars
Desperate bid to boost cash-strapped nation’s depleted foreign reserves
COLOMBO: Sri Lanka offered its overseas workers the right to buy electric vehicles duty-free on Tuesday to encourage them to send money home and boost the cash-strapped nation’s depleted foreign exchange reserves. The island nation banned vehicle imports in March 2020 as the coronavirus pandemic began to hit its finances, culminating the president’s flight and resignation last month. But in an effort to woo the more than two million Sri Lankans employed abroad, they will be exempted from the ban and allowed to bring in electric cars and motorcycles duty-free.
Before the ban, the duties would have ranged from roughly $5,000 to nearly $50,000, depending on the model. “We are offering this never-before tax concession to encourage our expatriate community to send foreign exchange home through the legal banking system,” foreign employment minister Manusha Nanayakkara told reporters following Monday’s cabinet decision.
Overseas workers will only be able to use half their remitted funds for the purchase, which can have a maximum value of $65,000, he added, while those who have sent home smaller amounts can buy home appliances duty-free at the airport. But overseas workers will have to remit their earnings through official channels to be able to benefit from the offer-and that will see them converted to Sri Lankan rupees at official rates. Expatriates are known to be using informal means to send money home because of better exchange rates as the country’s central bank is accused of keeping the rupee artificially overvalued.
Sri Lanka’s overseas remittances, once a key source of foreign exchange for the economy, have fallen by more than 50 percent, from $3.3 billion in the first half of 2021 to $1.6 billion in the same period this year. The financial crisis has forced Sri Lanka to default on its $51 billion foreign debt and open bailout talks with the International Monetary Fund, while essential goods such as fuel and medicines are in acutely short supply. — AFP