The government has so far approved the opening of letters of credit (LCs) worth nearly USD 1.8 billion for vehicle imports this year, according to Deputy Minister of Trade, Commerce and Food Security R.M. Jayewardene.
He said that although the total approved LC value stands at USD 1.8 billion, only around USD 1.2 billion worth of vehicles have actually been imported.
“Around USD 1.2 billion worth of vehicles have come into the country. Of the letters of credit opened, only about 60% of the vehicles have arrived so far,” the Deputy Minister noted.
Initially, the government permitted vehicle importers to open LCs up to USD 1.2 billion, but as that limit was reached, it was gradually increased to USD 1.8 billion, Jayewardene said. He added that this revised ceiling has also now been reached.
Meanwhile, Sri Lanka Customs Media Spokesperson Chandana Punchihewa stated that around 250,000 vehicles have been imported into the country, though he was not aware of the exact number of LCs opened.
Addressing the issue of vehicles held by Customs due to imports made through border letters of credit, Punchihewa referred to recent Finance Ministry regulations aimed at resolving the matter.
He explained that under the new Gazette, importers may reclaim their vehicles, but they face two options:
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Register the vehicle by paying an additional 35% penalty fee, which will be credited to the Department of Import and Export Control.
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Provide a bank guarantee for the additional amount and retain the vehicle without registration until the dispute is settled.
“If importers are willing to make the additional payment, they can register the vehicle. Otherwise, they may take the vehicle home under a bank guarantee and wait for a final resolution,” Punchihewa said.
The dispute over cross-border letters of credit stems from a clause in the English version of the 2013 Gazette Notification, which specifies that import documents must be stamped by a corresponding bank in the country of export, not by a third-country bank.
However, vehicle importers contest this interpretation, arguing that the Sinhala version of the Gazette merely refers to the ‘export agent’s bank’ without imposing such geographical limitations.
