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by Shirajiv Sirimane

The 'import duty' structure on bicycles should be reviewed and a new tax system be introduced soon, one of Sri Lanka's leading bicycle importers, Nishantha I. Piyasena, Managing Director of Nishan's Cycle Base in Maharagama said.

He said that there are four main categories with regard to the import of bicycles. "One area is the import of spares mainly to assemble bicycles in Sri Lanka. The other three areas are the import of brand new, reconditioned and 'used as it is bicycles'."

"If it is difficult to implement a tax system in these three categories the Customs could maintain a proper database on values of bicycles. Then automatically bicycles can be filtered and under quality bicycle imports can be avoided."

Mr. Piyasena said that the main reason behind the import of reconditioned bicycles is the big demand it has from the less affluent class. "The ordinary public cannot afford the price of a Japanese original bicycle. The reconditioned bikes are at least 40% cheaper than new bicycles. These reconditioned bikes are bought from homes and sent to bicycle assembling plants which do a technical evaluation. In some instances, they even install new spares before being shipped to Sri Lanka. The 'used as it is bicycles' do not get a technical inspection and are of low quality."

He said that surprisingly enough the customs are charging 25% for brand-new bicycles and charge the same amount for reconditioned cycles as well. He said that he pays a Custom Duty of around Rs. 1,300 for each reconditioned bicycle and pays the same amount for a brand new bicycle. "This is unfair."

He said that he had made recommendations to the Ministry of Finance and Director General of Customs in this connection.An official from the Sri Lanka Customs said that duty on bicycles are based on the invoice value. "We have received some complaints and recommendations with regard to this and we will soon look in to it," he said.

Mr. Piyasena said that there have been representations made to the government by Sri Lankan bicycle manufacturing associations requesting the authorities to completely ban the import of reconditioned and second-hand bicycles. "These Associations claim that the import of second hand and reconditioned bicycles is a threat to the local industry. This is not true. Competition is good for any product. If the government decides to ban the import of 'used as it is bicycles' and reconditioned bicycles the price of bicycles will increase and would be almost impossible for an ordinary person to buy one."

He said that the sport of cycling too would be hit tremendously if this is to be implemented.

"A racing bicycle is a must for sportsman and a brand new one costs around Rs. 75,000 while a reconditioned bicycle costs half the price.

The same applies for spare parts. Since it is the less affluent class which takes part in cycling they would be badly hit if the government decided to ban the import of reconditioned bicycles." However, he said that it might be a good idea to ban the import of low quality 'used as it is bicycles' and reduce the duty on bicycle spare parts. "This would help the local industry to be more competitive."

He said that he was in Japan for over two years in the late 1990s on a scholarship at Reitaku University and added that the industry is very competitive in Japan. "I have direct contacts with Continental bicycle Industries in Osaka which was established almost 50 years ago and is ranked among the top 10 bicycle manufacturing companies in Japan. They professionally inspect all bicycles imported form Japan exclusively for 'Nishan's Cycle Base."

He said that he caters to the niche market in Sri Lanka. "I do not have the mass market simply because I get all my reconditioned bikes scanned in Japan." Mr. Piyasena is a member of the Japan Mountain Biking Association and is a diploma holder and member of the Japanese Mountain Biking School. He is also a dealer member for International Mountain Bicycling Association in Colorado, USA.

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