Tuesday, 3 February 2004  
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Industrialists' export woes

Our story on locally manufactured three-wheelers, which you can read elsewhere in these pages, exemplifies the problems faced by local industrialists in exporting their products. In this particular case, Alba, the three-wheeler maker, has had to put export plans on hold as Sri Lanka does not have an authority to issue an Emission Standard Certificate (ESC) for locally manufactured vehicles.

As a result, Alba Lanka Industries is unable to fulfil an order for 216 three-wheelers from two environmentally-conscious countries which require ESCs for all imported vehicles. This is incidentally the first export order for Sri Lanka's three-wheelers.

In the absence of a mechanism to issue these mandatory certificates, the contract is most likely to go to a third country which can do so. It would be a big loss to local industry and to the country's coffers.

The local three-wheeler market is dominated by Indian brands. Nearly 3,500 three-wheelers are imported to Sri Lanka and around the same number of three-wheelers are registered every month. A substantial saving of foreign exchange can be incurred if at least a quarter of these three-wheelers can be manufactured locally.

Fears have been expressed that the government plans to allow the duty free import of three-wheelers, thereby undermining the local three-wheeler industry. It is generally acknowledged that the three-wheeler is the poor man's vehicle and cheaper three-wheelers will be a boon for youth looking for self-employment avenues. But the impact of such a measure on the local industry and environment must be considered.

Several countries have banned three-wheelers from their main cities, as they use two stroke engines which are believed to emit more noxious gases than four stroke engines. The latest three-wheeler engines, to their credit, do come close to the four strokes in terms of emissions, but doubts remain. The government should encourage local three-wheeler manufacturers to explore the possibility of installing compact four stroke engines.

The local vehicle industry is still in its infancy. Micro Cars Limited has just got off the ground. The first few cars have been registered after clearing a number of bureaucratic hurdles. Alba is also gaining popularity rapidly. India's Ambassador cars are being assembled locally as are Bajaj motorcycles. American Chevrolet pickups are being converted to right-hand drive in Sri Lanka for re-export to Australia.

The authorities must provide every possible incentive to these industries which potentially can provide employment to thousands of youth. Duty and tax concessions must be granted especially to the all-local brands. Investment authorities must create suitable conditions for global car giants to begin spare parts/car assembly operations here.

We do not have to look beyond India for inspiration in this regard - automotive giants such as GM, Fiat, Ford, Hyundai and Suzuki have big plants there. The result is that the Indian consumer can buy a brand new car at a very affordable price. Ample stocks are also available for export.

Local vehicle manufacturers must also turn their attention towards building motorcycles, the most popular mode of transport among youth. In fact, more than 50 per cent of the vehicles on our roads are motorcycles. Indian and Chinese brands have cornered nearly 90 per cent of the brand new motorcycle market. An attractively-priced local motorcycle could be a hit among consumers.

Unfortunately, most locals still shun local products, believing that foreign goods are always superior. The authorities, in collaboration with manufacturers, should undertake an effective campaign to efface this attitude from the national psyche.

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