Low-interest regime poised to attract more investments into automobile sector: Banker

• Stresses need for single window platform
• Highlights declining global fossil fuel usage for power
• Questions country’s readiness for growing EV trend

By Ishan Sheriffdeen

With Sri Lanka heading towards a lower interest rate environment, the stock market is expected to perform well, attracting greater investment into sectors such as housing and automobiles, a top banker said.

“Reducing rates will also lead to more leasing facilities and auto loans,” said Standard Chartered Bank Sri Lanka CEO and Ceylon Chamber of Commerce Vice Chairman Bingumal Thewarathanthri.

He noted that there are ongoing discussions regarding the loan-to-value (LTV) ratio for banks, with significant lobbying for an increase to the 70–75 percent range.

Thewarathanthri also highlighted that the automobile industry has been advocating for the creation of a Single Window platform for over two years.

“We urgently need such a platform to ensure the trade is tracked properly. It would streamline the automobile trade by connecting banks, Customs, importers, exporters, logistic agencies, and shipping lines. Improved compliance and reduced opportunities for fraud or errors will lead to increased tax and duty collection,” Thewarathanthri stressed.

“The creation of a Single Window is estimated to take about two years, with a projected cost ranging from US$ 20 million to US$ 80 million. The Ceylon Chamber has held discussions with Pakistan and has also received proposals from certain mature markets on this initiative,” he added.

“Though the government is committed to the Single Window initiative, it has not taken significant steps towards its implementation so far. Allowing trade-based money laundering to persist could have catastrophic results for the country,” he warned, speaking at the Ceylon Motor Traders’ Association’s (CMTA) 105th Annual General Meeting held in Colombo last Friday.

“We are also preparing for a mutual evaluation with the Financial Action Task Force (FATF) early next year, and as an industry, we must be ready. There is more work to be done in this regard.”

The AGM also highlighted the global growth in electric vehicles (EVs). It was noted that the number of EVs globally is rapidly increasing, with China leading the market with over 18 million registered electric vehicles by the end of 2023, accounting for more than half of the global total.

“EVs represent a significant and growing trend in the global market that cannot be ignored. The question is whether we are ready to embrace it as a country,” Thewarathanthri remarked.

He also noted that global fossil fuel usage for power generation is declining year-on-year. “More and more people are turning to renewable energy. This is a clear trend, and almost every country has significant commitments and plans for renewable energy and is actively transitioning.” Furthermore, he mentioned that advancements in polymer technology are set to bring radical changes to the automotive industry.

Touching on the world oil price, which has a significant effect on Sri Lanka’s import bill, Thewarathanthri said that the country is unlikely to see a stress on oil prices due to the Middle East conflict. “Prices did not skyrocket as expected and instead dropped, as there were no major disruptions to global oil trade.”

“Some agencies are forecasting oil to be around US$ 55 per barrel. In such a case, Sri Lanka might be able to achieve savings, which could be redirected to imports or used for strengthening reserves,” he added.

At the AGM, Kia Motors (Lanka) Managing Director Andrew Perera was elected as the new chairman of CMTA.