The Sunday Leader

Big Miracle For Land Rover

  • Government Taken On A Rs. 103 Million Ride

By Faraz Shauketaly

The world famous Land Rover Discovery vehicle has been available in Sri Lanka ever since its launch and – if the advertisements are anything to go by – Sri Lanka is the cheapest place on earth to buy this fabulously appointed top of the range vehicle. Although selling in its native Britain for the equivalent of USD 57,909, the Land Rover Discovery 4 3.0 Sv6 is advertised in Sri Lanka for USD 35,000 cif. There is nowhere else on earth you can buy this vehicle from a bonafide Land Rover dealer for this price. This up-market luxury vehicle is so advertised by a local Land Rover dealer SML Frontier Pvt Ltd. However, the company also states that a ‘local agent’s charges’ fee of Rs 2.8 million is also payable.

The SML Frontier advertisement and quote calculates the duty at approximately Rs 7 Million on the basis that the C&F value is USD 35,000 and on the basis that a concessionary permit is used. However, the permit can be used only to an upper limit of USD 35,000. Under Customs rules, if the value exceeds the amount permitted by the permit, the concessionary duty terms cannot be applied and, if foul play is discovered, the Customs have the right to issue a forfeiture notice on the vehicle.

In any event, the price of USD 35,000 for this particular vehicle, as declared by SML Frontier in their quote, really does make Sri Lanka the cheapest place in the world to buy it. Notwithstanding the local agent’s payment of Rs 2.8 Million, of course. A cursory check carried out on the internet allows one to check on the price of almost anything anywhere in any market. Such a check will reveal that the Land Rover Discovery 4 3.0 Sv6 will sell at a maximum discount of not more than 15% of the list price of USD 57,909 (The discount being usually given to dealers).

Sources pointed out that if the government in Sri Lanka was to ensure that the correct duty and levies are paid, the local dealers must transact with the manufacturers who have historically shown little appetite to indulge selectively in under-invoicing.

A Customs official said that a full investigation will be carried out to ensure that the value declared by importers of the Discovery or indeed any vehicle is bona fide and consistent. In Sri Lanka, the Land Rover agent is, in fact, an agent of an authorized dealer, Guava International Ltd of Guildford, Surrey, England. The Land Rover website lists Frontier Automotive as its local agent.

The Government, The Defender and CHOGM

It has also emerged that the government have been charged USD 39,450 for each of the 55 Land Rover Defender 110 LWB vehicles imported for CHOGM to be used as backup vehicles to protect Heads of State visiting Sri Lanka for the CHOGM meet. Unfortunately, it appears that the government have been charged at least USD 14,500 more than what any dealer in the UK would be able to supply the identical vehicle which is a barebones, stripped down vehicle; the most basic in the range.

This has presented an interesting conundrum for the government and indeed for the local market. The government granted itself a duty waiver as it imported these vehicles for essentially its own use (for CHOGM). Now that a decision was taken to sell these vehicles, the government has an underlying duty of care to recover the duty and levies on the vehicles on sale. As the value paid was USD 39,450, the duty and levies would be calculated on this transacted value. Once all these are added, it is well nigh impossible to sell the Defender because, as we have highlighted here, the Discovery 4 3.0 Sv6 has a declared value of just USD 35,000 for an upmarket model. The very basic Defender 110 LWB has a transacted value of USD 39,450!

The only realistic option available to the government is to retain the vehicles for their own use –for which they have paid not only an excess USD 14,500 more but are unable to obtain a realistic resale price thanks to the higher purchase price. Own use by the government will exclude the need to pay any duty and levies as the government gave itself a waiver.

It has been calculated that the amount over and above the true market value for a Defender 110 LWB paid by the government totals Rs 103 Million plus, of course, the fact that the government faces a ‘total loss’ situation as they are unlikely to find anyone willing to pay in excess of USD 40,000 for a barebones stripped down, no-accessories, Land Rover Defender 110 LWB.

 

The Access Connection To SML
Frontier Automotive Pvt Ltd.

The main player in Sri Lanka for Land Rover is SML Frontier Automotive (Pvt) Limited. It is a business in which it was reported that Sathosa Motors PLC has a significant stake. Sathosa Motors PLC, in turn, has as its majority shareholder with 84.4% Access Engineering PLC. In turn, Sumal Perera (25%), J C Joshua (10%), R J S Gomez (12%), S D Munasinghe (2.4%), Alex Lovell (1.6%), (All Directors of Sathosa Motors Plc) control 51% of the shares at Access Engineering PLC. Sumal Perera’s children have a further 9.1% of Access Engineering PLC, giving substantial and effective control of Access Engineering PLC to this group of five.

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