Import to Sri Lanka

[mak]

Sri Lanka import large number of Japanese used vehicle annually. Specially last few years after tax reduction, import had increased and road fill with 'new' cars.

Few rules apply when JDMV import to Sri Lanka.
1. Japan Auto Appraisal Institute (JAAI) report is momentary. It cost about 10,000 -20,000 JPY depend on exporters who arrange it.

2. Payment should be done through only LC (Letter of Credit). Government has strict regulation on payment made on import.

3. Only less than 2 years old cars allowed to import. Data calculate from registration data of Japan to BOL (Bill of lading). For the car export under government employee permit it is less than one year. Commuter vans,Trucks and Buses this duration is 5 years.

4. Custom duty structure is complicated. It is very difficulty say correct tax value until they calculate and give their value. However, considering car model, registered data in Japan, options in it and many other factors..it is possible estimate custom duty by a person who have some knowledge about it. It always better to have idea about tax value before you decide your drem vehicle. This website provide some information about duty http://www.customs.gov.lk/ (Official sri lanka custom website)

It is always better to contact a knowledgeable custom clearing agent, before you start custom clearing.

[mak]

As I mentioned in previous post, Sri Lankan can pay for vehicle through only LC (Letter of Credit). It is a secure process of importer.

The basic steps about LC.
1. You need to find a dealer in Sri Lanka who has contacts in Japan. Dealer can buy/arrange a vehicle from Japanese agent’s own collection or from an auction and import it for you. (You may find and contact directly a dealer in Japan) After you select a vehicle, you may need to make a deposit to make sure dealer hold the vehicle for you. Then only, you need to open LC (Letter of Credit).
2. LC is way of making payment from your bank to a bank in Japan (Bank of Japanese agent). You need to have invoice to open LC (and money in your bank or hand). Invoice should be in your name (one who wants to import the car). If not it will be a big problem when clearing the car for custom and tax payment.
3. Many bank in Sri Lanka, if not all, keep your fixed deposit or other deposit and will open LC. In such case you need to pay only when vehicle/document arrived to Sri Lanka.
4. You may need to make sure, you bank is accepted by the bank of Japanese agent. Most Sri Lankan banks are accepted by many agents, but you need to make sure it.
5. Through this LC process, you bank hold money until you agree to release them for Japanese bank. You need to do it in YEN (JPY) for most company in Japan. You bank will hold 10% more than the invoice value to cover any changes in currency rates. You bank will charge their fee for LC (About Rs 4000 to Rs7000 + money transfer fee when they acutely transfer money at the end of the process). It is very common Japanese agent request you to pay Japanese bank charge as well. It is around Rs 6000. In exceptional cases, some agent may ask much higher values than this. Then you need to careful about it. I know some cases, a Japanese agent asked 35,000 JPN as bank charges. So there can be many hidden fee, different fee from different Japanese agents. You need to clear about all before you start the process. Just few Emails may not enough!.
6. It is not rare that you have to amend (do changes) in LC before Japanese agent accept it. Then it cost about half of the cost mentioned above.
7. Once the LC has been accepted by Japanese agent, they will start shipping process, and will inform you a tentative date that the ship will leave Japan and arrive Sri Lanka.
8. After shipment, your bank will get document related to your vehicle. You may directly get paper copy or Email attachment of same document from Japanese agent. At that time ship will be arrived. You need to go to your bank and accept and confirm. Then bank will send money considering currency rate of that day. Excess money bank retained will be released to you.

[mak]

I just posted basic steps related to LC process, these are common instructions.

However, It is very important that you need to discuss with your bank and local dealer more about LC, since each LC can different. Some agent do not accept condition your bank consider as ‘common’.

I hope this post helps for understanding basic about LC. I will post about custom and inland revenue (tax) process later post.