Sri Lanka’s vehicle import industry is facing a severe crisis as Japanese banks refuse to accept letters of credit (LCs) issued by local banks, according to the Lanka Vehicle Importers Association.
Despite the government lifting restrictions on vehicle imports, importers are struggling to bring in Japanese vehicles due to financial trust issues between Japanese and Sri Lankan banks. Association chairman Indika Sampath Meranchige confirmed that Japanese banks no longer recognize LCs from Sri Lanka’s banking system, leaving importers without a reliable transaction method.
As a result, importers and vehicle companies are now forced to rely on their own financial standing and personal trust to facilitate purchases. Some have resorted to alternative banking channels, but these methods come with additional costs, leading to further price hikes in the already inflated vehicle market.
The ongoing financial instability and loss of international banking confidence in Sri Lanka’s financial system have exacerbated the issue, creating uncertainty for both importers and consumers. Vehicle prices are expected to rise sharply unless a viable solution is found to restore trade relations with Japanese financial institutions.
