New Gazette Eases Vehicle Release Amid Import Fraud Scandal

In a major policy shift, the new government has issued a Gazette notification enabling the release of nearly 1,000 vehicles held by Sri Lanka Customs, marking a significant development in the ongoing controversy over vehicle import irregularities. The Gazette, signed by President Anura Kumara Dissanayake in his capacity as Minister of Finance, Planning and Economic Development, came into effect on October 24.

The decision provides a regulatory framework for releasing vehicles imported under Cross Border Letters of Credit (LCs)—a practice that has long been under scrutiny due to widespread allegations of fraud and manipulation. Despite vehicle imports being permitted since February this year, a large consignment of vehicles brought through the Hambantota Port had been withheld by Customs for months over suspected violations of the 2013 Import-Export Regulations.

According to the Gazette, vehicles imported under cross-border LCs opened in third countries, rather than in the country of origin, may now be released under specific conditions. These include full verification of import documentation, Customs clearance upon payment of all applicable duties and penalties, and compliance with registration and emission standards prior to release.

The decision comes amid increasing pressure on the government to address irregularities in vehicle imports that have cost the Treasury billions of rupees in lost revenue. Investigations over the past two years have revealed that several importers exploited loopholes in banking and documentation systems by routing LCs through intermediary countries to evade taxes, undervalue vehicles, or disguise country-of-origin details.

Customs officials and industry experts warn that such schemes not only distort market prices but also undermine legitimate importers and financial institutions. In several cases, vehicles were imported using forged invoices or mismatched engine numbers, raising concerns about money laundering and the entry of stolen or illegally modified vehicles into the domestic market.

The government’s latest move is expected to generate mixed reactions. While vehicle importers welcome the release as a relief after prolonged delays, consumer rights groups have urged authorities to ensure transparency and accountability in implementing the Gazette. Economists argue that the decision reflects the administration’s attempt to balance economic recovery with enforcement integrity—allowing revenue generation from Customs duties while preventing market stagnation.

As Sri Lanka continues its efforts to stabilize the economy, the vehicle import sector remains a critical test of regulatory discipline and governance credibility. The Finance Ministry has indicated that a more comprehensive import control and verification mechanism will soon be introduced to prevent similar abuses in the future.