An impetus for industrialisation | Sunday Observer

An impetus for industrialisation

12 March, 2023

A couple of weeks ago, a low-key ceremony marked a significant milestone in Sri Lanka’s drive towards industrialisation. At this ceremony, Transport, Highways and Media Minister Dr. Bandula Gunawardena handed over the vehicle registration number plate for Sri Lanka’s first completely locally manufactured electric supercar, the Vega EVX. This car has already won rave reviews from the international motoring press for its radical design and the electric power unit, which is on par with those manufactured by the leading car manufacturers.

Sri Lanka used to spend around US$ 1 billion every year to import thousands of passenger cars and other vehicles. This money was obtained either from expatriate remittances or tourism earnings. However, the foreign exchange crisis precipitated by Covid-19 compelled the then Government to curtail non-essential imports drastically, with passenger cars topping the list. Passenger cars have not been imported to the country for nearly four years, except for a very few. However, the import of commercial vehicles, tractors, ambulances, construction vehicles and hearses has been allowed on a limited basis. The Exchequer is reported to have saved more than US$ 2,000 million through this measure.

While there are both pros and cons of this move, one silver lining was that car importers scrambled to assemble their principals’ vehicles here to circumvent the import ban. In fact, the Government encouraged the local assembly of vehicles, as long as the local components exceeded 60 percent of the overall makeup of the vehicles(s). Thus even if the engine is still imported, the seats, mirrors, tyres, body panels and many other parts could be sourced locally, giving an impetus to local industry. Several companies are already assembling Internal Combustion Engine (ICE) cars locally and selling them at very competitive prices which are much less than the duty paid prices for Completely Built Units (CBUs) imported from the countries of origin or third countries.

But the era of the ICE car is ending worldwide as fossil fuels are running out of fashion. With the entire world moving towards the rapid adoption of Electric (and even hydrogen fuel cell) Vehicles (EVs), the Government too has declared that no new ICE cars would be registered after 2035. Long before Covid hit us, the Government also declared that priority would be given to the import and use of hybrid and fully electric cars. Also, the Government vehicle fleet would be converted to electrics.

There is no doubt that the economic crisis has hastened the need to adopt electric cars, as Sri Lanka can no longer afford to spend a staggering US$ 6 billion needed per year to keep the ICE cars running. We already have around eight million ICE vehicles on the road for a country with only 22 million people, which is not sustainable in the long run. There really is no need to wait till 2035 – the Government should ideally declare right now that only electric vehicles would be allowed to be imported or locally manufactured from 2025, one full decade earlier.

The company behind Vega and several other companies have shown electric kits that can be retrofitted to existing ICE vehicles. If the costs can be driven down, this will be the best solution for electrification of the vehicle fleet. The Government will still be able to save a substantial sum of money even if a subsidy is given to the end consumer for retrofitted or new electric vehicles, as done in many other countries. However, it is important for solar chargers and DC superchargers to be installed for recharging EV batteries, as the mainly thermal-powered national grid will be severely burdened if thousands of electric cars have to be charged overnight every day.

The nascent EV industry in Sri Lanka has the potential to generate thousands of jobs in the long term. These are generally well-paid high tech jobs which will perhaps help to stop the brain drain we are now experiencing. Sri Lanka’s school and university curricula should have more Science, Technology, Engineering and Mathematics (STEM) subjects for students to choose from. This will create a talent pool for jobs in emerging sectors such as electric car assembly. Besides, it will also solve the problem of “unemployed youth” as most students will have jobs in the STEM sector as soon as they pass out from school or university.

It is also important to get more girls to study STEM subjects – this was one of the themes of this year’s International Women’s Day (IWD) celebrated globally on March 8. It is not too far-fetched to imagine a woman heading an electric car plant in Sri Lanka if we give women more opportunities in the STEM sector. The key to Sri Lanka’s future prosperity lies in further industrialisation, which should encompass the latest technologies in transport, energy, artificial Intelligence and machine learning, computing and finance. The foundation for this future should be laid now itself


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