Sri Lanka's economic engagement with China cannot be sustained through shortcuts, opacity: Report

Colombo, Aug 9 (IANS) Economic engagement with China cannot be sustained through shortcuts or opacity, a report in Sri Lanka's leading newspaper highlighted citing the crisis surrounding the "bold venture" with BYD to bring electric vehicles into the island nation.

"When Sri Lanka announced a partnership with China's BYD to bring electric vehicles into the country, it was heralded as a double victory: a leap toward green mobility and a symbol of deepening economic ties with Beijing. Today, that bold venture has curdled into a crisis. Nearly 1,000 BYD cars sit detained in Colombo Port, hiding a potential Rs 22 billion worth of liabilities arising from alleged under-declaration of motor capacities," Sri Lanka's Daily Mirror reported this week.

"Customs officials allege that BYD vehicles were imported with declarations stating 100-kilowatt motors, attracting a lower excise duty of Rs 2.4 million per car. However, similar models in international markets reportedly carry 150-kilowatt motors, which would incur Rs 5.4 million in duties. If this under-declaration is proven, the importer could face Rs 3 billion in tax shortfalls — escalating to Rs 12–22 billion once penalties, stranded inventory, and customer refunds are factored in," it added.

This, the newspaper highlighted, is slowly turning into "more than a corporate scandal" for Sri Lanka in a report titled 'Sri Lanka's costly EV gamble: When China's BYD became a liability', stating that how, in its "eagerness to ride China's electric wave", the country may have exposed itself to "reputational, financial, and geopolitical risks".

The report mentioned that the reputational damage reverberates along the very channels Sri Lanka depends on for economic recovery.

"BYD is not merely a car manufacturer; it is a flagship of China's high-tech industrial policy, backed by state interests and central to Beijing's global push in electric mobility. A scandal implicating BYD, whether through active complicity or regulatory ambiguity, invites scrutiny of the Sri Lanka-China commercial relationship itself," the newspaper stated.

Colombo, it mentioned, can "ill afford" to jeopardize any risks to its economic viability in such crucial times in the wake of US tariffs and ongoing IMF-driven austerity.

"If the allegations hold, the scandal does not just dent investor confidence in the electric vehicle market but will also undermine the credibility of Sri Lanka's corporate sector and, by extension, the reliability of its partnerships with foreign firms. BYD's brand, carefully cultivated as a symbol of Chinese technological ascendancy, now risks association with a regulatory dispute that could escalate into a legal and political issue," the Daily Mirror, one of Sri Lanka's leading newspapers, detailed.

"For Sri Lanka, the lesson waiting in such a crisis is nonetheless important. Economic engagement with China cannot be sustained through shortcuts or opacity. The reputational cost of mismanaging a high-profile Chinese partnership can be greater than the immediate financial loss," it added.

--IANS

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