Sri Lanka industrial zone shelved as expropriation thwarted

ECONOMYNEXT – Sri Lanka has shelved plans to set up an industrial zone with Thailand’s Rojana as an attempt to expropriate leased land from a previously privatized company was thwarted in court.

An official of Sri Lanka’s Board of Investment confirmed that the plans for the industrial park had been shelved after a plantations company went to court. The Thai investor had also been unhappy over the delay in getting land, the official said.

Horana Plantations Plc, a listed company has disclosed that it went to court against an attempt by the Land Ministry to expropriate leased land.

The Land Ministry had attempted to expropriate rubber land from Horana Plantations Plc’s 98 hectare (242 acre) Neuchatel Estate near Milleniya in the Kalutara District for ‘public purpose’, the firm said in an October filing.

After Horana Plantations filed objections and a case at the Court of Appeals against the move, the Land Ministry had attempted to immediately expropriate the land with a new gazette ‘on the grounds of urgency’, which was blocked by the Court of Appeals with a stay order effective until February 13, 2020.

The Rojana project was unveiled in 2017, and was projected to generate 500 million US dollars in foreign direct investments. The industrial zone was to initially be allocated 250 acres and subsequently another 150 acres of ‘state owned’ plantation land, reports said a the time.

It is not clear why the BOI attempted to expropriate the land instead of coming to a joint venture arrangement with the plantation firm, enhancing Sri Lanka’s property rights environment.

Sri Lanka has several laws which undermine private property rights allowing state agencies including the Urban Development Authority to expropriate land going beyond eminent domain (for public purposes such as roads) for commercial activities such as construction projects and industrial estates.

The state has a habit of taking back bits of land from privatized plantations though they are on long-leases to the companies, industry officials say.

Sri Lanka has history of expropriating freehold land also from businesses, which has contributed to undermining property rights and discouraging foreign and domestic investment since independence from British rule.





All land in regional plantations companies were also expropriated in the 1970s from foreign and domestic investors, until they were privatized amid losses. (Colombo/Nov23/2019)

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