ECONOMYNEXT – Sri Lanka’s Rigid Tyre Corporation (Pvt) Ltd said it will start producing passenger car radials with a 100 million dollar first phase of a 250 million dollar project being commissioned in January 2020.
In Sri Lanka tyres are under protectionist taxes, pushing up the running costs of anything from a bicycle to a truck, and country’s transport costs, contributing to undermining the country’s export competitiveness and tourism.
Sri Lanka has banned tyre imports in the wake of monetary instability in March and April 2020 as the island’s Latin America style central bank printed money, creating forex shortages and allowed its highly unstable soft-peg (called a flexible exchange rate) to slide, earning a credit downgrade.
Rigid Tyre is expecting to export its tyres.
“It is the largest foreign direct investment in the last ten years; it will also be one of the country’s foremost exporters when the production commences,” Executive Director Dhammika Lokuwithana said in a statement.
“Besides rejuvenating the export sector which has suffered due to different crises over the past few years, this project will also serve to revive the local rubber industry which Sri Lanka was once world renowned for.”
“We intend to source all the necessary rubber locally which will empower the native rubber farmer, generate new job opportunities in the thousands and, more importantly, the country will benefit from exposure to European technology which is the unrivalled forerunner in the market in terms of performance, efficiency and environmental consciousness.”
Sri Lanka has been importing lower grade rubber for some time to add value for re-export, as the country became a centre of solid tyre manufacture, though a global Coronavirus pandemic has slowed the sector.
Sri Lanka has for decades being charging an export cess on rubber, denying the global price for rubber to farmers and gradually discouraging production, critics say.
The Rigid Tyre plants will make Passenger Car Radials, including for SUVs. It will also make tyres for two-wheelers, three-wheelers, trucks buses and solid tyres, the firm said.
The second phase of the project will be commissioned in March 22. The firm said it will create 3,000 jobs.
“Investments such as these set a good precedent, cementing Sri Lanka’s position as a haven for investors globally,” Rigid Tyre Corporation Chairman Nandana Lokuwithana said.
“This falls very much in line with the Government’s vision to position the country as an industrial hub in the foreseeable future.”
Lokuwithana also heads Ceylon Steel Corporation and Onyx Group in the UAE. His other investments include Marriot Al Jadaf Hotel in Dubai, a cement grinding plant in Mirijjawila Hambantota which will start in May 2021 and Marangoni Industrial Tyres Lanka (Pvt) Ltd. (Colombo/Nov22/2020)