ECONOMYNEXT – Rojana Industrial Park is to set up Sri Lanka’s first industrial zone in over a decade, aiming to use the island’s location, access to big markets through free trade deals and low labour cost to lure investors.
The export processing zone in Millaniya, Kalutara, is expected to be ready by end-2018 with a fast-track development programme under which Board of Investment officials and heads of utilities meet weekly, State minister of International Trade Sujeewa Senasinghe said.
“Normally, it takes about five years to get all the approvals and build the infrastructure that we hope to do in one year,” he told a news conference.
Rojana, a joint venture between Japan’s Nippon Steel and Thailand’s Vinichbutr Group, is a big operator of industrial parks in Thailand’s Ayutthaya province, and will build, manage and promote the zone for enterprises to set up investments. Electricity, water and access roads will be provided by the government.
Rojana President Direk Vinichbutr said they aim to draw investors by making basic electronic home appliances like television sets initially and, if successful, later get into auto parts manufacturers.
“We have been developing industrial zones in Thailand for 30 years,” he told the news conference. “Sri Lanka’s prospects are very good. It has a strategic location, a large enough population and is now opening up a lot for foreign investors.”
Rojana will follow the model suitable for foreign direct investment like Thailand did several years ago.
“Competition is pushing investors in Thailand outside to explore new markets,” Vinichbutr said. “Sri Lanka’s labour cost is a little bit lower than Thailand’s, which makes it still feasible according to foreign investors in Thailand,” he said. “The minimum labour wage here is still workable for foreign investors.”
Dumindra Ratnayaka, chairman of the Board of Investment, which approves investments and operates existing industrial parks, said the government aims to make the island a manufacturing hub.
“We are focusing on manufacturing, which is what’s important to a country, and targeting specific investors,” he said. “We have not had any new industrial parks developed after the early 2000s. The existing parks are almost full. To bring in investors, we need parks.”
Senasinghe said Rojana had wanted 1,000 acres, but the BOI was able to give only 400 acres initially, of which 250 acres will be developed in the first phase followed by another 150 acres.
“Government policy is to increase exports, for which we need new export industries and have to set up export processing zones in several parts of the country,” he said. “We’re setting a strong foundation to draw foreign investment, and hope to sign five free trade agreements that will give us access to big markets."
Sri Lanka is in talks to expand its FTA with India, and have new FTAs with China, Singapore and Japan; we recently won back duty-free access to the European Union under the GSP Plus scheme.
(COLOMBO, August 21, 2017)