Sri Lanka joins Thailand to establish export processing zone
After nearly a decade, Sri Lanka will set up an export processing zone in Millaniya, Kalutara that will be built on 250 acreson a rubber estate belonging to the Horana Plantations and cost LKR 3.5 billion (USD 500 million).
Rojana Industrial Park Public Limited, Thailand, a joint venture between Japan’s Nippon Steel and Thailand’s Vinichbutr Group that has been developing industrial zones in Thailand for 30 years, will build, manage and promote the zone for enterprises to set up investments.
It has been reported that Rojana initially wanted 1,000 acres, but the Board of Investment (BOI)only allocated 400 acres, of which 250 acres will be developed under phase one of the project with the balance 150 acres developed under phase two.
Though it takes about five years to get all the approvals and build the infrastructure, phase one is expected to be completed by the end of 2018 despite the fact that the process to acquire the land is still ongoing as are talks with the Ceylon Electricity Board, Water Board and the Road Developed Authority to provide the required amenities.
With the country’s existing parks almost full, Rojana aims to use the island’s location, access to big markets through free trade deals and low labour cost to lure investors to initially manufacture basic electronic home appliances like televisions etc., and later expand to auto-parts manufacturing if this proves successful.
Also, according to the Vinichbutr Group, Sri Lanka’s minimum labour wage is still feasible for foreign investors as labour cost is marginally lower than Thailand, and Sri Lanka’s conducive investment climate was a deciding factor in their venture.
With the Government of Sri Lanka (GoSL) aiming to make the island a manufacturing huband targeting specific investors for this purpose, investor entry is being both encouraged and facilitated.
Also GoSL‘s policy to increase exports has necessitated the creation of new export industries and the need to set up export processing zones in several parts of the country.
The Ministry of Development Strategies and International Trade plans to establish a strong foundation to draw foreign investment, and hopes to sign 5 Free Trade Agreements (FTA) that will provide access to large markets.
Currently GoSL is in discussion to expand its FTA with India, and have new FTAs with China, Singapore and Japan in addition to having re-secured duty-free access to the European Union under the GSP Plus scheme.
OSL Take:
With the government of Sri Lanka seeking new export industries, encouraging investors, industrial zones and manufacturers, and gaining access to big markets through free trade deals, any potential investor has the opportunity to explore many avenues of investment in the country.
| Article Code : | VBS/AT/23082017/Z_4 |