Sri Lanka grants significant tax concessions to US$ 300 million Chinese investment in tyre manufacturing
The government of Sri Lanka has decided to grant significant tax concessions to Chinese tyre manufacturer Shandong Haohua Tyres, who is planning to set up a US$ 300 million project to manufacture tyres for the export market, after marking the project under the Strategic Development Act (SDA).
The Cabinet of Ministers has granted approval for SDA was given this week when Sri Lanka’s Prime Minister Mahinda Rajapaksa in his capacity as Finance Minister had presented a proposal, Cabinet Spokesman and Media Minister Keheliya Rambukwella has said.
Sri Lanka’s Board of Investment (BOI) project was reportedly inked last month and is the largest project earmarked for the Hambantota investment zone to date and exports are expected to commence within three years.
The BOI at the time of the signing had stated that the rubber sector was one of the five thrust sectors identified by the BOI’s strategy to drive foreign direct investment (FDI) to the country.
Presently, Sri Lanka gains US$ 1 billion worth of export earnings through the rubber industry, while the Sri Lankan Government has set up a target of US$ 2 billion to be achieved by 2025 and it is expected that once the project is completed and operations commence, it will fulfill 30% of the set target, local media reports stated.
According to reports, Shandong will manufacture semi-steel radial tyres and all-steel radial tyres needed for trucks, buses and passenger cars, creating job opportunities for nearly 2,000 people.
The inflows of the skills and the technology to the local youth through this investment will be another unique advantage for the country, the BOI has stated.
Small and medium scale rubber plantation industry employees are to be benefited through this new development and the upcoming manufacturing process is to create indirect employment, creating new income opportunities to the livelihood in the area as well.
Shandong will be established on 121 acres of land in the Industrial Park within the Hambantota International Port while the Hambantota International Port Group (HIPG) has offered this land to the Chinese company as their first ever FDI within the Industrial Park.
Part of Sri Lanka’s economic development is focused on attracting foreign direct investments to key economic sectors in the country. The government of Sri Lanka offers a wide range of tax concessions to foreign businesses/investors to engage with the island. The country has also adopted methods to improve the ease of doing business environment in Sri Lanka. Also, Sri Lanka’s geographical positioning in the Indian Ocean and the many trade agreements as well as trade concessions enjoyed by the country have made it a business hub in the South Asian region. Foreign businesses/investors could therefore explore opportunities in Sri Lanka.
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