Thailand’s Rojana inks agreement with BOI to set up industrial park in Kalutara

• Expects $ 500 m investments in Phase 1 from Japan, Korea,Hong Kong, UK

Thai-based Rojana Industrial Park and the Board of Investment (BOI) on Monday inked a joint letter of intent to set up a 400-acre Sri Lanka’s first industrial zone after two decades in Milleniya, Kalutara, as a major step towards creating an export-led economy.

The firm is expecting to bring in around $ 500 million in first phase of the project while aiming to be ready by the end of next year with a fast-track development program under the guidelines of the Prime Minister Ranil Wickremesinghe.

The joint letter of Intent was signed by BOI Chairman Dumindra Ratnayaka and Rojana Industrial Park President Direk Vinichbutr. Following the signing of the agreement, Rojana Industrial Park will build, manage and promote the zone for enterprises from Japan, Korea, Hong Kong and the UK to set up investments.

Rojana Industrial Park Director Chai Vinichbutr expressed his confidence on Sri Lanka’s model to attract Foreign Direct Investment (FDIs).

“I think the prospect of Sri Lanka is looking very good. The country has a good strategic location with a decent amount of population, while the economy is now opening up towards a lot of foreign investors. I think the model of Sri Lanka is very suitable for FDIs, which is similar to Thailand’s model some years ago,” he told journalists in Colombo.

Noting that the competitiveness in Thailand was also pushing a lot of investors within the country to explore new markets, Vinichbutr insisted Sri Lanka was ideal for the development of their company.

In terms of the labour cost of Sri Lanka, he said that it was little less than in Thailand. “According to foreign investors now in Thailand the labour cost is quite similar or little bit lower. We speculate that the minimum labour wage here in Sri Lanka is still workable for foreign investment.”

Vinichbutr said they were eyeing fundamental electronic appliances initially, which they expect to source to the local market as well. In addition he said they were keen on setting up their own power plant and if the firm’s future development is good in Sri Lanka, they will expand into automobile and other large industries.

International Trade State Minister Sujeewa Senasinghe said the Government would spend around Rs. 3.5 billion to build the essential infrastructure including electricity, water and roads.

He assured that the industrial zone would be built with minimal impact to the environment and the park would be given back to the Government after 50 years.

When asked if the Government would hold any shares in the industrial zone, Senasinghe said: “Yes. We have not yet discussed yet. The Government and Rojana will discuss that and we will have a very good deal.”

According to the Minister, Rojana had wanted 1,000 acres to build 200 factories in the industrial zone, but the BOI was able to provide only 400 acres initially, of which 250 acres will be developed in the first phase followed by another 150 acres.

He said the President and Prime Minister were only interested in the best benefits to the people of the country. “The Prime Minister is very keen on making Sri Lanka a competitive destination in the region.”

Commenting on selling products to the local market, Senasinghe noted that the regulations could be changed in order to allow Sri Lankans to buy good quality products.

“In future we might be able to let them sell locally, up to 20% to 30%. We bring cheap products from outside and we send good products outside. We will do the best for the country,” he added. 

BOI Chairman Ratnayaka said it was important to set up free trade zones in the country to attract foreign investments, noting that the existing industrial parks were almost full.

“We have not developed new industrial parks after early 2000. We are focusing on manufacturing, which is what’s important to a country, and targeting specific investors,” he pointed out.

However with regard to selling products manufactured from the Milleniya trade zone in the local market, Ratnayaka asserted it would function as per BOI regulations where 90% would be exported and 10% allowed in the local market.

“As far as Rojana is concerned, there will be separate discussions under different projects like warehouses and power generation.”  (CDS)