Govt. will consider compensation on BOI recommendation

Friday, 10 June 2011 00:39 - - {{hitsCtrl.values.hits}}

The Government yesterday stated that it would consider paying compensation to the manufacturers that were disrupted due to the strikes against the Pension Bill provided it is recommended by the Board of Investment (BOI).

Media Minister Keheliya Rambukwella told the weekly Cabinet press briefing that the Government would be open to the idea of paying some form of compensation to companies that had their business affected in the week-long disruption that spread from the Katunayake Free Trade Zone into other areas but it would depend on the BOI. “At the moment the BOI is assessing the extent of the losses caused by the strikes,” he explained adding that the government would be led by the BOI in this instance.

Responding to queries of what was included in the report on the clashes that were handed over to the President yesterday; the Minister noted that the document contained interviews with police authorities covering the strike as well as the measures that were taken by the Government to establish law and order during the tenuous period.

Earlier this week top industry officials estimated that strikes by workers in the Katunayake and Biyagama Free Trade Zones (FTZs) will cost the apparel industry between US$ 20 million to US$ 25 million.

The head of one of Sri Lanka’s biggest apparel manufacturing companies remarked that the breakdown of numbers was being assimilated by the companies at the moment and a realistic figure would fall between US$ 20 million and US$ 25 million. Delayed shipments in the Biyagama zone added to the losses while several other zones including Wathupitiwala, Ja-ela, Ekala and Seeduwa that are not demarcated as a FTZ but where garment factories operate were also disrupted.

From a macro perspective, the apparel industry is expected to earn Sri Lanka around US$ 3.6 billion this year. This means the industry should earn approximately Rs. 70 million a week to meet this target. Of Sri Lanka’s dozen FTZs, the one in Katunayake manufactures around 30% of exports.

The 265 companies in the BOI-run free trade zones account for about 13 per cent of the annual $ 8 billion in exports. Most are involved in the garment industry, one of Sri Lanka’s top three foreign exchange sources.