Multinational relocates to Sri Lanka from China

Friday, 13 December 2013 00:01 -     - {{hitsCtrl.values.hits}}

A top Japanese conglomerate is relocating its selected foam operations to Sri Lanka from China and thanks to the conglomerate’s new operation, Sri Lanka is now saving millions in forex volumes that are otherwise sacrificed on import of soft foam used for apparel. More importantly, the Tier 1 global supplier also says it is ready to set up world class automotive component production in Sri Lanka – with latest Japanese technology. “Japanese giant INOAC’s new venture with a $ 20 m investment here today is one of the biggest industry FDIs to come from Japan to Sri Lanka in our bilateral partnership history,” said Minister of Industry and Commerce Rishad Bathiudeen on 11 December. Bathiudeen was addressing the launch event of advanced soft foam production plant of INOAC Polymer Lanka located at the BOI Industrial Zone, Horana. INOAC Polymer Lanka at Horana is the only manufacturer of polyurethane in Sri Lanka. Polyurethane is specialised type of plastic material widely used in automotives, comfort products and millions of brassieres. INOAC, a global supplier to the automotive industry, is a privately-held Japanese conglomerate established in 1926, operating in 20 countries including USA, Canada, Korea, Japan, South East Asia and Europe. Currently it has 74 state- of-the-art factories across the world. INOAC is no stranger to Sri Lanka. Its history with Sri Lanka runs as far back as 1959 when it commenced its first joint venture with Associated Motorways (AMW) in Sri Lanka. INOAC is a Tier 1 producer of automotive components for Toyota, Nissan, Honda, Mitsubishi, Yamaha and several other renowned global brands. Within Japan, INOAC has almost 60-70% market share in selected tyres, tubes and specific automotive components. Bathiudeen said: “There is no doubt that INOAC’s re-entry is a great boost for Sri Lanka’s competitiveness in global marketplace as well as exports diversification efforts. Therefore on behalf of our committed President Mahinda Rajapaksa, I thank INOAC Corp. for its initiatives here. Japan is Sri Lanka’s third largest foreign financier. Our bilateral trade with Japan is also on a promising trend. In 2012 Japan was Sri Lanka’s third largest foreign financier after China and India as a Development Partner committing $ 521 m; 39 Japanese private investment projects are in operation, the bulk of them entering in the immediate aftermath of the opening of our economy in 1977. INOAC however was with us since 1959. Sri Lanka-Japan trade too has been growing – with an increase of 56% from 2002 to $ 770 million by 2012.” INOAC Japan’s Global Chairman and Group CEO Soichi Inoue, who specially flew into Colombo with his top management team, said: “INOAC is a Tier 1 producer of automotive components for Toyota, Nissan, Honda, Mitsubishi, Yamaha and several other renowned global brands. If the Maruti Suzuki assembly project starts here, we will bring our Japanese automotive component manufacturing right here to Sri Lanka. I mentioned this to President Mahinda Rajapaksa when I met him in Japan.  We are ready to set up a world class automotive component production in Sri Lanka with latest Japanese technology. We are hopeful that this will happen.” Responding to Inoue, Bathiudeen said: “We welcome you with open arms. Our Government as well as my Ministry officials and I will extend our best assistance to INOAC. Partnerships such as INOAC are very important for our industry development. Thank you!” “Around two years ago INOAC took a decision to transfer our production facility from China to Sri Lanka to produce and supply unique high quality polyurethane foam to the giants of the apparel industry in Sri Lanka such as MAS, Brandix, Benji and Silueta” said Ken Miwa, Executive Managing Director of INOAC Corp, Shinagawa, Tokyo. “We are shifting at least 20% of our production from China to Sri Lanka.” “Soft foam is a must in making brassieres of high export quality and Sri Lankan apparel suppliers have been importing the entire volumes to date,” said Rajiv Dharmendra, CEO of Silueta Ltd, an apparel producer with Biyagama Export Zone. “From today, there is no need to import. Sri Lanka produces at least 40 million such brassiere pieces for export regularly.  Due to soft foam now being made in Sri Lanka for the first time, we believe the cost saving for Sri Lanka is at least $ 5 m annually in the apparel sector alone and the savings could be higher.” “During President Mahinda Rajapaksa’s visit to Japan early this year, Inoue expressed his desire to commence automotive components manufacturing provided the proposed Suzuki Maruti car assembly project is established in Sri Lanka,” said Tilak de Zoysa, Director of INOAC Polymer Lanka. “From the very first day since 1959 to date I have been involved with the INOAC team providing the local support whether it be in marketing/human resource/construction or overcoming many challenges. To comply with Inoue’s vision to achieve world class standard and the best quality products, the total investment was increased from around US$ 10 million to US$ 20 million to a set up this world class production facility.” Also present on the occasion were Ministry of Industry and Commerce Secretary Anura Siriwardena, officials of BoI, and MAS Holdings Chairman Mahesh Amalean, among others.