Slow wheels turn

Saturday, 23 April 2011 00:00 - - {{hitsCtrl.values.hits}}

By Uditha Jayasinghe

After many months of negotiations with the Board of Investment (BOI), four apparel companies are readying to establish factories in the north of the country.

Industry sources revealed that Brandix, MAS, Omega Line and Orit Lanka are ready to ink agreements that will see them moving to the north under a special investment package given by the Government.

Even though initial negotiations are reported to have started during the latter part of last year, there were long delays in finalising the amount of investment as well as what assistance would be extended by the BOI, it is learnt.

Orit Lanka Managing Director Channa Palansuriya told the Daily FT that over six months had been spent on the project, which had kicked off in October 2010. He recalled several rounds of negotiations, partly delayed by the restructuring of the BOI early this year, before an agreement was reached.

“We are happy with the package that we have been given,” he said, adding that even though it was not as lucrative as expected, it includes land, water, tax holidays and electricity connection for the project.

“However, as a result of the BOI not meeting our expectations, the US$ 12 million investment has been reduced to US$ 8 million.” Orit Lanka had earlier planned this investment to be stretched out over a two-year period.

Hirdaramani Limited and Timex Garments Limited are some of the other companies keen on investing in the north. Even though nine companies were initially announced to have expressed interest in moving to the Northern Province, the progress of negotiations by other companies is unclear.

It was earlier reported that the officials of leading garment factories who are willing to set up their factories in the Northern Province visited Vavuniya on 28 October 2010 and had discussions with Northern Province Governor G.A. Chandrasiri at the District Secretariat, Vavuniya. Omanthai, Nelunkulam and Cheddikkulam were among the areas selected for potential investment.

Of these companies, Timex and Fergasam are considering establishing a factory in Mannar at an investment of Rs. 1.5 billion.

“We are focusing on constructing the buildings in six months, with another three months allocated for staff training. So we were hoping to start business during the latter part of 2011,” company representatives noted, adding that once the factory was established, they would consider moving to Achchuveli with another Rs. 1.5 billion venture.

“We are keen on this because of the tax advantages and the shortage of labour we face in other regions. The initial investment will be comparatively small, but in another two years we are hoping to expand with a Rs. 3 billion venture.”

Brandix already has a garment factory in Punani in the Eastern Province and is eyeing the north as well. However, the company was reluctant to divulge details until the project was finalised. When contacted, Hidramani officials also preferred to remain tight-lipped.