Apparel readies to go north

Friday, 18 March 2011 00:19 - - {{hitsCtrl.values.hits}}

By Uditha Jayasinghe

Billions of investment from the apparel industry looking to set up shop in the north are being galvanised as the Board of Investment (BOI) scrambles to clear projects before new legislation for restructuring is finalised at the end of the month.

Burdened under internal strife, the BOI had earlier come under fire for letting its restructuring process delay the approval process for ventures worth billions and undermining Sri Lanka’s global competitiveness.

Orit Apparels Lanka Managing Director Channa Palansuriya told Daily FT that he along with eight other companies had made headway with the BOI to establish factories in the north – a venture that could result in billions of investment for the war-affected region. They need essential assistance on taxation and infrastructure including land, but the process is moving forward with regular meetings being held between the investors and BOI.

Brandix Limited, Hirdaramani Limited, Timex Garments Limited, MAS Holdings and Omega Line Limited are some of the other companies keen on investing in the north.

“The BOI announced that nine apparel companies are interested in opening factories in the north. This is a positive development that is being encouraged by the Joint Apparel Associations Forum (JAAF) since it reduces production costs while giving an economic boost to war-ravaged areas. We are happy that the BOI after its initial delays is now responding positively and we have made significant headway in the projects,” Palansuriya said.

He added that the BOI was keen to finalise the projects before 31 March. The company has already spent six months on the US$ 12 million project. Orit Lanka hopes to establish a factory in Vavuniya and expend the investment over two years.

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 are 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 this year.

“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.

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