At least 200 foreign investors who had obtained Board of Investment (BOI) approval may have to pack their bags or re-apply as they have failed to start their industrial ventures.
President Mahinda Rajapaksa announced in the Budget that all BOI projects approved before June 30, 2010 and are non-performing, will be cancelled immediately if such investments have not commenced or ‘have remained closed as of today’.
Senior BOI officials were unaware about such a proposal until it was announced.
The Budget proposals relating to BOI activities confirm a series of Sunday Times stories that this institution is to be re-fashioned and re-structured to suit modern needs, amidst a tug-of-war between influential Government officials.
One official said the BOI is in the process of examining the files of these investors to find out whether any one of them had made an attempt to start the construction work of their factory buildings or made even preliminary arrangements towards this end. Such investors will be allowed to continue their projects.
However, he said it was essential to look into the legal aspect of this whole issue before making a decision to cancel their BOI ventures approved before June 30, 2010 and non-performing to date. This was a very sensitive issue, he said.
A leading investor who received investment approval in March this year told the Sunday Times that this Budget proposal will definitely create a negative impact among foreign investors. No investor will come to Sri Lanka under these circumstances, he added. He said that he was surprised when he heard about the cancellation of foreign investment approvals on a Budget proposal.
He said that this may be the first time in the world that such an action had been proposed in a Budget. He said that his company has spent money for preliminary arrangements to launch the project but it was delayed due to Parliamentary elections in April and the change of chairmanship of the BOI. This was not his fault, he added.
He revealed that many investors have already ordered machinery and other equipment and spent money to start construction work of buildings although they have not fully started their projects. Asking them to pack their bags and go based on a Budget proposal is unreasonable, he said.
However, the BOI official said these concerns of such investors could be considered.
The official added that all such investors will have to make fresh applications to the BOI prior to commencing such projects.
The BOI will work in reformulating strategies and institutional mechanisms to improve the investment climate. This will take place in several core activities, firstly by managing Export Processing Zones efficiently, which will attract investors to fill vacant positions in all 12 zones and secondly, by concentrating on promoting quality investment from abroad, he said.