Business Times

Sri Lanka’s biggest investment zone at Hambantota

By Sunimalee Dias

The southern town of Hambantota, currently seeing most of the development in the country with an airport, sports facility and convention centre and other mega facilities, is set to witness the construction of Sri Lanka’s biggest investment zone at its port site -- the size being almost equal to all investment zones in the country put together.

All the investment zones (12) together in Sri Lanka managed by the Board of Investment total 2,770.69 acres (1121 hectares) while the new investment zone site at Hambantota amounts to 2,717 acres (1100 hectares)

Sri Lanka Ports Authority (SLPA) Chairman Dr. Priyath Bandu Wickrama confirmed to the Business Times that the government is acquiring additional land amounting to 1100 hectares for scaling up investments in the region.

This is being carried out with the intention of extending the boundaries of the port area. The new zone will be connected with a flyover and located adjacent to the Hambantota port. The current Hambantota port area covers 1,500 hectares (3,705 acres) and within this there is a 140-hectare (345.8 acres) area for investments.

Dr. Wickrama pointed out the need for this expansion is to secure sufficient space to convert it to a logistics centre and for any future requirements. Having studied models in Salalah (Oman), Dubai and Singapore it was observed that these today lacked the necessary space for expansion.

Sri Lanka’s viability is perceived to be more than these ports as the island nation is capable of feeding both the East and West coast of the Indian subcontinent “without any issues,” Dr. Wickrama said.
The SLPA chief also said they received a good response from Dubai and Abu Dhabi during his recent visits that proves high potential for investors entering the country.

Asked to explain about the rock blasting work which has seen a sharp rise in costs at the Hambantota port, Dr. Wickrama said this work is “almost completed”. The government, he said, had been fully aware of the rock that was found on location but did not know the exact volume (size), which has exceeded the estimated figures.

Investors have currently infused a total of US$1 billion into the new Hambantota port to set up industries in the free port or economic zone that is a customs free area. Following this first call for proposals a second Requests for Proposals (RFP) will be carried out by October targeting $1.5 billion; while another RFP will be initiated to build a dockyard at the south port.

The government had bagged 23 qualified RFPs with 13 short-listed following a public advertisement calling for industries to invest in the Hambantota port, Port Chief Engineer Agil Hewageegana told the Business Times.

Negotiations were conducted with 11 companies vying to establish plants at the new port while the other two would be met by the end of the month. SLPA will facilitate organizations or companies intending on obtaining BOI status within the respective zones both within and outside the port.

Industries that would be established are cement grinding plant, cement packaging plant, sugar refinery plant, three petro chemical companies, two vehicle assembly plants and four companies in warehousing from Pakistan, India and Switzerland among others.

The petro chemical companies are to be involved in importing oil for blending and selling while another will be engaged in the import of chemicals for the manufacture of plastic bottles. Transmec and Senok will construct the two vehicle assembly plants, Mr Hewageegana said.

In this respect, two committees namely a Technical Evaluation Committee and the Cabinet Appointed Negotiating Committee (CANC) have been established. Following the conduct of negotiations, CANC is set to submit to cabinet the proposals for approval before the end of next month in a bid to commence the signing of agreements and construction work.

Some of the main features of the prospects of setting up industries within the port premises are the water front space availability not found at the Colombo port, Mr Hewageegana said. He pointed out that in this regard, the cement can be pumped directly to the ship from the manufacturing plant situated within the port.

While the industries will be within a customs free area it was possible to export these products without paying customs duty. However, he noted that if these products were sold within the country they would be subject to duties.

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