Merbok: Business as usual

Merbok Hilier Berhad, the BOI approved Malaysian company involved in the production of MDF or medium density fiber wood, is continuing with business as usual despite being embroiled in legal battles and arbitration with the BOI which is disputing certain terms and conditions of its agreement.

According to Faiz Musthapha, the respected Sri Lankan lawyer who is one of the arbitrators appointed to the case, an award will be given shortly but he declined to give a specific date. The company has been accused of ruining the local environment as well as ruining small and medium businesses. Producers in the local rubber wood industry opposed the Rs.1.6 billion MDF factory approved by the BOI in 2001. Only after the agreement was entered into between the two parties was it discovered that the BOI had agreed to terms and conditions which they were not authorized to do so.

Merbok says that when it was contemplating its investment in Sri Lanka, one of the key criteria for the evaluation of such an investment was the availability, quality and cost of electricity supply. Merbok required the provision of high voltage electricity supply, continuous and uninterrupted power supply as well as the provision of electricity supply at rates acceptable to them to facilitate international competitiveness of the manufacturing operations.

Former Additional Director General at the BOI, Bandula Perera said speaking as an industrialist, companies like Merbok should not be allowed into the country.

During his tenure at the BOI, Perera said he tried to bring Merbok to justice but 'things didn't seem to go that way.' He explained that the BOI stopped the company from producing MDF subsequent to which Merbok got an injunction in court. This led to the matter being taken up in international arbitration but Perera said he does not know what has come of the case after he left the BOI.