International probe to locate defaulting BOI investors who fled Sri Lanka
The Sri Lankan government is to launch an international investigation to locate foreign investors in Board of Investment (BOI) factories who fled the country without paying bank loans and dues to state institutions, official sources said.
Several factories have closed down in Export Processing Zones after their investors fled in an increasing trend that reflects a negative impact on efforts to attract Foreign Direct Investments, a senior government official revealed.
In a measure to reduce such instances, the listing of BOI companies in the Colombo Stock Exchange has been introduced to provide an exit strategy for foreign investors.
Apart from opening an avenue to raise additional capital, the listing will give an additional flexibility to the foreign investor to exit when the time is right, he said adding that legal action will be taken against foreign investors who left the country without fulfilling their financial obligations.
Government authorities are to seek international assistance to trace the Pakistani investor from the ZM Group who closed down the factories and left the island without proper notice.
These factories – ZM Vertiko Pvt Ltd at Padukka, ZM Kasuals at Kottawa and ZM Vision at Kiriella, have closed with over,1,500 workers losing their jobs.
A senior official of the Investment Promotion Ministry told the Business Times that the ZM group has unpaid loans of over Rs. 1 billion obtained from state and private banks.
The three factories were set up between September 2003 and October 2006. The latest exit of a BOI loss-making investor with unpaid loans follows several other similar instances of unpaid dues with the Bank of Ceylon and People’s Bank, prompting a government investigation.
Workers at these closed factories are yet to get compensation while the banks are unable to recover their loans since the machinery and other assets of these factories are outdated and were overvalued. Anton Marcus, convener and General Secretary of the Free Trade Zones and General Services Employees’ Union (FTZ&GSEU) said the union has urged the Labour Minister to take action to secure compensation for the workers.
He said that most of the factory owners had given bogus addresses to the BOI and no one can find them after they left the island or in their home country.
He noted that his trade union will seek the assistance of the Pakistani chambers to track down the ZM Group investor.