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Local industries accuse BOI of putting foot in the mouth
Local footwear companies are not pleased with the Board of Investments’s decision to allow an Indian company to set up business in Sri Lanka.
Where the shoe pinches: Local companies fear the negative impact on the market from the new entrant. Pic by Indika Handuwala
But the board says it has not broken any laws and the decision was made after a meeting with President Maithripala Sirisena.
The Indian company, Veekesy, is setting up a factory at Ethukala in Negombo and investing US$ 269,581 (Rs 41.39 million).
Local companies fear the negative impact on the market from the new entrant.
The BOI, in a letter dated September 25, 2017 has approved the investment. It will be allowed to manufacture a maximum of 2.1 million pairs of footwear annually for the local market. A clause providing provision for expansion of the industry to enter the export market has also been included in the approval.
The Footwear Manufacturers Association said the Indian business would be detrimental to Sri Lanka’s industry.
Its President P G D Nimalasiri said the BOI had taken an arbitrary decision without consulting the stakeholders in the local industry.
He said there were 10 large exporters, 30 medium-scale operations and 3,000 small-scale manufacturers employing around 40,000. The local manufacturers produced a range of products including canvas shoes, rubber boots, sandals, sports shoes and leather shoes. Additionally, accessories like wallets, bags, purses and key tags were also manufactured.
D Samson Industries spokesman Kasun Rajapaksa, said that the BOI had gone beyond its jurisdiction in approving the Indian company.
“Why is the BOI getting involved in the local market, this is the job of the Ministry of Industries,’’ he said. Also, he said that the BOI had failed to discuss the matter with the local footwear industry.
“The BOI should be looking at much larger investments from overseas — at least above Rs 200 million investment,’’ he argued.
He said he believed that the Indian company was not bringing in any new technology nor was it manufacturing branded shoes for the local market. “If they are into Adidas and Puma we can understand,’’ he said.
Former BOI chairman Upul Jayasuriya during whose tenure the approval was sought by Veekesy Company, said that in a letter dated July 7, 2017 he had given approval for 10% local manufacturing and 90% exports. He resigned from the BOI on July 13, 2017.
But the new BOI chairman, Dumindra Ratnayaka, has issued the company a fresh letter.
Mr Jayasuriya said that Indians did not allow Sri Lankan industries to set up factories there.
“They are very protective of their industries. Several of our industrialists who wanted to set up shop in India have failed,’’ he said.
The BOI in a statement said the decision to grant approval was taken following a directive from President Sirisena who chaired a September 11 meeting attended by all stakeholders in the industry. The statement said that BOI had not contravened any law applicable to the subject.