Financial Times

Batticaloa draws foreign investors
From singing fish to smoked eel
Undeterred by infighting between Tamil Tiger terrorist factions, a German-Japanese joint venture plans to invest half a million dollars on a smoked fish project in Batticaloa in one of the first foreign investments in the war zone area since the ceasefire.

It will export smoked eel to consumers in Japan and Europe who pay a premium price for what is considered a delicacy that is becoming ever more expensive as European eel populations face extinction since over fishing has led to a catastrophic slump in numbers.

This is the first inland smoked fish project in the country and the first smoked fish project in the North and East, and marks a change in the attitude of investors who have so far adopted a 'wait and see" policy on investments in the war zone.

"No risk, no revenue. They always come together," declared Ms Chizuko Uunshiyama, director of the joint venture firm, Wild Fish Ltd., when asked why they were not deterred by the threat of renewed fighting and the uncertainty and risk in the area.

"You can wait until it is safe but then there would be no advantage. Our advantage in going to the east coast now is that we're the first to market." Wild Fish Ltd. hopes to begin commercial operation by the end of this year.

The smoked fish will be primarily exported to Japan, the country that consumes 80 percent of the world's eel production, as well as to Japanese restaurants and hotels elsewhere. The product will also be exported to the EU countries.

"The eel is not considered an edible fish in Sri Lanka but is a highly priced delicacy in Europe and Japan," said Uunshiyama. The retail price overseas is around $40-50 per kg.

"This is an inland fishing project using fish in the lagoons, lakes and rivers of Batticaloa," said Admiral Terence Sundaram, CEO of North-East Regional Economic Development Commission (NEREDC), a new office opened in Trincomalee by the Board of Investment in a bid to attract industries to the region.

The north-east has a considerable pool of young, trainable labour, but only a few industries exist to harness this potential. According to government estimates the total unemployed in the region is around 325,000 with 17,000 new entrants to the labour force each year.

The factory's initial production capacity, on a 12-acre land in Batticaloa, will be one tonne per month and it will be expanded to 500 tonnes a year by 2006. The investors chose Batticaloa due to the availability of fresh water, and also because smoked fish made from wild fish as opposed to farm fish commands a premium price overseas.

The process of smoking is considered new here with the fish being cooked inside hot smoke and comparable to some products which are grilled and dried - a mix between dried and grilled fish - but which still has the texture of fresh fish and a longer shelf life.

The foreign investors decided to set up the project in Batticaloa owing to the availability of fish stocks and because eel stocks are getting depleted in Europe resulting in it becoming an endangered species. "The eel is hardly consumed here so there's a huge quantity available," a company official said. "In Europe the eel is so rare you can't get any more licences to catch them."

The restrictions were imposed after experts warned that the European eel is facing extinction. Biologists have said that European eel populations could be as low as one per cent of the size they were 20 years ago.

Over the past 10 years, the number caught across Europe has slumped by two-thirds - from about 30,000 tonnes to 10,000 tonnes. Around the Severn Estuary - Britain's largest eel fishery - the rate of decline is even steeper, falling from about 50 tonnes in the 1980s to just 10 tonnes in 2002.

Experts suspect the decline can be blamed on over-fishing, changes in ocean circulation, water pollution, the construction of dams, power stations and weirs on rivers, and even a vicious parasite carried by Asian eels, which damages its buoyancy sacs.

The Batticaloa project will employ 40 personnel for processing related direct employment and it will also create another 80 indirect jobs. These people will be trained, in catching and preserving fish according to international health regulations, in filleting as well as in 'retort poaching' - a US technology that enables the sterilizing and packaging of fish under pressure and heat conditions.

The retort poaching system ensures the ability to store fish in a tin for as long a period as six years without refrigeration.

The "smoking" of the fish will be done using coconut shells and natural firewood and there will be no preservatives added, coming to the consumer as a ready-to-eat product combined with the necessary salt and spices.

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