Business Times

Chinese SEZ at Mirigama confined only to a name board after 18 months ‘of construction’

By Bandula Sirimanna

MIRIGAMA, Tuesday - The sudden sense of excitement which engulfed many residents of the once quiet rural town of Mirigama, situated about 35 miles from Sri Lanka’s capital city, Colombo has now turned into anger, as their hopes to see a new Chinese industrial hub in the area were shattered after the halting of the project midway by Chinese investors.

Adios from Chinese investors to Mirigama SEZ
China Huicheng Investment Holdings Ltd has decided to completely abandon the dedicated Chinese Special Economic Zone (SEZ) project at Mirigama claiming that it was not feasible, the Business Times (BT) learnt on Friday.

Chinese investors have already left the island, as the authorities have not agreed to their investment proposals, an official said. The Lanka Mirigama Special Economic Zone (Pvt) Ltd, the company formed to implement the project will be closed down soon, Deputy General Manager of the Company L.D. Dickman told the Business Times when the BT met him at his office at the 13th floor, East Tower at World Trade Centre in Colombo on Wednesday.

He said that Chinese investors were planning to set up some industrial ventures which were not in conformity with the country’s environmental regulations. That was one of the reasons for their decision to abandon the project, he said.

The other reason was the transport difficulties and the location of the site in Mirigama which is far away from the city of Colombo. China Huicheng Investment Holdings Ltd has already spent Rs.25 million for the clearing of the site and the company has agreed to pay compensation to employees serving in the Colombo Office, he revealed.

The poor community of around 45,000 people, primarily farmers and small traders in the area, is now cursing the authorities for the environmental degradation caused by the Chinese under the guise of infrastructure development prior to the town being developed into a new China industrial hub. They have cut the soil, felled coconut trees and dumped earth mounds at the 161-acre special economic zone in Mirigama, and left the site taking away the heavy machinery with them, angry residents said. These Chinese had worked for only a few months and after that halted the work completely last year, a resident said. “Land preparation of the area began in November 2009 – over 25 acres of land have already been cleared of trees,” he confirmed.

In 2009, in its first major post-war effort to attract investment from Asia, Sri Lanka entered into an agreement with the Hong Kong-registered conglomerate China Huicheng Investment Holdings Ltd to develop a 161-acre Special Economic Zone in Mirigama. The then Minister of Enterprise Development and Investment Promotion, Anura Priyadharshana Yapa and Chairman, Huichen Investment (Holdings) (Pvt) Ltd., Wang Yu Ping exchanged the agreements of the dedicated Chinese Special Economic Zone (SEZ) at Mirigama at a press conference held on June 30. "The Chinese company will invest US$ 28 million under phase I and further investments will be made in the next phases," Minister Yapa told journalists happily on the occasion. But no work has been done from that date up to now, to implement this massive investment project.

First exclusive zone
Although Huicheng’s initial investment of US$28 million is not much to talk about, the setting up of the Mirigama Special Economic Zone (SEZ) was seen as a significant development in the South Asian region as a zone dedicated to Chinese investment, which with Huicheng’s influence could bring millions of dollars of private Chinese funds to Sri Lanka and also, China is the first country to be granted an exclusive economic zone by Sri Lanka, informed sources said.

A resident shows the “zone”. Pics by J. Weerasekara

Although the Chinese investors have agreed to develop the SEZ with standard buildings which will be available to investors for factories, internal roads, water and power capacity in addition to sewerage and other facilities, only a barren land was left over with earth mounds and piles of coconut tree logs after the so called infrastructure development activities carried out during the past one and half years.

According to the agreement, notable construction at the SEZ was to include an administrative building, upermarkets, banks and office areas. The Chinese investors also promised to develop facilities such as hotels and restaurants. Worker housing was to be provided within the industrial block, according to an announcement by the Board of Investment at a press conference held in July 2009. But when we visited the site, we were unable to find even a sign of any infrastructure development. We only saw the destruction caused to the environment without proper planning.

The Mirigama Special Economic Zone is a dedicated zone of 161 acres and the new developments were to be carried out in Block B consisting of 119 acres and Block C of 42 acres. The decision of the BOI to develop the Mirigama Special Economic Zone was based on a number of important benefits it offers investors. The existing part of the Mirigama zone, also known as Block A, hosts 10 enterprises in commercial operation which were started by investors from a number of countries. However informed sources said that inside the zone there are a few defunct factories with Indian investments and a local car assembly operation too.

The only construction at the site- a watchman’s shed

These are now in a state of complete disrepair, the machinery and steel structures are only good for scrap iron. This was an export oriented industrial landscape which was seen in utter disrepair with the exception of a few well operated industries including Brandix which is expanding at a phenomenal scale, the sources said.

It also consists of a couple of barren lots that have been unutilized since the inception of the zone in 1997, which should be given to local enterprises to create wealth among the unemployed and to contribute to the GDP, a local investor said.

In a startling revelation, a senior official of the Central Environmental Authority (CEA) told the Business Times that the Environmental Impact Assessment (EIA) obtained in 1998 to set up a Chinese industrial park on 130 acres of land located at Mahayaya Estate in Mirigama had expired 10 years ago and the BOI has not obtained a fresh concurrence of the CEA to establish a Chinese SEZ in 161 acres in Mirigama. However the CEA has informed the BOI to renew the earlier concurrence of 1998 by paying a small fee but this was not done so far, he added.

The Mirigama Special Economic Zone was an industrial venture dedicated to Chinese investors. China is the sole authority to decide who will be allowed to set up their units in the zone. According to BOI sources 29 Chinese manufacturers received the green signal to bring their investment, machinery and blue-collar workers, but the project has been halted midway as the Chinese investors wanted to build a tourist resort at the site.

A senior official of the BOI told the Business Times that Huicheng Investment Holdings (Pvt) Ltd has made a request from them to set up a tourist resort at the Mirigama SEZ and they are waiting for the approval of the Tourist Board on this proposal. He said that the company has not informed them officially about any plan to abandon the project. However, he noted that the work at the zone has been stopped midway due to the delay in granting approval for the tourist resort project.

The Chinese investors are looking at developing facilities such as hotels and restaurants. For this purpose, approval of the Tourist Board is necessary. The company’s earlier interests had extended to a wide range of economic sectors and activities such as machinery and equipment, electric motor-cycles, light vehicle assembly, manufacturing buses, ambulances and agricultural machinery but not the tourist resort projects, he added. The approval process to construct a hotel, will take at least 214 days and this may be the reason for the delay in the commencement of the project, he added.

Casino complex?
But the Business Times reliably learns that the Chinese investors have sought the approval of the BOI to build a Casino and a super luxury tourist hotel with the money pumped by a billionaire Casino king in Las Vegas.

This request has been turned down by the government, and the Chinese investors were not happy about it, the sources said. Repeated attempts made by Business Times since last Thursday up to now (Tuesday, January 25) to contact Deputy General Manager Investment, BOI L.D. Dickman who claimed to be the key person to give any kind of information of this project have failed as his official telephone number 011-2006666 has been disconnected.

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