All investors at industrial parks coming under the Board of Investment (BOI) are up in arms against a recent decision to increase annual ground rent in an unfair manner.
Issuing notice on the 21st of February, the Executive Director (Finance) of BOI has directed investors of all BOI enterprises to make the revised annual fees/ground rent before February 29 or face its consequences of cutting off water and power supply to factories.
Ms. C.P. Matthias, Executive Director (Finance) - BOI who issued the notice refused to comment on the issue. But a senior BOI official said that the annual ground rent has been increased to $5,390 per acre from $3,850 in 2009 owing to high demand by FDI’s for zone land and that existing investors should pay the market price.
“We were forced to pay or find services cut off. How can we promote the zone to other potential investors when the BOI treats us like this?” said Ananda S. Wijesuriya, the Seethawaka Industrial Park Manufacturers’ Association (SIPMA)’s former chairman.
He said all BOI officials present and past have ignored the needs and concerns of investors in deciding on new rates. “BOI officials just don’t understand that we need to do well to pay any increased rates”
He revealed that in 2009 a decision was taken to increase the ground rent to $3,500 notwithstanding the contents of the original agreement with the Ministry of Industries where the rate was stipulated as $1,000 per acre.
He noted that any increase in the rent payable, etc should be approved by the Minister charge of the subject and published in the Government Gazette. “We are at a loss to understand why the Minister of Economic Development could have agreed to such an increase considering that the cumulative since signing the agreement with the BOI in February, 2004 amounts to a staggering 539%, at the rate of 67.375% p.a. Industrialists who have established themselves at the inception with high investments were incurring increased costs due to inadequacies in the infrastructure available. Most of the industrial zones including the Biyagama Export Processing Zone are experiencing frequent power failures as well as transport problems for their employees.
“Treasury Secretary Dr. P B. Jayasundera has publicly stated that the BOI has failed to attract foreign direct investments and thus we cannot fathom the reason for such a steep increase, without any rationale that only drives the existing investors to the wall,” he said.
He added that they have not seen any improvement in the zone that will justify some kind of adjustments. “We are aware that the BOI could enforce these rates without giving any consideration to the plight of the investors or justification for such an increase misusing the powers by denying the services that are part and parcel of investors’ rights in accordance with the agreement they have signed,” he said.
Mr. Wijesuriya pointed out that Economic Development Minister Basil Rajapaksa seemed to be unaware of the sorry state of affairs at the export processing zones. Although politicians and officials talked of grandiose plans to attract new investors, they hardly took any interest in those who were there, he said.
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