Industrial zones

THERE are several industrial zones already in operation in various parts of the country. Under President Mahinda Rajapakse's Mahinda Chintana manifesto, industrial development has been considered a priority along with agricultural development. This has been reflected in his Policy Statement to Parliament and in the 2006 Budget.

Advisor to President Mahinda Rajapakse on Economic Affairs Ajith Cabraal has said that the Government plans to establish 12 new industrial zones. This is a timely move that will help boost investments in Sri Lanka.

It has been pointed out that most of Sri Lanka's industries are concentrated in Colombo and Gampaha. This is a sad state of affairs. Apart from a few garment factories in the outstations, most factories are in the Western Province.

The new Government is keen to rectify this anomaly. Presenting the Budget, President Rajapakse announced a host of incentives and concessions including tax holidays for industrialists willing to move out of Colombo and Gampaha.

Another factor that has to be considered by investment planners the woeful infrastructure network in the provinces. Investors, local or foreign, look for good roads, an ample, uninterrupted supply of power and water and telecom facilities to facilitate their business.

It does not do any good for an investor to open a factory in Anuradhapura, only to find that his drivers have to spend six to seven hours on the road to get the goods to Colombo.

The power situation will also get worse if no action is taken to build new power plants such as the coal fired ones. Adding more power to the national grid is essential if the Government is keen to expand industries to the interior.

The rapid development in the telecom sector with the advent of the CDMA technology is a silver lining.

The new industrial zones will have to be provided with all these facilities in addition to tax and duty concessions for the relevant plant and machinery.

Local investors should be encouraged to move into these zones. This will create employment for thousands of youth. Priority should be given to the manufacture of export-quality goods at these sites.

The SME sector, which has also been granted a number of incentives in the recent budget, should also benefit from the establishment of the industrial zones.

Finding land for expansion is often a problem for these entrepreneurs. Industrial zones will be an ideal location for such entrepreneurs. The proposed IT City in Kamburupitiya will also be a boon for the development of Information Technology and related business (software and hardware development etc).

All these measures will go a long way towards achieving the projected economic growth targets. The Government plans to achieve an annual growth rate of 8 per cent. This is by no means unattainable. Fiscal discipline and streamlined revenue collection are essential in this endeavour.