In response to our story titled “Alleged Money Launderer Lokuwithana Back: This Time With Plans For Ecologically Damaging Steel Plant In Trincomalee”, the Board of Investments (BOI) has sent the following explanation.
Response CT Article: Steel Plant In Trincomalee
The proposed steel manufacturing and export plant in Trincomalee was approved by the BOI in December 2018, pursuant to diligent scrutiny and review.
This project envisages strict adherence to European environmental standards, and final implementation will take place following a comprehensive impact assessment and mitigation. The BOI is firmly committed to ensuring that such compliance meets with the stringent standards set out by all relevant local regulatory agencies.
While at present, similar factories remain in operation even in urban areas, this particular project will be located in a declared BOI Licensed Zone (gazetted circa 2006), which is within the Industrial Area demarcated by Surbana Jurong Private Limited, the Singaporean government- owned consultancy company tasked by the government of Sri Lanka with developing the Master Plan for Trincomalee.
With respect to the allocation of land for the Tyre Factory in Horana, it is pertinent to observe that the land in question was not within a gazetted BOI zone, and therefore had no value fixed by the BOI. The fact that it was undeveloped and enjoyed limited access to basic infrastructure during the time of handover is reflected in the valuation of same given by the Government Chief Valuer. It is on this basis as well as consideration of the total investment and projected export value of the project that motivated the BOI to allocate the said land at a price which exceeded the government valuation by Rs. 40 million. As such, this land was not provided on a concessionary basis.
The BOI further wishes to state that all inward remittances related to BOI projects are made via legitimate banking channels to dedicated Inward Investment Accounts that are regulated by the relevant local and international authorities. Hence the question of money laundering through BOI projects does not arise.
As a final observation, the BOI wishes to state that while it remains true to its purpose of facilitating economic growth through FDI, especially at this crucial time when the economy is in dire need of FDI, it remains equally firm in ensuring that all BOI projects adhere to strict compliance with the laws of Sri Lanka, be it in terms of monetary, environmental or any other applicable regulation.
Although the BOIs ambitiously claims that strict environmental standards will be adopted in relation to the proposed steel plant in Trincomalee, it goes without saying that the proposed steel manufacturing plant is not a ‘clean industry’ that facilitates sustainable development.
As Colombo Telegraph pointed out in its story, the plant will inevitably result in toxic waste products, acid rain-causing Sulfur Dioxide, heavy metal residues and gaseous outflows, altering the ecosystem of the Trincomalee area, home to Sri Lanka’s largest natural port.
In addition to its monumental impact on the environment, the proposed steel plant also poses a grave public health risk, not only to the workers of the facility, but also to the people in the area. It does not require a lot of wisdom to understand that the environmental and public health impact of the plant significantly outweigh its potential economic benefits.
Having said that, it is also important to understand that the ill-planned project will also have far-reaching economic implications. A steel plant adjacent to the Trincomalee Port will prevent the Sri Lankan government from attracting clean, high-value industries that drive sustainable and inclusive development in the area. This will turn the Special Economic Zone (SEZ) in Trincomalee into a white elephant project burdening the economy.
What remains clear is that the BOI is set to launch a self-destructive, self-sabotaging project pursuing short-term gains, without approaching the subject in a holistic manner. This brings the bona fides of the institution into serious question.
The BOI’s clarification conveniently ignores the involvement of Nandana Lokuwithana, a Dubai based Sri Lankan businessman and a man with a dubious track record. The businessman, who is popularly known as ‘Mariott Lokuwithana’, has come under serious money laundering allegations.
The mere fact that Lokuwithana is involved in this project casts serious doubts over the ‘integrity’ on the part of the BOI, which comes under the purview of Minister Malik Samarawickrama, a close friend of the controversial businessman. While this is not the first time the BOI’s association with Lokuwithana came under question, it is now becoming increasingly clear that the BOI’s hopes for promoting FDIs in Sri Lanka continue to hinge on the likes of Lokuwithana.