A massive textile manufacturing project under the Strategic Development Project (SDP) on a 265-acre oceanfront plot of land allotted near Punnakudah, 15 km from the town of Batticaloa and abutting Eravur is coming up in Sri Lanka’s Eastern Province. According to the Board of Investment (BoI), ‘strategic textile manufacturing investments’ established within the zone’s borders are entitled for advantages under Sri Lanka’s SDP Act. There are big bare pipelines open to the sea that can be seen, and Eastern Province Government Agent K. Karunakaran informed Ceylon Today that all project information should be obtained from BoI.
Once the pipeline is connected to the sea, the GA on 26 January had visited the site to explain to the Media about the project.
Prior to the BoI proposal, in 2019 several politicians like Wimal Weerawansa, S. Viyalendran and Senthil Thondaman had visited the site for inspection according to sources, the investors have been speaking to these politicians initially.
The fabric park received Cabinet approval in 2020 and former BoI Chairman, Sanjaya Mohottala, last year said that five investors have already committed to invest around USD 300 million in the fabric park and that more foreign textile manufacturers will be invited to set up factories within the zone.
However the GA said that BoI wanted roads, electricity and a water supply to the fabric park, which has been provided and beyond that, they would not be able to give any details. When asked if investors are coming to the fabric park, his response was, “Ask the BoI”.
The fabric park would have five fabric dyeing plants and five garment manufacturing zones according to the Central Environmental Authority (CEA).
Ceylon Today contacted the CEA to obtain the recommendations of the BoI on running the fabric park.
The Central Environment Authority
The CEA is still waiting to hear from the BoI of the approval they have recommended to be obtained from the Coastal Resource Management Department (CC&CRMD), the Marine Environmental Protection Authority (MEPA) for the overall plan of the water treatment system. This has not reached the CEA so far according to its Deputy Director General Environment Management Assessment N.S. Gamage.
There are currently large pipes scattered on the sea shore of Punnakudah and one major pipeline, already laid out to the sea, which has left the communities in the vicinity confused about the project. If an Environmental Impact Assessment (EIA) was completed, locals would undoubtedly be aware of the project, but this is not the case. This newspaper checked with many in the area and they said the project is not transparent and they were told there is a water treatment plant for the surrounding villages.
When asked about public opinion and whether it was included in the EIA report, Gamage stated that a public notice about the project was published in all three languages in newspapers and that the notice was also displayed at the PS of Eravur, the CEA office in Batticaloa, the CEA website and so on. But there was no answer for a month.
The BoI had submitted its proposal to the CEA for a fabric park on 262 acres of land in 2019 and the CEA had its first on-site visit in 13 January 2020, and its technical evaluation committee also visited the site.
Those who visited the site were CEA officials, the PS of Eravurpattru, DS of Chenkallady, Road Development Authority, Urban Development Authority, Department of Wildlife Conservation, Irrigation Department, Department of Fisheries and Aquatic Resources, National Aquatic Resource Research and Development Agency, Coast Conservation and Coastal Resource Management Department, MEPA, Forest Department National Water Supply And Drainage Board along with experts on pollution control, coastal aspects, and water reclamation. According to the CEA, there were three inspections prior to the EIA is submitted.
One year later, on 12 February 2020, BoI submitted its report to the CEA. Following the visit and the EIA report given by BoI, the CEA opened the report for public comments for one month. “The EIA report was on the public domain for comments from 15 March 2021 to 29 April 2021 and there were no response. Thereafter on 7 December 2021, the EIA of the fabric plant was approved by the CEA,” added Gamage.
According to the CEA, the BoI project for five textile manufacturing plants mainly for fabric dyeing and another five garment manufacturing industry (cutting and tailoring) has been approved.
Following the EIA, the CEA has further called for several recommendations from BoI.
According to the CEA, what is now required is the construction details of the short-sea outfall such as pipe details, anchoring details and diffuser description that needs to be submitted to the coast conservation and CC&CRMD and MEPA and written approval to be obtained prior to finalisation of the detailed design.
The outlet pipeline should be underground to avoid potential interception of the prevailing natural sediment movement process and to withstand extreme sea conditions to avoid instability of the outfall structure while designing the multi-port diffuser to prevent clogging and reduce consequences of bio-fouling as indicated in the EIAR dated February 2021 and the addendum to the EIAR dated June 2021.
The project proposal shall obtain approval from MEPA prior to commencement of discharging of treated wastewater into the sea though the short sea outfall.
The other major issue the CEA noted was that the waste water treatment should be carried out by the investors in the fabric park. According to the CEA, 12, 000 cubic meter of waste water would be produced per day and they will have to follow standard waste treatment practice.
Also, the establishment of composite sampler controlled at four-degrees centigrade just outside the property boundary of each industry for the purpose of the inspection of treated process wastewater quality monitoring prior to connecting to a communal wastewater treatment plant (CWWTP) must be ensured and the composite sampler is to be provided for independent monitoring by the BoI or CEA in case of incidents of non-compliance.
Furthermore, the length and depth of the short sea outfall shall satisfy the proposed tolerance limits for discharge of wastewater into marine waters though short sea outfall standards with respect to near field and far filed dispersion.
The BoI is also requested to encourage individual industries to use biodegradable natural dyes and metal free chemicals where possible.
According to Gamage, all above matters has been agreed by the BoI and adhered to, but the CEA is also waiting for the permit and approval of the construction details of the short sea outfall such as pipe details, anchoring details and diffuser description that needs to be submitted to CC&CRMD and MEPA and written approval to be obtained prior to finalisation of the detailed design.
History of Punnakudah and land grab
The area along the sea has a long history of land grabs, dating back to 1975, when Prime Minister Sirimavo Bandaranike demanded all of the land from the public, alleging that they were state lands. However, those lands were left unmanaged, and after the war, the second and third generations of the original owners recovered the land using fraudulent documents citing the conflict and other causes. There were allegations that the then-Eastern Province Land Commissioner issued deeds to both Tamil and Muslim residents. It is also alleged that UNP lawmaker Ravi Kaunanayake owns approximately 27 acres of land in this area.
In the recent past, the Government re-acquired some land purportedly owned by falsified deed, and this is the land area that has been ‘presented’ to the BoI for the fabric park. The residents of the region are still ignorant of the specifics of the fabric park. There are already 50-odd workers clearing up for the base of the fabric zone.
BoI’s strategy for the fabric park
According to the BoI, it is over 300 acres allocated for the fabric park and it would provide opportunities for multiple verticals relating to the manufacture of textiles and the manufacturers can establish plants in this dedicated area, complete with a host of amenities and facilities including a sea outfall, central wastewater treatment plant and pre-cleared environmental approvals for all products.
The BoI website further notes that the processing park aims to reduce material lead time with the availability of locally sourced fabric to reduce input costs.
Project ownership structure according to the BoI is that it would be Foreign Direct Investments (FDI), Domestic private investment. The investment is worth Rs 5.5 billion on infrastructure facilities and other development purposes and there are four leading garment manufacturing companies willing to invest.
They also add that this project eventually would bring investments worth USD 6 billion annually which is currently spent on raw materials needed for textile manufacturing and in this Textile Park raw materials worth USD 500 can be manufactured.
Incentives offered by BoI for investors
BoI has also proposed a 5-10-year tax holiday for exports (Duration of tax breaks based on size of investment, type of product to be manufactured, market orientation, type of patent rights, domestic value addition, manufacturing quality etc. while zero per cent duty and taxes on imported capital goods and raw materials
The investor can bring USD 10 million as minimum investment to this fabric park and there they will also enjoy exemptions for Import Substitution under Value Added Tax (VAT), Port and Airport Levy (PAL), Customs Import Duty (CID), Commodity Export Subsidy Scheme (CESS)
Other incentives would be dividends to non-resident entities are exempt from income and withholding taxes and if the countries are within the Sri Lanka double-tax treaties (there are 46 signed treaties with Sri Lanka). Also, there is 100 per cent repatriation of capital and profits permitted, according to the BoI website.
The BoI said in 2019, Sri Lanka imported 255,437 MT of fabric to the value of USD 2.2 billion both for the export-oriented apparel manufacturers and for use in the local market. Sri Lanka imported more than 50 per cent of its fabric from China along with other countries like India. The former BoI Chairman also added that China and other supplying countries are recovering from the first wave of Covid-19, Sri Lanka now does not enjoy the ‘exclusivity’ it enjoyed and would have to move back to the traditional niche exports once again.
Ceylon Today’s attempt to contact the current BoI Chairman Raja Edirisuriya to obtain the information of the investors who have already selected the Fabric Park but he was unavailable for a comment.
Running a textile dyeing industry is a very serious business altogether. A country like India has a huge water pollution issue partly due to dye waste pumped into the water bodies. The largest culprit according to one German public international broadcaster Deutsche Welle (DW) is the fashion industry and the bulk of clothes is bought by the western world. Wastewater from dyeing and washing fabrics is destroying one sacred river in India, the Noyyal of the Kaveri River in Tamil Nadu.
Also, in 2018, the EU adopted a circular economy package for the first time that will, at the insistence of the European Parliament, to ensure textiles are collected separately in all Member States by 2025 at the latest. The EU has for years advocated promoting the use of ecological and sustainable raw materials and the re-use and recycling of clothing.
Sri Lanka requires entrepreneurs and investors in the apparel industry; however textile dyeing requires greater precision and constant monitoring. The wastewater treatment for dye mixed water should be addressed carefully, especially after the Xpress Pearl disaster last year which caused huge marine environmental damage that is yet to be analysed.
The CEA still does not know who the investors are and is awaiting word from the BoI. If the former BoI chairman claims that five investors have already committed to investment in the fabric park, the CEA and the public will be quite interested to know the details. People in the Eastern Province are already in the dark about this initiative. The Province’s fisher associations nor the rural development agencies know anything about the project.
MP S. Viyalendran said that he has protected the land from grabs but he is keen to protect the fishermen if there are disputes with the project.
BoI Responds to Ceylon Today:
When was the Cabinet approval obtained for the fabric park project in Batticaloa?
A. The Cabinet approval was granted on in October 2020 for the Eravur Pattu Dedicated Textile Zone.
Who are the investors and the amount of investments they had brought into the country?
A. Two major investors have shown their interest in establishing ventures within Eravur textile Zone with an expected investment of USD 65 million estimated employment generation over 900. Meanwhile, negotiations are underway with two more investors.
Are the investors within 46 nations that enjoy double tax treaty signed countries? We hear the investors are from India and Malaysia.
A. The projects approved by BOI for Eravur Park are from India and the US. The two countries have already signed the DTA’s with Sri Lanka.
Was the EIA feasibility studies conducted?
A. Yes. Approval obtained from Central Environmental Authority in September 2021. This approval is issued after a technical evaluation by a committee comprising relevant institutes including Coast Conservation and Coastal Resources Management Department (CC&CRMD), Marine Environment Protection Authority.
Was there a coastal conservation approval obtained?
A. During outfall construction CC&CRMD officials visited the site and their guidance was obtained.
Fishermens issues and fish breeding can hamper if such dye waste is dumped in the sea? What measures have been taken?
A. No. Since, wastewater will be treated to the regulatory standard before discharge. Further, Sea outfall is designed and constructed in such a manner that the treated wastewater is dispersed into the sea environment with provisions for a heavy dilution. A dispersion model study has also been conducted and it shows that there will not be a negative impact to the receiving environment provided the wastewater is treated to the required standard. prior to discharge. In order to ensure so, required monitoring will be conducted by BoI.
When will the fabric park be completed for investors?
A. The fabric park is ready now for factory construction as we have provided basic construction needs of water supply, electricity and access road. Simultaneously rest of the developments will be continued. Hopefully in one year’s time, the park can be operated with the establishment of factories, providing employment opportunities for 5,000 direct and 300 indirect.
By Sulochana Ramiah Mohan