BOI clarifies media reports on COPE meeting

The Board of Investment (BOI) yesterday issued a clarification on various media reports on the discussion between the organisation and the Committee on Public Enterprises (COPE) held on Wednesday. Following is the full statement issued by BOI Director General Pasan Wanigasekara:

Consequent to the Budget Proposals 2017, the then Ministry of Development Strategies and International Trade (MODSIT) established two export processing zones in Millaniya and Bingiriya, under the guidance of the Cabinet Committee for Economic Management (CCEM). The MODSIT Ministry submitted relevant Cabinet Papers in this regard on 15 December 2017 and 10 October 2018 respectively. Approvals had been granted for the government to provide essential infrastructure facilities for the selected zones and budgetary allocation has been provided to the MODSIT in 2017, 2018 and 2019.  

These activities were undertaken and coordinated by the Ministry (MODSIT) as those activities involved infrastructure development and land acquisition outside the land parcels identified for the establishment of the zones. Such developments were to be carried out by other government agencies; Electricity – CEB; Water supply – NWS&DB; Roads – RDA. The role of the BOI was to facilitate such engagements and report progress to the ministry and to develop the infrastructure within the land parcels identified for the zones.  

The media statement issued by your department makes reference to the Board of Investment effecting transactions amounting to Rs. 3,352.92 m to various institutions without a formal project proposal and repayment plan. We wish to however inform you that all fund allocations for such external infrastructure were made through the 2017-19 Budget proposals by the then government to the relevant Ministry (MODSIT). 

The financial disbursement planning was done by the MODSIT directly in consultation with the relevant infrastructure development agencies such as RDA, NWS&DB, CEB, etc., while the BOI played only a facilitator’s role under the directives of MODSIT. Furthermore, the Cabinet Memorandum of 15 December 2017 that was submitted by the MODSIT Ministry, sought, under section 3.3 (iv), in clear terms, to direct the CEB, RDA and NWS&DB to commence construction and infrastructure required for the project Simultaneously to the land acquisition process using funds allocated to the Ministry (MODSIT) in the 2017 Budget.

As such, we wish to emphasise the fact that the BOI has not made any payments from BOI accounts as stated in your media statement and based on the available and limited information shared by the then Ministry of Development Strategies and International Trade, all such financial transactions have been effected by the relevant Ministry MODSIT to the relevant government institutions.

Although the media statement issued by your department does not make reference to a time period during which such transactions have been effected, we wish to also inform you that based on the limited information that has been shared with us, and to the best of our knowledge, that these transactions have been made by the Ministry (MODSIT) during the period of 2017-2019, and that according to information made available to the BOI, no such payment had been made thereafter for the Millaniya Export Processing Zone.

It is also pertinent to note that the Cabinet Memorandum submitted by the same Ministry (MODSIT) dated 29 January 2019 had acknowledged that there were “Acquisition issues and inadequate funds” (para 5 under section 2.0), and as such, sought approval to, “Utilise the allocation already made under Millenniya Industrial Park for the work mentioned” (grid substation to provide power to both the Millaniya and Wagawatta EPZs and access road construction and junction improvement) through budget allocations in 2019 and 2020.

It was also brought to the attention of the COPE Committee during the hearing that the BOI would only invest its own funds in the development of new zones if and only after the identified land parcels are vested with the BOI free of encumbrances, and the ongoing development of the Eravur and Arabokka zones were highlighted as cases in point.

The media statement also refers to 484 projects under 12 Export Processing Zones having either had their agreements terminated or operations suspended or closed. It does not however, refer to a time period. Our records indicate that these 484 terminations of contract and suspension/closure of operations have taken place during the 43-year life span of the BOI since its inception in 1978 and until 2021. Furthermore, we wish to also bring to your attention that 71 of these projects are expansions and cannot be considered under the categories of either being suspended/closed or agreement cancelled.

We have brought the above to your attention, as the media statement released by your esteemed department incorrectly presents the facts pertaining to the discussions held during the COPE Committee hearing. We urge you to correct the statement issued, as the current statement highlights facts that are prejudicial to the Board of Investment and has caused irreparable reputational damage.