BOI says successful facilitation paved way for Volkswagen assembly plant

Tuesday, 12 April 2016 01:30 - - {{hitsCtrl.values.hits}}

The Board of Investment said yesterday that successful facilitation by its Chairman Upul Jayasuriya and his officials working closely with the Ministry of Lands, a land in the Kuliyapitiya area was secured for setting up the Volkswagen assembly plant in Sri Lanka.

This land will be taken over by the BOI and would be formally handed over by the investment promotion agency to Senok Automobile Ltd., for the assembly of cars manufactured by Volkswagen AG, the renowned German company.

The agreement to assemble cars was signed by Jayasuriya and Senok Automobile Ltd. President Noel Selvanayagam and is a BOI Section 17 Agreement. The investor will assemble diesel-powered vehicles in the 1,000 cc to 2,000 cc category and this will include passenger cars, Sport Utility Vehicles (SUV), Multi Utility Vehicles (MUV) and commercial vehicles.

Initially these vehicles would be marketed locally for a period of three years and thereafter the vehicles manufactured will be exported to overseas markets.

There is also a potential for export vehicles which would be petrol/electric/hybrid vehicles to be built without the concessions that have been given for assembling diesel vehicles. The total value of this project is an investment of $ 26.5 million, of which 21.5 million will be invested in fixed assets within a period of 24 months.

As Volkswagen is currently a world leader in automobile manufacture, this project is a very high profile one and a statement about Sri Lanka’s growing attractiveness as a destination for investment. The BOI is very keen to attract other leading automobile manufacturers into the country as the industry creates opportunities for the creation of local component manufacturers that can supply the building of a complex product such as passenger cars.

Volkswagen is a leading German automobile manufacturer based in Wolfsburg, Germany. The company was founded in 1937 and produces cars, trucks and buses. Company revenue was Euro 197 billion in 2013. It is best known for iconic models such as Beetle, Golf and Passat.

The benefits of the project include inflow of German advanced automobile technology into the country and creation of job opportunities for the local youth.