|
Frustrated Hayleys Chairman appeals through media
The Hayleys Group,
among Colombo’s largest conglomerates, last week called for more
clarity and a proper policy framework on foreign investment
saying current policies were unclear and inconsistent.
“If there were no restrictions on investing overseas, we could
have advanced further as a company and brought more benefits to
the country,” Hayleys Group chairman Rajan Yatawara told The
Sunday Times FT in a rare interview last week to reinforce some
issues that it had raised in its annual report.
Activated carbon
Haycarb is a pioneer in manufacturing eco-friendly coconut shell
based activated carbon.
Its product range includes standard, washed and impregnated
carbons in granular, pellet and powder form and it has the
capability to regenerate and return spent carbon to chemical
industries in which it is used. Activated carbon is used widely
in water purification, air and gas purification, and solvent and
gold recovery.
The company is the largest coconut shell based activated carbon
manufacturer in the world and has production centres in Thailand
and Indonesia.
The Central Bank Controller of Exchange was unable to comment on
the Hayleys issue in particular but provided some guidelines on
how approval is given to applications to invest abroad.
“It all depends on whether all the documents are in order. If
they are not it could take longer that the normal 3-4 weeks,”
said D. Vasantha, acting Controller. The Bank processes the
application and if in order sends it to the Finance Minister for
final approval. “Sometimes these applications take time when we
have to get more details like audit reports, etc,” he said.
The company was
going to the ‘press with our story as we are getting nowhere
with these policies,’ he said adding: “The vulnerability of the
Sri Lanka government to foreign investors is killing local
competition.”
 |
Seen
here are different types of activated carbon
including granules and powder. The powder is an
effective antidote against poison. Haycarb donates
more than Rs 2 million worth of this activated
carbon powder to government hospitals annually
helping save many lives. Pic by J. Weerasekera. |
Yatawara, citing the
group’s own case of where foreign investors have been allowed
into the activated carbon sector when the supply base is limited
and price under-cutting has been one of the reasons why Hayleys
has set up production facilities overseas, spoke on a range of
issues that have partly led to a fall in profits in the last
financial year. The group reported a turnover of Rs 24 billion,
up 23.5 per cent over the previous year but pre and post tax
profits fell.
Delays in VAT refunds, variations in fiscal policy and
inconsistencies in agriculture policy in relation to the recent
withdrawal of the subsidy were raised by the Hayleys chairman in
the interview. But his main point of concern was whether there
is a sinister international move to kill Hayleys’ reputation as
a world leader in activated carbon and whether the Sri Lankan
government was unwittingly becoming a partner to this strategy.
“They (foreign investor) set up in competition with local
industry and a depleted raw material base. Some 80 percent of
the carbon for our main overseas comes from us and if we
collapse, they collapse. They (foreign investor) can afford to
say lose $1million (by paying higher prices for local raw
material) to kill Haycarb (the activated carbon subsidiary) and
a multinational.
We are driven to the wall. We wind up and lay off staff,” the
normally-mild Hayleys chairman said angrily.
It was a very rare meeting with Hayleys (Yatawara was assisted
by group directors Richard Ebell and Ananda Hettiarachchy)
senior management in a normally, publicity-shy culture that the
group has had in the past.
In fact Yatawara and his predecessors have expressed concern in
the past on inconsistencies in regulations and problems with the
exchange rate policy – but only through the chairman’s review in
the annual report; rarely directly through the newspapers.
“We don’t go behind politicians or officials but play by the
book,” the Hayleys chairman, who retires and gives way next
January to “Tanky” Wickremeratne, said adding however that,
“that hasn’t changed things.” He said recently they invited
Coconut Ministry senior officials to the Hayleys activated
carbon plant to show the kind of world-class technology that
locals are capable of.
The officials were very impressed.
In the 2005-06 Hayleys Group annual report, Yatawara refers to
the ill-advised BOI move to allow another foreign investor in
the activated carbon sector. “At a time when the five local
activated carbon producers have production capacity and sales
prospects for using 60,000 charcoal the country has never
produced more than 45-50,000 tonnes/year, the BOI grants
approval with its usual incentives to another 100 percent
foreign owned entity to set up an activated carbon factory here.
Haycarb’s need at full capacity is 36,000 tonnes. Foreign direct
investment in these instances comes in the way of machinery and
buildings of questionable value, some low waged employment
creation as a result (whilst elsewhere termination of better
paid employees is imminent), lower export income for the same
volume sent out of the country repatriation of profits,” he told
shareholders.
He asked: “What purpose does such FDI serve?” “BOI approvals are
confidential and neither the public nor other stakeholders are
consulted. Why should this be? Sri Lanka could even be used to
reactivate and export spent carbon containing toxics; or repack
Chinese carbons which face anti-dumping penal duties in the
West,” he said in the report, reiterating these points in the
interview.
“Don’t get us wrong,” interjects Group director Ebell, adding:
“Not for a moment are we saying we are opposed to foreign
investment. All what we are saying is that policies should be
consistent, and established and reputed local industries should
not be ruined.”
On other issues, Yatawara criticized the government for delays
in VAT refunds (the government owes the company more than Rs 450
million over the past six months), saying: “The VAT scam or poor
tax collection is no excuse. Our shareholders don’t accept this
as an explanation for low returns, nor our employees, for no
bonuses.”
“It is incomprehensible to the average citizen that the
government has no funds to pay us our dues,” Yatawara said in
the report and also reiterated this in the interview.
|
|