Posted on June 5th, 2017


Several of Yahapalana’s manufacturing joint ventures, which were going to push the economy forward, died at birth.  The first casualty was the much hyped Volkswagen factory. Volkswagen’s Sri Lanka agent, Senok Automobiles, headed by Noel Selvanayagam, announced in Sept 2015, that they had entered into an agreement for a multimillion dollar investment by Volkswagen, for which they were   given land in Kuliyapitiya by the BOI.

Yahapalana was jubilant. The Volkswagen plant would be ‘a major leapfrog’ (sic) for the country in the right direction.  It showed Lanka’s growing attractiveness   for investment. Volkswagen is currently the world leader in automobile manufacture, having overtaken Toyota of Japan. Volkswagen had attempted to set up a plant in Sri Lanka in 2008 but failed due to various reasons.  Yahapalana government had expressed an interest had spoken to the German Ambassador and here was the result.

Selvanayagam obtained the necessary clearances from the various government authorities and   Senok started preparing the land for the plant.  Then it was announced that Volkswagen was not coming to Kuliyapitiya. The excuse trotted out by Yahapalana government was that Volkswagen’s problems over some of their diesel models in the US had cost Volkswagen US$ 18 billion in losses.

This was immediately challenged. In Germany Volkswagen said that they had no plans for Sri Lanka. A spokesman for Volkswagen stated on Sri Lanka TV that Volkswagen never had any plans for a Volkswagen investment in Sri Lanka. Volkswagen itself never said it was coming. The German Ambassador complained that everywhere he went he was asked about the Volkswagen factory. He said that neither the Volkswagen Company nor the German embassy had anything to do with whatever was started in Kuliyapitiya.

Car experts said that it has been obvious that VW would not be coming here since it was already based in India. Why should Volkswagen invest in Sri Lanka when they have a plant in India which is capable of producing 200,000 vehicles per year? Further, Volkswagen has now changed to the manufacture of European cars.

This ‘Volkswagen’ project was promptly dubbed Hoaxwagen”. It was charged that the BOI, under the excuse of Volkswagen, had handed over valuable land to Noel Selvanayagam. Selvanayagam had also, it was alleged, secured a range of   concessions from the government.

Instead of taking back the land, in January 2017, BOI signed a second agreement with Senok  in which the Kuliyapitiya land was given on a freehold basis to the newly created ‘Western Automobile Assembly’ for a vehicle assembly plant. ‘At no point at the foundation laying ceremony had there been any mention of the plant being for Volkswagen. At the ground breaking ceremony neither the German ambassador nor a representative from Volkswagen was present. But the media noted that the new logo closely resembled Volkswagen logo. ‘Western Automobile’, will serve the domestic market for the first three years, since it only has the capacity to turn out 500 units, said BOI at the inauguration, but will eventually turn out 10,000 to 15,000 diesel cars of 1000 cc to 2000 per year.

Yahapalana announced proudly that Marangoni of Italy is to invest Rs. 11.25 billion to build Sri Lanka’s largest fully integrated tyre manufacturing plant at Wagawatta in Horana as a joint venture with Rigid Tyre Corporation. The media reported that on the direction of President, Maithripala Sirisena, Prime Minister Ranil Wickremasinghe laid the foundation stone of this mega plant at ‘a stately event’ held at the BOI Industrial Zone, Wagawatta, and Horana on January 5 2017.
This tyre plant, the first of its kind in Sri Lanka, will manufacture the whole gamut of tyres, from radials for light and heavy vehicles to off-the-road tyres, babbled Yahapalana. In addition to tyre manufacturing, the venture expects to manufacture high density conveyor belts, targeting the global mining industry. Similarly, high pressure hydraulic pipes will also be manufactured to cater to the demand originating from the oil industry.  BOI was giving it a ten year tax holiday. The project which would create more than 3,000 direct and indirect jobs.

Nandana Lokuwitharana, who had bought the Ceylon Steel Corporation had successfully negotiated a deal with the government to obtain 100 acres of land at Wagawatta to establish Rigid Tyre Corporation (Pvt). The Cabinet Committee on Economic Management (CCEM) has also sanctioned a massive discount on the lease. The BOI charges a huge premium per acre and Lokuwitharana would have had to make a down payment of US$ 4 million (Rs 600 million) for his allotted 100 acres. But the CCEM has approved an unprecedented discount of 99.98 percent on each acre of land to Lokuwitharana. Apart from this concession, other incentives too were granted at the request of the investor, said Cabinet sources.

Marangoni in far away Italy promptly distanced itself from the project. Marangoni said it had been operating its own industrial tyre plant in Sri Lanka since 2008. The Sri Lanka plant was opened when production capacity at its original Rovereto site in Italy became insufficient. Marangoni had stopped producing tyres in 2014, having decided to exit from the car and light tyres business. Marangoni then began negotiations to sell its Sri Lanka production plant to Ceylon Steel Corporation.  Rigid Tyre Corporation also said on January 8th, that no joint venture has been formed with Marangoni to set up the factory  and that the BOI agreement for the project has not been signed. On January 26th the media reported that the Tyre plant project was suspended.

Coca Cola has started to woo Sri Lanka. The President of the Coca Cola Company Asia Pacific Group and its Executive Vice President   had met Finance Minister Ravi Karunanayake and said that Sri Lanka could be developed as a production hub to manufacture Coca Cola and re-export Coca Cola to India. India has the highest demand for Coca Cola products in the South Asian region. Sri Lanka could benefit from the arrangement by earning huge amounts of foreign exchange, while generating jobs for the youth. Coca Cola had inquired about the use of Sri Lanka natural water resources and tea related products for the manufacture.

EPDP leader Douglas Devananda pointed out in Parliament that the Coca Cola factory to be established in Sri Lanka would further reduce the island’s already diminishing natural water sources.  Coca Cola was currently facing serious criticism in India. There were around 57 Coca Cola plants in India and they were criticized for violating water usage limits. That is why the Coca Cola Company is planning to set up its manufacturing plant in Sri Lanka and use our water sources.

Yahapalana is working on two joint ventures for the manufacture of sugar. In July 2015, the BOI had signed an agreement with MG Sugars Lanka Pvt Ltd to revive the Kantale sugar factory. MG Sugars Lanka is a partnership between Bangalore-based Shri Prabulingeshwar Sugars Chemicals Ltd and Singapore’s SLI Development Pte Ltd. The 500-acre Kantale land was handed over to the Board of Investment (BOI) to proceed with the project. In May 2017, the land was released to MG Sugars.

The company, which had earlier conducted a $2 million feasibility study, had agreed to invest US$100 million.  It planned to process 500,000 metric tons of sugarcane within 18 months after re-launching the factory, providing benefits for 25,000 farmer families in the area. The factor would provide jobs for around 1,220.

The second sugar venture Yahapalana is attempting is a sensitive one. In 2007, during the Rajapakse regime, there was a plan to hand over of 62,500 acres in Uva- Wellassa area for a sugar cane plantation to the British company, Booker Tate. The local agent was I.M.S. Holdings. There were vigorous protests from residents and environmentalists and the project was halted.   Booker Tate now plans to resurrect the project, with help of the Yahapalana government, reported the media.

 President Maithripala Sirisena has presented a Cabinet Paper on this project.  The project will now cultivate sugarcane in 62,500 acres of fertile land  in Rideemaliyadda, instead of lands from Nilgala, Galoya and Maduru oya reserves as proposed in the 2007 project. Rideemaliyadda land is located between Nilgala and Maduru oya reserves. A sugar factory will be built on a 149 hectare land in Dehigama and Akiriyan Kumbura divisions in close proximity to the Nilgala reserve in Moneragala.  A Thai company affiliated to Booker Tate will invest over US$110 million to establish this factory.

Chief Opposition Whip Anura Kumara Dissanayake spoke on the matter in Parliament. He highlighted its detrimental impact on the environment, archaeological heritage and the lives of the people of the area. The proposed project damages the entire eco-system  and aggravates the human-elephant conflict, he said. .About seven archaeological sites are located in that area. We demand a comprehensive Environmental Impact Assessment (EIA) covering the whole area of this project.

He pointed out that the project was aimed at producing 80,000 metric tonnes of sugar and the factory will need 2.8 million litres of water on the first day of its operation. How are you going to get this water? Is it from Maduru Oya?   Also the Government was going to distribute 5 acres each for 7,500 farmers on the condition that they only cultivated sugar cane. This would make them laborers of the factory.

Dissanayake also pointed out, ‘this is a very large factory.  If we join Hingurana, Kantale, Sevanagala and Pelawatte sugar factories together, the extent of land would be less than 40,000 acres. This factory has an extent of 65,000 acres.’ Dissanayake asked the government to stop this project and follow an environmental friendly development approach when utilizing lands.


  1. aloy Says:

    It appears that someone in Yahapalana government is interested in making Sri Lankans sick. It appears that a variety of plastic rice has been imported and is being sold in the country via Sathosa. I am not sure about the accuracy of this video which is going viral in Facebook these days. According to the demonstration by a lady who bought the stuff from an outlet in Kotte it definitely looks like plastic. According to another post in FB similar rice has been imported from Pakistan to Italy and is being consumed by Sri Lankans there.
    This is a serious situation and should not be taken as another joke like the bond scam probe; it is a matter of life and death for those who consume it. First of all the political big wig involved in the importation of the rice should be temporarily moved out and an impartial inquiry should be conducted. Culprits should be identified and punished.

  2. aloy Says:

    Few minutes ago I was watching another FB video which shows the actual production of plastic rice from plastics. So the existence of plastic rice is not a myth. The persons who imported it to SL should be identified and not hushed up for political expediency.

  3. Susantha Wijesinghe Says:


  4. Ananda-USA Says:

    SL VLOG in the June 4, 2017 video disclosed that Ravi Karunanayake as Finance Minister had paid 20 SELECTED UNP Ministers Rs 150,000 per month from the funds of the Finance Ministry.

    This payment to Ravi’s “Cabinet within the Cabinet” was not the regular salary of the Ministers but a payment made secretly.

    Apparently, when this was EXPOSED after the recent Cabinet Reshuffle, other Cabinet, Appointed and State Ministers outside this Ravi’s Personal Cabinet have become angry like a nest of HORNETS that they had not been paid the same Rs 150,000 as the selected 20 Ministers of Ravi’s own “Cabinet within the Cabinet”

    This SECRET PAYMENT without APPROVAL by Parliament and without a Gazette Notification represents a CRIMINAL ACT of THEFT on a GRAND SCALE!

    This PAL HORA should be indicted for Misappropriation of Government Funds, PROSECUTED, CONVICTED and IMPRISONED for a long time.

    If this ALLEGATION is TRUE, Ravi Karunanayake should NOT BE ALLOWED to serve as the Foreign Minister of Sri Lanka for ONE MORE DAY!

    Furthermore, those 20 Ministers who ACCEPTED Rs 150,000/month BRIBE under the Table, should be FIRED and CONVICTED as well!

    Will Aiyoooo SIRISENA CONTINUE PREACHING yahapalanaya homilies to us without taking action on this as he did on the BOND SCAM, or WILL HE UPHOLD THE LAWS OF THE LAND? I will give you only ONE GUESS!

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