Chemical industries in Sri Lanka: Awaiting exploitation

By N.S.Venkataraman

( November 16, Chennai, Sri Lanka Guardian) After tumultous period of unrest and violence due to militant activities , Sri Lanka is now looking forward to time of peace and growth and progress. Obviously, the Government of Sri Lanka as well as Sri Lankan and international investors should cease this opportunity to identify the appropriate areas of investment in Sri Lanka and implement projects with time bound action plans in tune with the global trends and scenario.

While Sri Lanka has many advantages in terms of natural resources such as rubber and tea plantations and mineral resources such as ilmenite deposits , careful strategic plans have to be devised to develop and exploit these resources by converting them into profitable finished products and get value additions.

So far, Sri Lanka has been exporting several of its natural products and deposits without value addition and in the process has been losing investment and economic growth opportunities for the country. Such scenario cannot any more be justified, since Sri Lanka has no reasons for not doing so after the end of the militancy and ushering in of the period of normalcy now. Sri Lanka may lack technological expertise and resources at present for exploiting its several natural resources and for making investments in viable chemical and agro chemical projects. But , the initiation of skilful policy measures and schemes by the Sri Lankan government can attract massive investments from the technologically developed countries and multi national companies, who can bring forth the technological inputs and investments for mutual benefits.

Sri Lanka can take clue from the growth strategies and programmes of the Government of Singapore, where the availability of natural resources are less than that of Sri Lanka and the size and population of Singapore is also much less compared to Sri Lanka. Many chemical projects of high technological standards have been set up in Singapore in recent times like huge petro chemical complex and several products like poly carbonate, poly vinyl alcohol etc. which are not produced even by larger country like India. Singapore has encouraged investments in bio technological and bio pharmaceutical field in a big way by attracting several multi national companies. While Singapore does not have any worthwhile market, the massive chemical projects are planned in Singapore with international market in view. Sri Lankan government can certainly do whatever the Singapore government has done and even may do better in view of the several natural advantages that Sri Lanka has, as compared to Singapore.

Several chemical investment opportunities in Sri Lanka can readily be cited. For example, with the availability of ilmenite mineral deposits of fairly good quality standards, a large titanium complex can be set up in Sri Lanka that would involve the production of synthetic rutile, titanium dioxide pigment, titanium metal etc. which are ilemenite based products. The global demand for titanium dioxide is around 4 million tonnes per annum and it is increasing steadily at 4% per annum in the world. Titanium dioxide is a very valuable pigment that is extensively used in the production of paint, ink , plastics and several other products. Many companies produce titanium dioxide in the world even though there is no ilmenite deposits in the country, by importing the requirement of ilmenite. Singapore is an immediate example. Titanium metal, which is a strategic metal used extensively in aircrafts, defence, chemical projects etc. is another important product that can be made from ilmentie deposits.

Another great investment opportunity for Sri Lanka is the chemicals that can be produced from tea. Green tea poly phenol is a very significant product made from green tea that has important nutraceutical applications and whose demand is growing up at impressive rate in the global market. Caffeine is another important chemical from tea waste. Such products can be produced in Sri Lanka with great advantages and would significantly contribute to the improvement in the economy of tea plantations.

There is an activated carbon project from coconut shell which is already operating in Sri Lanka. But, opportunities exist for more capacity creation for activated carbon and several other value added nutraceutical products from coconut can be produced in elegant manner.

Sri Lanka should also actively consider setting up a petro chemical complex with big investment from multi national companies that would pave way for production of several down stream petro chemical products and polymers and additives, which would open up huge employment avenues and demand for skilled jobs.

While the above opportunities have been stated as examples , many other growth avenues exist in the field of chemical industries particularly in food processing, bio technology and bio pharmaceutical sector.

Sri Lankan government should consider creating separate zones for research and development activities, where several multi national companies would show interests in investments due to the comparatively lower operating costs in Sri Lanka . Such research and development centres would strengthen the much needed technological base in Sri Lanka considerably in the long run. Sri Lanka has to take urgent steps to create at least one technological educational institution of international standards. It can take some help from Indian Institutes of Technology that are functioning in India with good standard and credits.

Sri Lanka should not let go the opportunities that the conditions of peace now offer. The international investors are waiting and watching and would march towards Sri Lanka with great interest if the government of Sri Lanka would be able to introduce appropriate policies and schemes and create the right conditions for growth.

-Sri Lanka Guardian