Major Shipbuilding and Repairs facility to begin soon:

Political and economic stability prompts Saudi investment

by P.Krishnaswamy

Following the signing, last Wednesday, of the MoU between the globally prestigious Hadi Hamad Al-Hammam Group of Saudi Arabia and the Government of Sri Lanka on the first ever Saudi-investment venture - the US $ 44 Million Seagulf Shipyard (Pvt) Ltd - at the Galle port, the Sunday Observer interviewed Vice President (International Operations) of the Company T.K. Rajgopal.

He spoke of the growth potential in Sri Lanka and her political and economic stability which prompted the Company to invest on the major Ship Building and Repairs facility. He said the Company is confident of the investment potential in Sri Lanka and many Middle Eastern businesses were looking at the island nation for investments.

Eastern PC Minister of Agriculture, Animal Production and Development, Rural Industrial Development , Fisheries and Tourism Naseer Ahamed also spoke on some aspects of the project.

Excerpts of the interview:

Q: Could you tell us of the background of your Company?

A: The Company was inaugurated in 1979. From then onwards we expanded on an international level. We are mainly on the oil and gas sector and have now started the marine sector. We have over 2000 permanent employees, with many sub-contractors.

Our permanent employees include many Sri Lankans virtually in all departments. We are a major contractor for Saudi Arabia where our headquarters are based.

We have branch offices in Bahrain and Dubai. We have a joint venture in Dubai and in other countries.

Q: What prompted you to invest in a major project in Sri Lanka?

A: We found political and economic stability in the country and a lot of potential for growth. Some of our employees questioned as to why we had not shown any interest in investing in Sri Lanka.

We met the advisors who briefed us on the growth potential. We will bring in our expertise in the marine field, port development and ship building. Our company owns ships, comprising over 50 vessels.

It is difficult to find areas that could be maintained in Dubai or Singapore.

This region lacks repair and yard building facilities. It is a holiday destination with a lot of cruise vessels. So we decided to develop a ship building and repair facility at the Galle port in Sri Lanka. In spite of the fact that it is in the main shipping line from the East to the West there are adequate facilities to maintain ships and vessels.

Q: When do you propose to complete the project - both stage one and stage two?

A: We are fast tracking it. We have to complete the entire project within 18 months. But we will be fully operational within the next three months. We have the capability, the personnel and the equipment. As soon as we go back we will start mobilising and begin work.

Q: What types of vessels would be undertaken at the initial stages?

A: We will do small craft, leisure craft and craft up to 1,000 tonnes in head weight, in small to medium sizes. We will also cover vessels that operate in the oil and gas sector. Lot of such vessels come to Sri Lanka since the country expects to go into exploration.

It is the next market we are targeting. We are not competing with the Colombo Shipyard or any others. With the boom in the fishing industry and all types of vessels, including trawlers, coming from the Maldives and other places a top class facility to maintain them is necessary. When there is no facility in the region, they have to go outside the region for maintenance.

So we thought to provide a maintaining facility. Sri Lanka being an island nation with the availability of facilities, all the vessels will come here. We are investing and will only bring experts and senior staff from outside. All others will be recruited locally. That will provide large employment opportunities and contribute towards the economy. There is no bunkering facility.. So we can add that too with our experience.

Q: Investor confidence has been restored after three decades of war on terrorism. Do you believe other business leaders in the Middle East will also think of investing?

A: Lots of people are looking at long term investments in Sri Lanka and there are opportunities for them. We are here for a long term investment. The Marine sector is a long term investment.

We want to develop the local industry, and bring in the technical know-how and expertise. We want to train the younger generation which again will contribute to the economy. 'Hammam' is actively involved in supporting Sri Lanka in the outside world on the growth potential, investment potential and availability of opportunities.

The BOI fast tracked our applications and extended all assistance for the investment. We have taken it on a long-term lease. Hadi Hammam is a long term visionary. We came here on three occasions before signing the MoU. We studied the situation and the environment for investment. We are confident that ours is a good investment. Support and easy access to all concerned offices including the BOI were given to us. Investment Promotion Minister Lakshman Yapa Abeywardene who is in-charge of the BOI explained how things have been simplified. Tax holiday, invoicing in dollars and many other facilities are available, he said. So we can invoice in dollars and earnings will be in dollars. It means foreign exchange earning for the country.

Q: The government implemented several major development projects for the conflict-torn regions. Do you have any plans to invest in any of these regions ?

A: We visited the eastern province and saw lots of projects coming up. There is lot of growth possibility in the region. You can see a lot of business leaders from the Middle East coming here. We believe they will be interested. Delegations from many countries are now coming here to explore investment possibilities. That shows there is a lot of economic activity going on. The government did a good job in providing details of the procedures to be followed, arranging strategic meetings and laying all ground work. They are taking good advantage of marketing the opportunities available.

Q: When do you propose to complete the work - both stage one and stage two?

A: We are fast tracking it. We have to finish the work probably in less than 18 months. We have the capability, the personnnel and the equipment. We will be fully operational within three months. As soon as we go back we start mobilizing all resources and will start work.