Budget 2025 Industrial Zone Proposals: Challenges and Solutions

The 2025 Budget proposes significant investments in industrial zones to boost domestic chemical production and export-oriented automobile and rubber manufacturing. While the initiative is commendable, several structural and logistical challenges threaten its success.

- BY VINOD MOONESINGHE

The 2025 Budget, presented to Parliament by President Anura Kumara Dissanayake as Finance Minister, allocates funds for industrial zones targeting chemical production for domestic use and automobile and rubber manufacturing for exports.

The Budget allocated Rs 500 million for five industrial parks, planned in Kankesanthurai (KKS), Mankulam, Iranawila, Galle, and Trincomalee, plus a proposed chemical manufacturing zone in Paranthan. The last named—home to the state-owned Paranthan chemical plant since 1954—is expected to boost mineral resource value addition and supply key industrial inputs, including acids and alkalis.

Another Rs. 1,500 million is set aside for an automotive assembly and rubber products zone to enhance export competitiveness in component manufacturing. The Budget document emphasises that investing in these sectors will strengthen Sri Lanka’s position in global export markets.

The Ministry of Industry and Entrepreneurship Development stated in March that the necessary lands for these zones had already been identified, and the acquisition process was underway. However, it would take another two-three years to fully establish the new industrial zones. Despite this, they aimed to complete the required infrastructure by the end of the year.

While one should laud this plan, which at least nods a head towards industrialisation, unfortunately, several challenges stand in the way of it achieving success.

Lack of outstation industrial ecosystems

The first is that industries need to be attracted to these areas. Each zone could be expected to hold about 250 factories. At present, industrialists prefer to invest in the Western Province, the only area with a semblance of an industrial ecosystem. The other areas lack facilities, infrastructure, and supply chain elements.