Committee explores options for operating Valaichchenai Paper Mill as a public-private joint venture

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Hon. Mahindananda Aluthgamage, Committee Chair of the Sectoral Oversight Committee on National Economic and Physical Plans stated that he will convey the need to maintain the Valaichchenai Paper Mill as a public private joint venture without allowing a situation of closure is presented to the concerned ministers and the Hon. President

The Committee Chair stated the above when the National Paper Company Limited annual reports for the years 2013, 2014 and 2015 were taken into consideration by the Sectoral Oversight Committee on National Economic and Physical Plans recently (20).

Ms. Thilaka Jayasundara, Secretary to the Ministry of Industry stated that since the machines of the Valaichchenai factory were imported in 1956 and thus 1.2 million dollars are required for repairs. However, since no financial allocation was received from the treasury, a cabinet paper was submitted to run this as a public private joint venture, but was not approved as the land was allocated for tourism.

It was also disclosed that if USD 1.2 million is spent and repairs are made to the machines in the factory, a profit of 22 million rupees per month can be made by producing 5 tons per day. It was also discussed that this entire land, which is spread over an area of ​​340 acres, could be considered for a tourist zone instead of only a part of it. The Committee Chair stated that if the Valaichchenai Paper Mill is to be closed down, instead of selling it, it is important to run it as a public private joint venture, and thus, the recommendation of the Committee shall be forwarded to the Ministry of
Finance and industry and the Hon. President.

Moreover, the Committee emphasized the need to build a manufacturing economy by developing the industries of the country instead of depending on the tourism industry itself. The Secretary to the Ministry of Industries pointed out that the contribution of the manufacturing sector is only 15% of the country’s gross domestic product, while in a developed country this figure is 30%. She stated that the land reserved for industries is 0.04 percent of the total land in the country and it is usually 3 percent in a developed country.

Furthermore, attention was paid to the concern of not having a specific region for the leather industry and it was pointed out that plans should be prepared taking into account the development of both industry and tourism sectors.

Moreover, taking into account the 2022 annual report of the Department of Fiscal Policy, the Committee Chair drew attention to the weaknesses in the tax collection process in this country. The Committee pointed out that it is unacceptable for people with large incomes to sneak through the tax net and collect taxes from people with low incomes and advised to conduct a more extensive study on the tax policy and streamline the related mechanism. The Committees emphasized that the Inland Revenue Act should be amended and the officials including the Ministry of Finance should take the initiative for the said.

The Committee Chair expressed his displeasure that although a number of recommendations were made to connect the Land Registry Department and the Motor Transport Department with the Ramis system of the Inland Revenue Department, it has not been done so far. He also stated that the government will lose a considerable amount of tax due to the provision of temporary VAT number by the Inland Revenue Department.

Additionally, the 2022 Annual Report of the Public Accounts Department, the 2020 Annual Report of the HDFC Bank, the 2022 Performance Report of the Ministry of Commerce, the 2021 Annual Report of the Sri Lanka Accreditation Board, the 2022 Performance Report of the Cooperative Employees Commission, the 2022 Annual Report of the Ministry of Urban Development and Housing and Condominiums The management authority’s annual report for the year 2021 was also considered at the Committee meeting held.

Members of Parliament Hon. Eran Wickramaratne and Hon. Madhura Withanage, officials from relevant government institutions were also present at the Committee meeting held.


Hon. Mahindananda Aluthgamage, Committee Chair, emphasized the need to maintain the Valaichchenai Paper Mill as a public-private joint venture to avoid closure. The factory, in need of repairs costing $1.2 million, could generate a profit of 22 million rupees per month by producing 5 tons per day. The Committee also stressed the importance of developing the manufacturing sector to reduce reliance on tourism. Discussions included concerns about the tax collection process, the need for industry-specific regions, and the importance of amending the Inland Revenue Act. Various annual reports and performance reports were also considered at the Committee meeting attended by relevant officials and Members of Parliament.

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