Spurred by UAE investments, Kerala govt woos further FDI

Smart City Kochi News

Copyright © Khaleej Times.

TRIVANDRUM — Boosted by the investments from United Arab Emirates (UAE), the Left Democratic Front government in Kerala has launched a concerted effort to attract more foreign direct investments (FDI) that they opposed while out of power.

More than Rs20 billion being invested by DP World on the International Container Transshipment Terminal at Vallarpadam and Rs17 billion to be invested by the Dubai Technology and Media Free Zone Authority (TECOM) on the proposed SmartCity at Kakkand are by far the largest FDI Kerala has received so far.

The state has been lagging behind many other states in the country in respect of FDI despite being one of the largest recipients of remittances from Keralite workers abroad. Remittances now constitute about 22 per cent of Kerala's domestic product.

From January 1999 to December 2005, the FDI approved for the State was Rs.12.17 billion in 184 projects, which constituted only 1.26 per cent of the total FDI approvals in the country, according to the state's economic review.

Maharashtra ranked first in the FDI list with Rs22 billion in 2629 projects followed by Delhi, Tamil Nadu, Karnataka, and Gujarat. Kerala was in the 12th rank in getting FDI as on December 2005. The state attracted only seven foreign companies in 2005 compared to 1280 by Delhi.

While the arrival of the DP World has raised the prospect of massive investments in port-based projects, the advent of SmartCity is expected to pave way for substantial FDI in the information technology, in which the state has several distinctive advantages.

The projects spurred by the container terminal include port-based special economic zone (Rs.75 billion), LNG Terminal (Rs.30 billion), single buoy mooring (Rs.7.5 billion), petrochemical complex (Rs.35 billion) and many others. Work on some of these projects has already started.

The government is now trying to rope in foreign players to develop a similar terminal at Vizhinjam to ensure a similar investment boom in the capital district of Trivandrum. A high-level delegation that visited the Gulf countries recently discussed the project with UAE authorities.

Industry Minister Elamaram Kareem, who headed the delegation, told Khaleej Times that the UAE had evinced interest in investing in port, power and knowledge sectors. The two are in the process of setting up a joint working group to identify the projects.

Chief Minister V S Achuthanandan is exploring the possibility of Russian collaboration for the Vizhinjam project. He has held one round of discussions with Prime Minister Manmohan Singh and Russian envoy to tap the 'Rupee-Rouble fund' for the infrastructure project.

The Russians have already come forward to invest in the mineral sector. A memorandum of understanding (MoU) has already been signed with Russian government-owned Rosoboron Export (RoE) for producing value added products from minerals.

The government is also ready to join hands with Malaysian government for setting up a satellite city at Calicut in North Kerala. A MoU in this regard is expected to be signed next week. The project envisaging a medical city and an IT park will be a joint venture of Kerala and Malaysian governments.

The new-found zeal of the LDF government in pursuing FDI has raised eyebrows among Communist hardliners, who had opposed the FDI while in opposition. Curiously Achuthanandan was in the forefront of the campaign against FDI, saying such investments without technology will harm the state.

He had opposed the SmartCity project pursued by the previous United Democratic Front government's tenure, terming it a real estate project. But today he and his party describe the signing of the final agreement for the Smart City project as the biggest achievement of the LDF government.

Achuthanandan has apparently shed his image as a hardline Communist after he assumed office and is pursuing foreign and private investments in all key sectors to revive the state's battered economy as his West Bengal counterpart and posterboy of reforms Buddhadeb Bhattacharjee did.

The state government has set up a company called Infrastructure Kerala Limited (InKel) to attract NRI investments for developing infrastructure for hi-tech industries. The NRIs and NRI groups have offered about Rs4 billion as share capital for the venture as against Rs740 million sought by the government.

Tourism has already been attracting sizeable FDI without much effort. The latest major FDI in the sector comes from the Singapore-based Banyan Tree Hotels and Resorts and the Kuwait-based Kapico Group. They have joined hands with Mini Muthoottu Group to set up a 7-star resort at Cherthala in Aleppey district at an investment of Rs1.5 billion.

The FDI is expected to give the much-needed take off Kerala looks forward to in the industrial front. The industrial growth in Kerala remained tardy and much below the national average despite the continuing efforts to make it investor-friendly.

The industrial growth was negative in 2001-02 at constant and current prices. Though there was a revival in the following two years, the growth turned negative yet again in 2004-05, but picked up in 2005-06.

According to the latest Economic Review by the State Planning Board, the average industrial growth rate for the period between 1999-2000 and 2005-06 was a meagre 1.54 per cent and from 2003-04 onwards 2.29 per cent. This was far below the national average of around 10 per cent.

No improper concessions to Tecom: Kerala CM

Latest Kochi (Cochin) Smart city News

Copyright © Khaleej Times

TRIVANDRUM — Kerala Chief Minister V S Achutanandan has dismissed the charges levelled by opposition leader Oommen Chandy against the final agreement signed by the Left Democratic Front government with Tecom for setting up the SmartCity at Cochin as part of a deliberate move to create a smoke screen.

Responding to the six questions raised by Chandy, the chief minister said that the government had not given any undue concession to the Tecom as alleged by the former. The agreement inked last week was more favourable to the state than the one finalised by the previous government.

“The lease rent we have fixed for the 234 acres of land to be given for the proposed IT project is three times more than the land price fixed by the United Democratic Front government headed by Oommen Chandy,” the Chief Minister pointed out.

Referring to Chandy’s query regarding the status of the land of Kerala State Electricity Board (KSEB) and Kerala State Industrial Development Corporation (KSIDC) to be given for the project, Achutanandan said that it was part of the 234 acres of land to be leased for the SmartCity.

Regarding the opposition leader’s charge about reduction of the capital base in the venture, the Chief Minister said that only the initial capital investment was brought down. The total capital investment remains at Rs.17 billion. The share capital would be to the tune of Rs.6.8 billion.

As regards Chandy’s apprehensions regarding the government stake in the venture, Achutandan said that the government should be congratulated for raising the stake from 9 per cent to 26 per cent. He pointed out that the former chief minister had settled for 9 per cent stake after giving the state-run Infopark.

He termed Chandy’s charge that the government had facilitated income tax concession to the TECOM by losing revenue worth Rs.400 million as baseless. The chief minister described the opposition leader’s question on the change effected in the agreement over the jobs to be created by the project as a big joke.

He said that the 90, 000 jobs included in the clause were direct jobs to be created by companies setting up shops in the SmartCity. Achutanandan said the questions raised by the opposition leader did not deserve any reply.

“I have sought to answer them as I did not want to show any disrespect to the opposition”, Achutanandan said adding that the final agreement was inked after careful consideration of all aspects. He said that the SmartCity would immensely benefit the state.

Ruling Communist Party of India (Marxist) secretary Pinrayi Vijayan has also ridiculed the opposition leader’s charges against the project. He said that the project was given the nod with the unanimous approval of the ruling coalition.

Infosys to develop Rs3.06 billion campus: IT major Infosys Technologies Limited has unveiled its plan to develop a campus with world class working environment in the Kerala capital at an investment of Rs.3.06 billion.

Speaking at the ground breaking ceremony of its software development centre here yesterday, K. Dinesh, co-founder of the company and member of its board, said the proposed centre would have 8000 seats.

The new centre is designed to enhance productivity and efficiency. The company has been operating out of a leased space in the Technopark with 1,100 seats for the last two years. It has invested Rs 300 million on the facility so far.

Dinesh said Infosys would create a capacity to seat 1,500 employees over the next one year.

Deal signed to set up SmartCity Kochi

© Gulf News.

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Ahmad Bin Byat, executive chairman of Tecom Investment and Lizzie Jacob, chief secretary of Kerala has signed the final agreement to eastablish SmartCity Kochi.

Deal signed to set up SmartCity Kochi

Thiruvananthapuram, India:The much-awaited $350 million-SmartCity Kochi project between the Government of the Indian state of Kerala and SmartCity, a joint venture between Tecom Investments and Sama Dubai was inked here on Sunday.

The project, aimed to put Kerala on the global IT map, is being signed nearly three years after it was first mooted. The agreement was inked by Ahmad Bin Byat, executive chairman of Tecom Investment, and Lizzie Jacob, chief secretary of Kerala.

Smart City, to be set up in Kochi, is a joint venture company of Tecom Investments and Sama Dubai. Speaking on the occasion, Ahmad Bin Byat said Smart City would be home to the best companies of India and abroad. "This project would certainly put Kerala on the global IT map. It would just not be the IT sector alone that would benefit but others too," said Byat.

"This is a historic ceremony and a happy occasion for me. This has materialised after long discussions and would be mutually beneficial and economically a boost for Kerala. More importantly this would strengthen the relationship between Kerala and Middle East," said a beaming Achuthanandan, chief minister of Kerala.

The project would have 8.8 million square feet of building of which 70 per cent would be for IT and IT enabled services.

Kochi will join Malta as the first two members of a global network of knowledge-based industry townships that Smart City seeks to create. Last month, SmartCity signed an agreement with the Government of Malta to establish SmartCity Malta, a business township to be located in Ricasoli, Malta.

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