Sri Lanka: Sri Lanka's flourishing green scene

Sri Lanka's flourishing green scene

Sri Lanka is enjoying a burgeoning green sector and as businesses ranging from garment manufacturers to hotels, agriculture producers and energy generation firms go for green schemes, new prospects for Hong Kong investment are opening up.

Opportunities are available for green-manufacturing companies inclunding suppliers and companies representing environmental firms.

Strong green initiatives are being spearheaded both by the government and the private sector; these are being used to add price to businesses and increase firms' "competitive chance" in a difficult market.

An example is the garment manufacturing sector which accounts for nearly 50% of the country's exports.

Hong Kong-based Trump Trading Co's affiliate, the Hirdaramani Group, is of the country's major manufacturers and established a new purpose-built green manufacturing facility in 2008.

Director Arjuna Kuruppu claims it's the first new apparel factory in the world to be awarded the prestigious US Leadership in Energy and Environmental Design (LEED) gold certificate. It is as well the first in Asia to be credited as a carbon neutral factory, Kuruppu said.

Similarly, industry leader Brandix Lanka Ltd was awarded LEED platinum status for the conversion of an existing factory at Seeduwa in Sri Lanka's Western Province and gold status for its factory in the southern coastal town of Koggala.

There is keen competition to plough investment into green. Hirdaramani's investment to become a LEED factory was about 25% additional than for a conventional factory.

The group spent US$6.5 million on its factory, installing evaporative cooling instead of conventional air-conditioning, prismatic skylights on the roof instead of overhead fluorescent lighting and LED task lights at each machine's needle.

It's as well introduced solar panels that produce about 7% of the factory's electricity and most of its hot water.

Brands attracted to green manufacturers

"Green investment is paying off not just for the planet, but in an actual increase in orders," said Kuruppu.

US label Patagonia, which is focused on green garments, has recently started to place orders with Hirdaramani for a sportswear range.

Brandix now has additional green factories manufacturing exclusively for M&S of the UK: "these are M&S Green Attribute certified factories and had to pass a stringent approval strategy, but the investment has paid off," said Chief of Environment and Energy Management at Brandix, Iresha Somarathna.

The group specialises in lingerie, casual wear and supplies brands, including Victoria's Secret in the US and H&M in the UK. The group is now implementing its green strategy in India and Bangladesh.

A fly in the ointment of the green success story in the garment sector is the vast quantities of waste it produces, which until 2008 was trucked to landfills and burned.

Laws prohibiting dumping actually opened a new opportunity for industrial waste recycling: young entrepreneur Edward Fernando quit his full-time position in logistics at a travel company, mortgaged his family property and set up a Board of Investment approved company, GreenKeepers Pte to recycle waste.

Now he has eco centres, which as well handle garment-branded waste in Sri Lankan export processing zones, plus other in Bangladesh and he's planning to open on the Indian subcontinent.

Last year, GreenKeepers exported 5.8 million kilos of waste; most of the fabric waste went to China: "we work with re-cycling companies in China that make yarn from cotton waste and products such as computer shells and car dash boards from the synthetic waste."

Other centres are in Pakistan, Vietnam, Indonesia and Africa and the company's efforts have now become an integral part of the garment supply chain. "Now we are looking for an investor to recycle the waste in Sri Lanka," Fernando said.

Hong Kong element in green tourism

Sri Lanka is the first country in Asia to initiate tourism projects from the UK-based Travel Foundation through its Responsible Tourism Partnership (RTP).

The country's as well supporting the Greening Sri Lankan Hotels project (funded by the European Commission's Switch-Asia programme).The aim is to enhance the environmental performance of additional than 350 hotels.

It means improving energy, water and waste management systems, reducing cost of operations and increasing consumer acceptance as low carbon-footprint establishments.

RTP Chairman Nishad Wijetunga, says the country is recognised as a leader in sustainable tourism in Asia.

The construction of hotels in the capital Colombo and another in the southern town of Hambantota, by Hong Kong's Shangri La Group, is expected to further enhance the industry's reputation, industry leaders say.

Meanwhile, in the agricultural produce sector, players are offering green products from tea to spices, inclunding rubber and coconut palm products. Some are trying to go beyond organic.

Coffee company Hansa Ceylon Coffee is using coffee production to regenerate forests (with mixed planting) to help revive areas that have been critically damaged by monoculture planting.

Founding Director Lawrence Goldberg, a passionate environmentalist from the US, said: "the best coffee is shade-grown, making coffee a great crop to re-forest the Sri Lankan highlands."

Goldberg's efforts - he hand-roasts the coffee at a small home at the highest point in the central highland town of Nuwara Eliya - are now making economic sense and he sees an opportunity for his specialty coffee in markets like Hong Kong and Dubai.

Goldberg and his Sri Lankan friend and mentor, System Ecologist Ranil Senanayake, as well established a company for certification of forest garden produce, FGP Inspection and Certification (Pvt) which certifies products from Costa Rica to Ecuador, India and the Philippines.

Renewable energy

Renewable energy both for generation and conservation are investment-grade investments, said Thusitha Sugathapala, Director General of the Sri Lanka Sustainable Energy Authority (SLSEA).

Energies such as solar, wind, biomass and small hydro power plants account for 7% of Sri Lanka's energy consumption, but the government plans to increase it to at least 20% by 2020.

Renewable energy providers sell electricity to the grid at a declared tariff that is dependent on the cost of production - current prices per kW hour unit range from US$0.11 to US$0.16.

Private sector investment in small hydro power stations is increasing and there are now about 90 such projects.

Meanwhile investors from Japan and South Korea are operating solar farms in Hambantota.

European investors have bought into wind farms in Hambantota and the western coastal town of Kalpitiya while biomass power generation has overseas investors on different projects. Japanese funding is as well driving bio diesel production from castor inclunding algae.

A spin-off benefit for investment in renewable energy is carbon trading under the UN-led Clean Development Mechanism (CDM). The Ministry of the Environment, which is the designated national authority for certification of emission reduction, says that there is great request for projects to be CDM-certified.

projects small hydropower and bio mass projects - have been certified and have forward-traded their carbon credits to the Japanese and Dutch governments.

But there is another side of the coin to CDM: as the international carbon market falls, the Sri Lanka Carbon Fund Ltd, a private company with 51% shares held by the government, is starting to diversify into a range of environment projects, providing services to investors in green projects.

The focus is now changing to bilateral arrangements and the first of these is being negotiated with the Japanese