The island is the world's fifth largest exporter of natural rubber, generating over 100,000 tonnes annually. More than 60 per cent is exported in an unprocessed form.
On the manufacturing front, Sri Lanka is the world's leading supplier of solid rubber tyres for off-road vehicles. Major investments have also been made by producers of healthcare and surgical rubber products, where high quality raw material is of primary importance. Globally, there is good demand for rubber tiles and floor coverings. In addition, shoe producers obtain rubber heels and soles from Sri Lanka.
Opportunities for investment include the manufacture of tyres, tubes and automotive rubber products, especially by relocating these facilities from high cost industrialised or industrialising countries.
Sri Lanka's Competitive Advantages in the Rubber Industry
Availability of high quality raw rubber at competitive prices.
Recognition as a high quality Natural Rubber (Latex Crepe) Producer.
Access to a pool of technical and professional manpower at competitive wage rates.
Attractive incentives.
Good infrastructure.
Competencies built over 124 years of experience in the industry.
Availability of supporting services (research and development facilities, testing & certification services).
The Rubber Industry in Sri Lanka
Sri Lanka is the world's 9th largest producer and the 10th largest exporter of natural rubber (NR). It is also the major supplier of high quality latex crepe to the world market and the world's largest manufacturer and exporter of solid tyres for off-road-vehicles. Nearly 60% of the NR production in Sri Lanka is used for value added rubber products. The bulk of these value-added products are for the export market. Foreign investors from 20 countries have set up lucrative and long standing world class ventures under BOI approval. The 59 BOI approved rubber industry projects consume nearly 75% of Sri Lanka's total domestic NR production.
No. of projects, investment & employment by product type-2005* | ||||||
| Product type | No of projects | Investment (Rs. Mn) | Employment (Nos) | |||
| Tyre Retrading | 3 | 5% | 558 | 4% | 235 | 1% |
| Pneumatic types & tubes | 3 | 5% | 4,825 | 31% | 4,077 | 25% |
| Solid tyres | 4 | 7% | 896 | 6% | 667 | 4% |
| Footwear | 2 | 4% | 855 | 5% | 306 | 2% |
| Flooring | 2 | 4% | 928 | 6% | 253 | 2% |
| Other dry | 8 | 14% | 390 | 2% | 942 | 6% |
| Latex dipped | 26 | 46% | 6,652 | 43% | 9,244 | 56% |
| Latex foam | 8 | 14% | 547 | 3% | 676 | 4% |
| Total | 56 | 100% | 15,651 | 100% | 16,400 | 100% |
| * as at 26-05-2005 Note: Projects are those in operation under Section 17 and 16 of the BOI Law | ||||||
Incentives
Qualifying Criteria (Minimum) - Excluding manufacturing of Crêpe, Sheet and Scrap rubber
New Enterprise
Investment : USD 150,000
Export : 80% of Output
Incentives
Tax Rates
0% First 5 years
10% 6th and 7th years
15% thereafter
Import duty exemption on capital goods and raw materials for export quantities
Exemption form Exchange Control Regulations
Excluding manufacturing of crepe rubber, sheet rubber and scrap rubber