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Cablegate: Sri Lanka Ventures Into Nanotechnology

VZCZCXRO8477
RR RUEHBI
DE RUEHLM #0850/01 2531040
ZNR UUUUU ZZH
R 091040Z SEP 08
FM AMEMBASSY COLOMBO
TO RUEHC/SECSTATE WASHDC 8644
INFO RUEHNE/AMEMBASSY NEW DELHI 2254
RUEHIL/AMEMBASSY ISLAMABAD 8064
RUEHCG/AMCONSUL CHENNAI 8675
RUEHBI/AMCONSUL MUMBAI 6099
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHDC

UNCLAS SECTION 01 OF 02 COLOMBO 000850

SIPDIS

STATE FOR SCA/INS, SCA/RA, EEB/CBA, and OES/STC

E.O 12958: N/A
TAGS: ECON EINV ETRD PREL CE
SUBJECT: SRI LANKA VENTURES INTO NANOTECHNOLOGY

1. Summary: The Sri Lankan business community and the government
will establish Sri Lanka's first-ever attempt at public-private
partnership in research and development with the establishment of a
nanotechnology research and development institute and a
nanotechnology park. The venture, which aims to infuse
nanotechnologies into locally-manufactured export items such as
rubber products, apparel, and activated carbon, is being led by
apparel giant MAS Groups Chairman Mahesh Amalean. Although full
funding is not yet in place, Amalean and others are convinced that
the project will help to develop cost-effective new technologies
that will make Sri Lankan products more competitive in the world
market. The government will invite foreign investors to set up
nanotech companies as part of this new initiative. End Summary

---------------------------------------------
New Public-Private Nanotechnology Initiatives
---------------------------------------------

2. The government and private sector are jointly forming two
entities that will explore ways to infuse nanotechnology into Sri
Lanka's local industrial sector. The first - a Sri Lanka Institute
of Nanotechnology (SLINTEC) -- is the brainchild of local apparel
giant Mahesh Amalean, Chairman of MAS Groups, and the National
Science Foundation. Numerous CEOs from other top conglomerates, as
well as the President's Secretary and scientists from the National
Science Foundation, have committed to the project. Several Sri
Lankan expat nano scientists are also closely involved. SLINTEC
marks the first time the government and the private sector will
collaborate on research and development. Equity for the SLINTEC
will be 50% public, 50% private.

3. According to Amalean, who is leading SLINTEC as chairman, the
entity will initially develop new products and technology that can
be used by local industries such as apparel, rubber and activated
carbon. These are key export industries in Sri Lanka. There
appears to be keen interest from these industries for R&D, and
several top companies in these sectors have already identified R&D
projects to be carried out by SLINTEC. Loadstar, the largest solid
rubber tire manufacturer in the world, wants SLINTEC to develop a
"nano tube" to mold tires and the rims into one component. The
apparel industry desires technology that will reduce die, chemical
and water usage in manufacturing; the industry also want to develop
functional "intelligent clothing." Sri Lanka's leading mobile phone
operator, Dialog, hopes to do R&D into using solar energy to power
their base stations as well as research on integrating
bio-monitoring into wireless communications. SLINTEC will hold the
intellectual property rights of products/technology created by the
group.

4. The government and private sector are also forming NANCO, which
will establish and operate a nanotechnology park on a 30 acre site
approximately 35KM from the capital of Colombo. Ownership, like
SLINTEC, will be 50% public, 50% private. SLINTEC will be
co-located at the NANCO site once the industrial park becomes
operational. (Note: Until then, it will operate from a popular
Export Processing Zone near Colombo. End note.) NANCO hopes to
attract companies that want to take advantage of nanotechnologies
within the park, to ensure that R&D and production maintain in close
contact. The government plans to invite foreign investors to set up
manufacturing plants within the park, likely with the benefit of
special concessions.

------------------------
Possibility of Success?
------------------------

5. While excitement for nanotechnology is building among Colombo's
business executives, funding has yet to fully materialize. SLINTEC
start-up costs are estimated to cost $10 million; NANCO will need an
investment in the range of $50 million. Private sector
contributions for SLINTEC are already in place; however, the
government contribution has yet to materialize. Contributions for
NANCO, other than the government-identified location, are not in
place. Amalean is actively seeking assistance to establishing links
with U.S. nanotech labs and identify additional funding sources.

6. The National Science Foundation reports that Sri Lanka's key
advantage in the nano-science field is the availability of several
Sri Lankan scientists, who are counted among the world's top
nano-scientists. The promoters of these projects plan to "make use"
of these expat Sri Lankans while also recruiting scientists from Sri
Lankan universities to work at SLINTEC. However, at this early
stage, it remains to be seen whether expat experts, some of whom
have been involved in the initial organization of these two
entities, will agree in the end to join such ventures.

COLOMBO 00000850 002 OF 002


Additionally, as this is Sri Lanka's first attempt at private sector
collaboration with the government on research and development,
problems are likely.

7. Nevertheless, the involvement of very successful private sector
leaders and a well-trained local scientific community bodes well for
this project. Post will monitor developments and report further as
appropriate.

BLAKE

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