The Board of Investment had failed to recover Rs.118,729,170 from 9 defaulters and more than 800 million rupees given as incentives to non-starter projects, the Auditor General’s review of the BOI annual report for 2006 presented to Parliament recently revealed.

The misuse of incentives to start BOI approved ventures in a considerable number of cases or of cancelled projects showed that they had used the duty waivers to import vehicles or machinery but did not start the project. "Efforts had not been taken by the BOI to collect the value of such duty concessions granted to cancelled projects. There was no evidence to prove in audit that the relevant custom duties for capital goods imported amounting to Rs.819,624,428 by 167 such cancelled projects had been recovered from the relevant projects," the AG said.

In addition the BOI had granted interest free loans for constructing factory buildings to projects it had approved but had failed to recover more than 57 million rupees during the year 2006. These interest free loans should be paid back within 40 or 60 installments. But due to the weaknesses in the procedures adopted by the BOI it had not been able to collect the loan recoveries within the specific period the report said.

There are nine Export Processing Zones, 3 Industrial Parks and 4 regional offices under the BOI. Out of these only 3 Export Processing zones were running at a profit of Rs.154,987,725 in the year 2006.

However, the total number of projects undertaken as at 31 December 2006 by these sub units was 296 with a total cost of Rs.84,834 million to the BOI employing  650 BOI employers and had generated only 132,125 employment opportunities the report noted.

Most of the BOI projects had not reached the minimum initial investment criteria but enjoyed privileges like the waiver of custom duties, tax holidays and other concessions. Efforts also have not been made by the BOI to recover amounts granted as incentives to projects that had failed to keep up with the agreements or the projects that did not actually start the AG reported.