THIRUVANANTHAPURAM, 12 May 2007 — A high-level team from Dubai, headed by Ahmed Bin Byat, director general of Dubai Technology and Media Free Zone (Tecom) Authority, is expected here today to sign the final agreement for setting up an exclusive IT industry hub in the port city of Kochi.
He will sign the deal with the state government at a function to be held tomorrow in the presence of Chief Minister V.S. Achuthanandan, his Cabinet colleagues and senior government officials, the chief minister’s information technology adviser Joseph Mathew said.
The Dubai team that includes the Tecom Investments Chief Executive Officer Abdullatif Al Mulla, Tecom Executive Director Fareed Abdul Rahman and other key officials who negotiated the deal, will arrive on a chartered flight and proceed to Kochi for a site visit after the signing ceremony. They will fly back to Dubai the next day.
The official said the work on the Smart City will begin within two weeks after the signing of the deal and the first building is expected to be completed in 18 months. Another 30 acres of land is also being handed over on freehold to the joint venture in which the state government would hold 16 percent stake.
The state government’s Chief Secretary Lizzie Jacob will sign the agreement on behalf of Kerala at the function to be held at Mascot Hotel tomorrow morning. The chief minister will host a dinner for the guests in the port city the same evening.
The agreement is being seen as the biggest achievement of the Left Democratic Front (LDF) government that completes its first year in office next week. Achuthanandan got his Cabinet’s nod on April 25 for the draft agreement with drastic changes from the one finalized by the previous United Democratic Front (UDF) government.
Smart City, which is expected to invest around Rs.20 billion in the free trade zone to create 8.8-million sq. ft. built-up space and pump in double the amount into the state’s economy, will be the first major foreign investment in Kerala after the DP World’s International Container Transshipment Terminal at Vallarpadam in the port city.
“It’s a positive signal to potential investors and we would go a long way from here. The investment climate in the state has undergone a drastic change,” Industry Minister Elamaram Kareem said.
The Tecom, which runs Dubai Internet City, the Middle East’s largest ICT infrastructure, is also setting up similar facility in Malta, SmartCity@Malta for catering to its European clients. The Kochi facility is expected to host labor-intensive units of the global information and communication technology majors and it is expected to create 90,000 jobs.
Billed as the largest ever private sector ICT project and foreign direct investment as well as the largest ever source of employment (the state-run Technopark and Infopark currently employ less than 20,000 ICT professionals), the project will also be the largest ever source of knowledge-based jobs in the state that boasts of the highest literacy in India.
Kerala lags far behind its southern neighbors in capitalizing on India’s ICT boom. Last year, the state exported software worth just Rs.2.9 billion as against Karnataka’s 370 billion, Tamil Nadu’s 139.6 billion and Andhra Pradesh’s 125.21 billion rupees.
The LDF government claims of having made a tough bargaining in the state’s favor. The old deal required handing over of 350,000-sq. ft. Infopark owned by the government to Tecom. In the new deal, the government retains it.
The provision of the old deal that the government should promote no similar IT infrastructure venture in Kochi as an investor Kochi also stands scrapped.
In the old agreement, 236 acres of land was to be transferred to Tecom for Rs.260 million and the land’s ownership was also vested with them. The Smart City would now pay up Rs.1.04 billion for 246 acres taken on lease. The state government’s share in the old deal was nine percent.
As agreed earlier, the state government would initially have two nominees on the director board including the chairman, who would be a senior government secretary. It would go up to three after five years when it enhances its stake to 26 percent as agreed mutually.
Talks for the project had begun in 2004 when Defense Minister A.K. Antony was chief minister and Indian Union Muslim League (IUML) leader P.K. Kunhalikutty the IT minister. Oommen Chandy, who succeeded Antony, also pursued the project aggressively despite stiff resistance from Achuthanandan who then alleged a “total sell-off to the Dubai firm.”
During the past three years, several top Tecom officials, including Byat, Mulla and Abdulrahman have come to the state and held talks with Kerala officials.
A memorandum of understanding was signed in September, 2005, when Oommen Chandy was the chief minister. Achuthanandan then opposed the transfer of the existing properties to the joint venture and demanded better price for the land.
