The dynamic policies of President Premadasa came to an abrupt halt 31 years ago
As one who had the opportunity to serve as the Chairman and Director General of the Greater Colombo Economic Commission and later converted to the Board of Investment from 1991
to 1993 and prior to that as the Chairman of the People’s Bank during the period of President Premadasa, it will be appropriate for me to write about the importance to implement the economic policies of the Premadasa period to overcome the current economic crisis and achieve sustainable economic recovery on the 31st Death Anniversary of late President Premadasa. Although giving free handouts was the order of the day, Premadasa policies were able to change this concept by pushing economic development to the provinces. He did this by inviting the private sector businessmen to set up garment factories in the rural areas which provided employment and brought in the much needed foreign exchange.
The dynamic policies of President Premadasa came to an abrupt halt 31 years ago. We need a new leader who can bring back the dynamic Premadasa policies to give a new vision to drive the economic development of Sri Lanka and bring prosperity to the nation at a time the country is facing a severe economic crisis.
The young girls in the rural villages were for the first time producing export quality garments, going to the main markets of USA and UK
The 200 Garment Factories Programme spread throughout the country and undertaken by the private sector with the BOI and other Government agencies and commercial banks played a major role in making Sri Lanka a major hub for the export of garments with the village girls producing for the global markets. Today the major export industrial product from Sri Lanka are garments and underscores the success of the Premadasa policies and the jobs and economic development in the villages outside of Colombo. For the first time export-oriented industries were taken to the villages and jobs were provided to rural youth, which resulted in the upliftment of poverty in the rural sector. Those who joined the 200 Garment Factories Programmeme are today not only leaders in the garment industry locally, but global leaders with factories spread over many countries and some of them include MAS, Brandix, Hirdramani, EAM Maliban Group, Hela Clothing, Lucky Industries, BAM Group, Orit Apparels, Star Garments, Smart Shirts, Penguin Sportswear, Omega Line, Vogue Tex, Orit Apparel, Aitken Spence (Garments) and many others.
In 1991 the apparel and garment exports were apparently US $ 764 m. With the setting up of the 200 Garment Factory Programme the exports increased tremendously and reached US $ 5.6 B in 2022 and US $ 4.5 B in 2023. This shows that FTAs should be focused on exports and not imports as at present.
Board of Investment of Sri Lanka
There were many new changes taking place at the GCEC at the time I took over. Some of the major ones were the setting up of the Koggala Export processing Zone, the 200 Garment factories Programme, conversion of GCEC to BOI, for the first time incentives for the infrastructure projects were brought in compared to the earlier concept of only export-oriented projects, setting up of the one stop shop, Cabinet Sub Committee on Investments and BOI projects became the main export earner for Sri Lanka. The BOI was used as the vehicle to achieve this massive task of setting up 200 garment factories which indeed was a dream come true due to the dynamic leadership provided by President Premadasa and the BOI coming directly under the President and the main foreign investment arm in Sri Lanka all under one roof with authority, implementation skills and no political interference.
Since the BOI was directly under the President we found that we did not have any political interference and could work to achieve targets and goals according to set rules and regulations. It was in 1977 President J.R. Jayewardene heralded the Open Economic Policy. The Greater Colombo Economic Commission was set up to attract foreign direct investment, set up Free Trade Zones and promote export-oriented projects.
For the first time the people saw factories shifting out of the Katunayake and Biyagama Free Trade Zones in the Colombo and Gampaha Districts to outside provinces
The GCEC/BOI was a very powerful and action oriented organization coming directly under the President and had the power of giving tax incentives, approval to open a foreign currency banking account and Customs functions for the imports and exports relating to GCEC/BOI companies.
The success of the 200 Garment Factories Programme was the ease of doing business, grant of tax incentives, textile quotas and a luxury vehicle on the completion of the project which was carried out under BOI as per the applicable rules and regulations without any political interference. In fact President Premadasa didn’t tolerate any political interference and we hardly ran into problems with any of the politicians especially in setting up garment factories in the different electorates.
The BOI was a one-stop shop where investors could come to one place for all their requirements. The numerous meetings that we had with investors, government ministries and banks which were chaired by the late president himself and others chaired by the finance secretary were action oriented to solve problems of investors and not talk shops.
200 Garment Factories Programme
The 200 Garment Factories Programme could be considered as one of the main achievements and contribution made by President Premadasa to uplift the rural economy of Sri Lanka with the help and support of the big companies and investors in the private sector. For the first time we saw factories shifting out of the Katunayake and Biyagama Free Trade Zones in the Colombo and Gampaha Districts to outside provinces.
The US Garment Quotas were utilised by President Premadasa- who was a grassroots politician- as a strategic tool for developing the rural economy. Today although we have many Free Trade Agreements and are signing new FTAs there are no strategic plans either for the government or the private sector to promote and expand the export sector and become a net exporter reversing the adverse trend of been a net importer. These new FTAs signed do not have the basic principle to implement the trickle - down approach used by international development agencies for the benefits to reach the villages and the poor people and uplift poverty in Sri Lanka which was a success achieved by the 200 Garment Factory Programmeme. India is a close partner of Sri Lanka and if they open up the exports to the garment industry by removing the quota then we could certainly increase our exports as well as the trade balance with India and is a matter that has to be pursued on a fast track for us to overcome the debt crisis by earning foreign exchange and narrowing the trade gap and achieve a trade surplus.
The garment industry became the largest industrial export from Sri Lanka due to the vision of the late president Premadasa. Workers who had to leave their villages and come to Colombo and Katunayake and stay in boarding houses with measly savings were now able to travel to work from their homes and have a substantial take home pay.
In fact, the opposition, who were critical of the 200 Garment Factories Programme when in power, continued the expansion of the Garment Factory Programmeme and commenced the 50 Garment Factories Programme and other schemes, but they lacked the leadership, dedication, implementation capabilities and skills possessed by President Premadasa.
The private sector was drawn into the 200 Garment Factories Programme by giving tax incentives, infrastructure such as land, electricity, telephone, water, roadways and other benefits, quotas depending on the area selected to enable them to undertake expansions or new projects without much hassle and free of bureaucracy. This was the era where the “One Stop Shop” concept for the approval, implementation, monitoring and opening of projects were carried out by the all - powerful BOI under one roof to serve the foreign and local investors.
India is a close partner of Sri Lanka and if they open up the exports to the garment industry by removing the quota then we could certainly increase our exports
To undertake this project the late president selected the then Greater Colombo Economic Commission (GCEC) and converted it to the Board of Investment of Sri Lanka (BOI) in order that it could cover the entire country. This was a swift and significant change made within a few days and the Bill was approved by Parliament. The success of this strategy for BOI to be the main arm of the Government directly under the President to promote foreign and local investment projects has now been greatly diluted and seen in the great difficulties experienced by investors who come to invest in Sri Lanka. A correction is badly needed to support foreign and local investment that are export oriented if we are to come out of the present debt crisis.
We saw a new approach of President Premadasa and his Secretary and other officials who were men of action and result oriented following the President who used to start work at 4.00 am by calling them to follow up on the projects or any critical news in the newspapers, radio or television which needed remedial action. The private sector and foreign investors really appreciated such speedy action and were not pushed from pillar to post, but were served by the BOI One Stop Shop. President Premadasa wanted men who could perform to give results and those with the ‘Can Do’ attitude.
I remember the frequent meetings we had at Sucharitha where President Premadasa invited investors who were due to open their factories and solved any problems they had. At these meetings the Chairman of CEB, Roadways and Water Board were always present as these were three items where investors complained of which was electricity supply, roadway and water supply. At these meetings dates were given to investors to open factories at which opening the President would be present.
The weekly meetings with the cabinet sub-committee was another vehicle which sorted out matters especially relating to transfer of land for BOI projects and many cabinet papers were submitted for approval on the recommendation of the cabinet sub-committee. This is the success of the 200 Garment Factory Programmeme as we had the proper systems and procedures manned by capable people from the Cabinet of Ministers, BOI and Government ministries.
For the first time export-oriented industries were taken to the villages and jobs were provided to rural youth, which resulted in the upliftment of poverty in the rural sector. Those who joined the 200 Garment Factories programme are today not only leaders in the garment industry locally, but global leaders with factories spread over many countries
There were a minimum of 500 persons employed- mainly females- in each factory. Preference was given to Janasaviya certificate holders in the granting of jobs in the 200 Garment Factories Programme and this enabled the people to earn a wage rather than depend on free handouts and support the poverty alleviation Programmeme. Also each electorate had a money circulation among the workers per month of Rs. 2 to Rs. 5 million a big boost for upliftment of economic activity in the villages. In addition all factories had to give free breakfast to workers mainly cereals grown in the villages.
The young girls in the rural villages were for the first time producing export quality garments, going to the main markets of USA and UK; a feat achieved thanks to the late President Premadasa.
Credit should also be given to the USA Government, as the late President was able to utilise the garment quotas to be properly distributed under the scheme. Increase in quotas was also obtained to sustain the expansion, which took place. We also had investors from UK, Hong Kong, Singapore and Germany.
In the 200 Garment Factory Programme the late President Premadasa was present for all the official openings of factories and he gave opening dates to all investors and they had to work round the clock to open their factories on the scheduled dates.
The success of this strategy for BOI to be the main arm of the Government directly under the President to promote foreign and local investment projects has now been greatly diluted and seen in the great difficulties experienced by investors who come to invest in Sri Lanka
At the initial stages as expected in any new project it was slow, but once the first few factories were opened it was a hive of activity and investors were queuing up looking for sites to open new factories. The interest in garment factories came about when the president visited the opening of a garment factory put up by late Kumar Dewapura, who was the Chairman of the Tri Star Group in the Kurunegala District, on the invitation by the then Chief Minister Late Jayawickrema Perera and found out the great potential for the development of the garment factories with the USA quota which was not properly utilised and the big demand from overseas buyers. At my first meeting with the leading garment factory association to discuss the 200 Garment Factory Programmeme their response was that we will not be able to start more than 8 factories. However once we started the first few factories set up by Late Kumar Dewapura and initiated by the late president all the investors were rushing to set up factories.
At the time of the untimely death of death of President Premadasa, 160 areas had been allocated to construct garment factories and 117 factories. All were opened by the late President and six were ready for opening. Thirty seven (37) factories were under construction. This was indeed a record for any major industrial project started in Sri Lanka.
Lessons for the future
We need a leader who can speedily revive the Premadasa policies and give new impetus which will be the turning point in the history of Sri Lanka to have sustainable economic and social development, poverty alleviation and immediately bring back the private sector as the engine of growth promoting export, domestic and economic development.
Today with people in the north and the south having lot of expectations with the peace process, it is essential to implement development Programmes to accelerate economic development and alleviate poverty and usher in prosperity.
The leaders should follow President Premadasa’s policies to go to the villages and to see for themselves whether their needs are met and work for the upliftment of the rural poor. The ambitious Programmes of any Government could be easily achieved if they follow the policies of President Premadasa by providing leadership and being action and result oriented.
President Premadasa played a gigantic task of reawakening our economy and was one of the very few action-oriented presidents with the common man at heart. He “Walked the Talk”.
He was a leader who was able to activate the economy by utilising both the public and private sector and accelerate economic development. Today we need to follow Premadasa policies to give a jump-start to our economy and make our country more industrious and prosperous.
The BOI was used as the vehicle to achieve this massive task of setting up 200 garment factories which indeed was a dream come true due to the dynamic leadership provided by President Premadasa and the BOI coming directly under the President and the main foreign investment arm in Sri Lanka all under one roof with authority, implementation skills and no political interference
President Premadasa made use of the USA quota system to promote exports and with the GCEC set up by President Jayawardena later converted to the BOI by President Premadasa the main arm of the government for economic development of the country and set up the 200 garment factories Programmeme to provide the benefits to the rural people. It is imperative that the BOI should be brought to the place it was during the period of President Jayawardena and President Premadasa to be the specialised vehicle for economic development with authority of the Government. Successes achieved during this period are due to the vision of President Jayawardena and the implementation policies of President Premadasa. He also implemented accountability and non-performers were not tolerated.
Many have stated that the era of President Premadasa if continued would have led Sri Lanka to be a developed, disciplined, industrious and prosperous nation similar to Singapore which was rebuilt by another great leader, the former Prime Minister of Singapore late Lee Kuan Yew. The time has now come for us to elect a leader to take over the mantle to implement the Premadasa policies to transform Sri Lanka from a debt burden nation to achieve sustainable economic recovery and bring prosperity to the nation.
(The writer is former Chairman and Director General Board of Investment of Sri Lanka and former Chairman of People’s Bank)
