President Premadasas policies were

result-oriented and accelerated social

and economic growth and
development

Saturday, 13 May 2017

I had the opportunity to serve President Premadasa as the

Chairman and Director General of the Greater Colombo Economic
Commission and also as the first Chairman of the Board of
Investment of Sri Lanka from 91 to 93 and prior to that as the
Chairman of Peoples Bank at a very young age. It will be
appropriate for me to write about the economic developments
undertaken during this period especially the 200 Garment
Factories Programme and the poverty alleviation Janasaviya
Programme on the 24th death anniversary of President
Premadasa.

The 24th death anniversary of late President R. Premadasa fell on

1 May. It is sad that the country lost a dynamic leader who was
action and result oriented and had the vision to spread economic
development throughout the country by taking the garment
factories to the villages and providing jobs to rural youth, which
resulted in the upliftment of the economy in the rural sector.

As Chairman of the Peoples Bank during the period of President

Jayawardena and continuing during the President Premadasa, I
was closely associated in the implementation of pro poor and
inclusive programmes such as direct lending to self-employed,
small scale and micro projects through the Peoples Bank and its
network of branches spread throughout the country. The new
concept of President Premadasa for the banks was to set up Praja
Naya Niyamakas (PNN) who were given a loan of Rs. 100,000 by
the bank on provision of security and to on lend small amounts of
loans ranging from Rs. 500 to Rs. 10,000 per person for micro
projects. Further the rates of interest charged by the PNN and the
on lending rate was recommended by the bank to enable the
people to get loans at a very much reduced rates compared to the
money lenders who charged exorbitant rates.

Two of the major programmes launched by President Premadasa

in which I was able to make a contribution were the Janasaviya or
the poverty alleviation programme when I was Chairman of the
Peoples Bank and the 200 Garment Factories Programme as the
Chairman and Director General of the BOI, both of which had a
direct impact on the upliftment of the rural economy.

Both these programmes made a significant contribution to the

economic emancipation of the rural people which comprised 70%
of the population of this country.
Janasaviya Programme

President Premadasa was one who had feeling for the common
man and reached out to uplift their living conditions in many of
the programmes, such as the housing development projects,
supply of drinking water and electricity and annual Gam Udawa
celebrations which culminated in the many development projects
completed in the area.

Although giving free handouts were the order of the day,

President Premadasa was able to change this concept by pushing
economic development to the provinces by inviting the private
sector businessmen to set up garment factories in the rural areas.

Preference was given to Janasaviya certificate holders in the

granting of jobs and this enabled the people to earn a wage
rather than depend on free handouts. He was also able to activate
the state banking sector to play a lead role in the Janasaviya
poverty alleviation programme.
This was one of the thrust projects of the Government and was
handled by a separate ministry. However, the two State banks
the Peoples Bank and Bank of Ceylon were called upon to play a
major role in these two schemes.

In fact, I remember that when the late President was the Prime
Minister, he summoned me as the Chairman of Peoples Bank and
Dr. Nimal Sandaratne, the chairman of the Bank of Ceylon to a
meeting at the Sucharitha and wanted us to come up with a
proposal to set up agency banks in the AGA divisions to provide
small sector loans at the door step of the villager.

This meant that villagers would not have to come to banks and fill
lengthy forms but could use the agency banks to obtain their
loans without going through the normal lengthy procedure
applicable to the grant of loans.

These agency banks were named Praja Naya Niyamaka (PNN).

The banks were to identify persons to be appointed as agents of
PNN who could undertake the task of lending money to the people
of the area.

They had to provide security for the money advanced by the

banks at normal interest rates and they were to on lend at rates
of 2 to 3% per month which rate was very much lower than the
rates charged by money lenders which was 5 to 6% per month.
The maximum money advanced to the PNN was between Rs.
50,000 to 100,000.

The Janasaviya scheme was implemented by both banks and was

accelerated after the late President assumed office after winning
the presidential elections. The Peoples Bank had appointed 4,000
PNNs and the Bank of Ceylon a similar number.

The PNN scheme provided the opportunity for the rural masses
another channel to obtain small sector loans. The private sector
banks like the Sampath Bank also came up with a scheme for
such small sector loans in certain selected areas and this was a
scheme launched by late N.U. Jayawardena who was then the
Chairman of Sampath Bank.

The Peoples Bank, which was set up mainly for the rural sector,
at the inception was able to play a lead role in the setting up over
4,000 PNNs, grant of loans without security, self-employment
loans to youth, agricultural loans, startup loans, tiny sector loans,
athamaru loans, pawning, janasaviya loans, assisting the
cooperatives and the cooperative rural banks.

The competition between the two banks also resulted in the rural
sector benefiting and areas hitherto not visited by banks were
targeted for the grant of loans. However, the Peoples Bank was
able to overtake the Bank of Ceylon in the grant of loans in rural
areas.

Changing attitudes to be positive

The policies of the late President Premadasa resulted in change of

attitudes of the staff of banks to go to the small man who was
earlier neglected and meet their requirements rather than wait for
the people to come to the banks and queue up and fill forms.

Today we find that many promises are made by politicians without

having a proper implementation plan and later forgotten.

However, President Premadasa made it a point to monitor and

evaluate performances of banks, ministries, departments and
officials not only by verifying statistics but by sending his staff to
visit the sites and give him a report after inspection.

This enabled him to find out the officials of ministries and

corporations who worked tirelessly to achieve results as well as
those who bluffed their way through and enabled him to have an
effective monitoring and control mechanism and also to take early
remedial action.

Export growth and employment creation through 200

garment factory programme

I was Chairman of the Peoples Bank and one evening I had a call
from the then Secretary Finance Paskaralingam who told me that
the President wanted me to take over the GCEC now BOI. This was
quite a surprise and a challenge for me as I knew that the GCEC
was quite different from the Peoples bank which had over 350
branches and over 10,000 employees with a good cadre of senior
management staff who were the best products turned out by our
local universities.

However I had always accepted challenges and entered another

new organisation which had a major role in attracting foreign
direct investment, increasing exports, creation of jobs and the
overall economy of the country.

There were many new changes taking place at the GCEC at this
time. Some of the major projects and new regulations to promote
investment were as follows.
Setting up of the Koggala Export Processing Zone
200 Garment Factories Programme
Conversion of GCEC to BOI
Grant of incentives for the first time for infrastructure
projects were brought in compared to the earlier concept of
only export-oriented projects
Setting up of the one-stop-shop at BOI
Cabinet Sub Committee on investment approvals
 BOI projects became the main export earner for Sri Lanka
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 investors in the private sector. Well
organised factories were set up in the rural areas and the rural
girls became a part of the export economy. 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 as a

strategic tool for developing the rural economy and to help
alleviate poverty in Sri Lanka and was one of the main effective
tools which provided a trickle-down approach to benefit the poor
man.

The garment industry became the largest industrial export from

Sri Lanka due to the vision of the late President. 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 governments which criticised the 200 Garment Factories

Programme when in the opposition, once in power commenced
the 50 Garment Factories Programme and other schemes
thereafter which enabled to build the garment industry on the
strong foundation laid down by President Premadasa. Even
recently a new garment factory was opened in the Eastern
Province.

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 and implementation of projects was carried out
by the BOI. All approvals done under one roof by the BOI.

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 would
cover the entire country. This was a swift and significant change
made within a few days and the Bill was approved by Parliament.

Conversion of GCEC to BOI All-powerful Government

agency to serve investors under President

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.

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. In 1977
President J.R. Jayawardena 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.

The GCEC/BOI was a very powerful organisation 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 first zone was set up in Katunayake
and the second in Biyagama and the current Prime Minister who
was MP for Biyagama played a major in setting up the zone in
Biyagama. Both Katunayake and Biyagama could be considered
two of the very successful free trade zones in the world. President
Premadasa set up the Koggala Free Trade Zone.

The success of the 200 Garment Factories Programme was the

grant of tax incentives, textile quotas and luxury vehicles which
was carried out under BOI as per the applicable rules and
regulations without any political interference. In fact President
Premadasa did not tolerate any political interference and we
hardly ran into problems with any of the politicians in the
provinces where the factories were set up. The staff of the BOI
and others who were seconded from various ministries played a
major role in making the 200 Garment Factories Programme a
success. This indeed showed that given the right direction and
authority, the public sector management could play a major role
in the economic development of our country.

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, banks 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.

Investors experienced a marked improvement in the business

climate with President Premadasa and his Secretary
Paskaralingam and other staff who were men of action and always
result oriented. The private sector and foreign investors really
appreciated such speedy action and was not pushed from pillar to
post but were served from one centre. President Premadasa
wanted men who could perform and those with the can do
approach and did not worry whether they were red, blue or green.

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. Always at these
meetings the Chairman of CEB, Roadways and Water Board were
present as these were three items where investors complained of
which was electricity supply, roadway and water supply.

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.

The twin objectives of the trickle down benefits of the benefits of

grass root level development and alleviation of poverty were
achieved directly by the implementation of the 200 Garment
Factory Programme.

All factories under the 200 Garment Factory Programme had a

minimum of 500 employees in each factory in an electorate had a
money circulation among the workers per month of Rs. 2.0 to Rs.
5 million. In addition all factories had to give the breakfast to the
workers.

The target was 200 factories employing 100,000 youth and

putting into the economy Rs. 500 million to Rs. 1 billion per
month. The youth in the villages were for the first time producing
export quality garments going to the main markets of USA and
UK.

Credit should also be given to the USA Government, as the late

President was able to utilise the garment quotas given to uplift
the rural economy and move industrialisation from the city to the
village.

Increase in quotas was also obtained to sustain the expansion,

which took place. Even factories were set up in the north in
Vavuniya and in the east in Batticaloa.

The then USA Ambassador visited the opening of a garment

factory in Puttalam with an OPIC investment delegation and they
were highly impressed with what they saw. Thereafter, she also
visited many other openings where USA investors had set up.
We also had investors from UK, Hong Kong, Singapore and
Germany investing in factories in the rural areas hitherto not even
thought of by any industrialist, local or foreign.

In the 200 Garment Factory Programme the late President 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 opening
of a factory was marked by the construction of a clock tower in all
the areas which was undertaken by the investor and opened by
the President before the factory opening.

At the initial stages it was slow but once started it was a hive of
activity and industrialists were queuing up looking for sites to
open factories. In fact the initial idea came from the late Kumar
Dewapura who was the Chairman of the Tri Star Group. He was
given a land in the Kurunegala district by the then Chief Minister
Jayawickrema Perera and currently the Minister of Food to set up a
garment factory and President Premadasa visited the factory and
developed the concept of the 200 Garment Factories Programme.
Kumar Dewapura was instrumental in setting up of the first few
factories and giving a lead for others to join in the programme.

At the time of his untimely death of President Premadasa, 160

areas had been allocated to construct garment factories and 117
factories, all opened by the late President, six were ready for
opening and 37 factories under construction.

Punctuality and meeting targets

Another special feature was that each town or village got a clock
tower and this indicated that a garment factory had been opened
in the area.
Punctuality at the openings may be due to the clock towers that
were constructed and on many occasions, President Premadasa
was ahead of time to open the clock towers to avoid the rahu
time.

There were many teams working to successfully carry out this

gigantic task of setting up of the 200 garment factory
programme. Many teams from the BOI, UDA, Housing Ministry,
CEB, RDA and Telecom were working and included the identifying
of investors, areas and land for investment, granting of quota,
incentives, infrastructure such as land, electricity, telephones,
water, roadway, etc., setting of target dates for opening of
factories, supervision of building construction and reporting
progress, assisting in the recruitment of the workers many of
whom were from Janasaviya families, arrangements for the
opening of the factory and construction of a clock tower in each
area.

In addition, the late President also spoke to investors and we had

to meet almost daily in the evening at the Sucharitha to review
the progress in the presence of investors who had come to sort
our problems. In all these instances they were sorted out on the
spot or if the officers were not there, they were given instructions
on the phone to attend to matters immediately. Examples of some
of the common matters were the supply of electricity,
construction of roadways, provision of telephones which were
attended to immediately with the President giving them the date
for opening of the factory. All these showed the excellent
managerial skills, commitment and efficiency in which all
departments worked to carry out this gigantic task with the
outstanding leadership of President Premadasa.

Investors were able to speed up their import and export facilities

by the setting up of the separate BOI customs clearing centre.
This mainly assisted the 200 garment factories set up outside the
zones and immensely benefited investors by removing many
bottlenecks. Therefore, it was really planning, implementing,
monitoring and working round the clock that enabled these
results to be achieved.
In 1991 apparel and garment exports were approximately $ 764
M. With the setting up of the 200 Garment Factory Programme the
exports which gave a boost to the garment exports increased
tremendously and have today exceeded $ 5.0 billion. One of the
main advantages of the industry was that since it was the main
export earner for Sri Lanka comprising 40% of total exports all
governments assisted in the development of the industry. Even
today new factories are opened in the north and east and one of
the few avenues available to create employment. Many who
criticised the garment industry as a sunset industry can see for
themselves the benefit it has given the country. The highest
export earner and highest employer of females and meeting
tough environmental and working conditions to meet global
standards.

Infrastructure projects The World Trade Centre

It was during the period of President Premadasa that for the first
time incentives were given for infrastructure projects. The World
Trade Centre (WTC) was one of the significant investments that
took place during this time, the exhibition and convention centre
in Fort, and many other hospitals, housing, TV, radio, mobile
phones and hotel projects.

a. World Trade Centre

This was the first major infrastructure project undertaken by a

Singaporean Investor S.P. Tao that was commenced and approved
under the BOI incentive scheme. This was going to be a 39-storey
twin tower costing app $ 130 m and the biggest project
undertaken at that time. The ceremonial construction commenced
with the presence of S.P. Tao, myself as Chairman of BOI, Ajith
Jayaratne, Cassim, Directors of Taos company and with Ven. Podi
Hamuduruwo chanting seth pirith.

The BOI was able to act as a one stop shop and provide the
necessary facilities to the investor to undertake this massive
project. One of the key people who convinced and later helped in
expediting the project was R. Paskaralingam, the Secretary
Finance at that time. S.P. Tao was also a good friend of the late
Baku Mahadeva, a former Secretary of Finance. This shows the
role played by the BOI in its true form in the economic
development of the country led by the President Premadasa.

b. Kandalama Hotel project

This hotel project was approved by the BOI and agreement was
signed by the Chairman of Aitken Spence late Seevaratnam.
When construction was to begin, there were lots of protests from
the politicians and villagers mainly due to environmental hazards
and pollution that would result from running a hotel in this area.

The late President Premadasa obtained expert opinion and found

that there was no danger to the environment nor to the lake as a
result of this project and carried out a campaign to inform the
public of the benefits and advantages of this project to the people
of the area and to overcome the fears of residents and people of
the area.

These protests later turned out to be political as in many cases.

However, the Government never gave into these objections and
protests and it was possible for the owners of the hotel to
construct the hotel. The right decision of President Premadasa is
testimony not only to the popularity of the hotel with both local
and foreign tourists but also their winning many international
awards for the eco-tourism and environment friendliness which
was one of the main reasons for the protest.

Many who had vociferously campaigned against the construction

of the hotel had been present at the official opening of the hotel
and those who helped them were forgotten. The tourist and hotel
industry should pay tribute to the late leader who fought for the
rights of the tourist industry and made them internationally
famous. In fact, the tourist industry was given many benefits such
as tax incentives, duty free concessions and this applied to both
new and existing hotels.

c. Other infrastructure projects

Some of the leading companies today in the mobile

telecommunication sector such as Dialog, Singapore Telecom
were approved under the new infrastructure incentives granted.
In the television industry some of the main channels such as
MTV/Sirasa, Swarnavahini, TNL which were approved under
different names was licenced during the period of President
Premadasa under the BOI incentives. This included some radio
stations also.

Today the biggest investment is in the infrastructure sector and

this includes the port development, telecommunication, power
plants, hospitals, hotels and housing apartments which are all
approved by the BOI.

It is rather unfortunate to note that industrial projects, IT/BPO

projects have all been overtaken by apartments and other
infrastructure projects. Also many of the highways, port
development, airport construction have been undertaken by the
Government on foreign loans which are now a big burden on the
country. If they were undertaken as Public-Private Partnership
projects then they would not have added to the debt burden of
the country and would have gone ahead only if they were viable.

Also today we do not have the same low labour costs we had
earlier and have to go for more advanced investments where
skills and knowledge are required. Therefore one of the biggest
investments we need today is in the education and skill
development areas to be undertaken both by the public and
private sector. We need to provide incentives to the private sector
to make Sri Lanka an education hub and to set up local higher
education institutes to provide a quality education at an
affordable cost to take forward and attract foreign direct
investment for higher value added industries and in technological,
IT/BPO sectors and management.

Breaking the bureaucracy

The late President Premadasa for the first time was able to
activate the Government servants who willingly and readily
served the people avoiding criticism from the public. The term
bureaucracy was nowhere to be seen or heard during this period.

Some of the major events organised to take the Government

machinery to the people were the presidential mobile service,
which took the ministries, ministers, secretaries and other officers
to the provinces and provided immediate solutions to problems
brought to them. Various ministries also conducted their own
ministry mobile services in various provinces before the
presidential mobile service.

This was also an era where the Government servants were

working round the clock and were very effective. Many of them
were awakened early in the morning by the late President at 4
a.m. if there were any adverse stories in the newspapers or to
check on the progress of work he had given them. This also kept
the Government servants on their toes and the Government
machinery moving.

President Premadasa who never took no for an answer expected

the Government servants as well as the private sector to have a
can do attitude. He was a person who firmly practiced the idiom
walk the talk. He carried out his plans and was involved in all
stages of these projects and gave the leadership. He was not
comfortable with people who were negative or always came up
with excuses. There have been instances where Government
servants had been transferred on the spot due to negative
attitudes or not doing work allocated to them.

Lessons for the future

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 ambitious
programmes of the Government could be easily achieved if they
follow the policies of President Premadasa by providing leadership
and being action and result oriented. The leaders should follow
President Premadasas 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.

President Premadasa played a gigantic role of reawakening

economic development and was one of the very few action-
oriented presidents with the common man at heart. He was a
leader who was able to activate the economy by utilising both the
public and private sector and accelerate development. Todays
leaders should make use of the Premadasa policies to give a
jump-start to our economy by attracting the private sector and
make our people more industrious and prosperous.

President Premadasa made use of the Open Economic Policies and

the GCEC set up by President Jayawardena for the economic
development of the entire country and give the benefits to the
rural people. President Jayawardena made the GCEC the most
powerful economic agency in the country and set up the first
Export Processing Zone in Katunayake and the second one in
Biyagama where the current Prime Minister Hon Ranil
Wickramasinghe played a major role as the Member of Parliament
for Biyagama. However unfortunately during the period of Former
President Chandrika Bandaranaike Kumaratunga the BOI was
handed over to a Cabinet Minister and this gradually resulted in
BOI losing its powers and importance to serve investors. As per
latest information the BOI and EDB are to come under a new
agency under a Cabinet Minister.

Many have stated that the era of President Premadasa if

continued would have led Sri Lanka to a disciplined and
industrious nation similar to Singapore which was rebuilt by
another great leader, the former Prime Minister of Singapore Late
Lee Kuan Yew.

(The writer is former Chairman and Director Greater Colombo

Economic Commission, former Chairman and Director General
Board of Investment of Sri Lanka, former Chairman Peoples Bank,
former Chairman and Managing Director State Mining and Mineral
Development Corporation, and former Chairman and Managing
Director Ceylon Leather Product Corporation.)
Posted by Thavam