As a young professional Chartered and Management Accountant who served as Chairman of three state institutions including the People's Bank during the tenure of President J R Jayewardene and continued as Chairman of People's Bank during the period of President Premadasa and was later appointed as the Chairman and Director General of the Greater Colombo Economic Commission which was later converted to Board of Investment of Sri Lanka, as the First Chairman of the renamed Board of Investment of Sri Lanka from 91 to 93 it will be appropriate for me to write about the economic developments undertaken during this period especially connected to poverty alleviation and the 200 Garment Factory Programme on the 26th death anniversary of President Premadasa.
It is sad that the country lost a dynamic leader who was action and result oriented and had the vision to spread the development of the economy throughout the country by taking the industries to the villages and providing jobs to rural youth, which resulted in the upliftment of poverty in the rural sector.
As chairman of the People's Bank during the period of President Jayewardene and reappointed by President Premadasa, I was closely associated in the implementation of pro poor programmes such as direct lending to self employed and small scale projects through the People's 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 to 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.
Two of the major programmes launched in which I was able to make a contribution were the Janasaviya or the poverty alleviation programme when I was chairman of the People's 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.
President Premadasa stated “Whatever development we may bring about, should be to the benefit of the poor. Development in any sense should help people to live. Our efforts should be to remove the distinction between have and have – nots altogether.” A distinguished president of the United States stated “if a free society cannot help the many who are poor, it cannot save the few who are rich” late President John F. Kennedy.”
Janasaviya was one of the thrust projects of the government and was handled by a separate ministry. However, the two state banks - the People's Bank and Bank of Ceylon - were called upon to play a major role in these two schemes.
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. The Janasaviya loan scheme was implemented by both banks and was accelerated after late President Premadsa assumed office after winning the presidential elections. The People's Bank had appointed 4,000 PNNs and the Bank of Ceylon a similar number.
Due to the thrust on rural development and small sector loans, both the state banks came forward with various loan schemes between Rs. 5,000 and 25,000 without providing any security.
The People's Bank, which was set up mainly for the rural sector, at the inception was able to play a lead role in the setting up of over 4,000 PNNs, grant of loans without security, self employment loans to youth, agricultural loans, start up loans, tiny sector loans, Athamaru loans, pawning, Janasaviya loans, assisting the cooperatives and the cooperative rural banks.
Change of attitudes and monitoring projects
The policies of the late president resulted in change of attitudes of the staff of banks to go to the small man who were earlier neglected and meet their requirements rather than wait for the people to come to the banks and queue up and fill forms.
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 which officials worked tirelessly to achieve results as well as those who bluffed him and enabled him to have an effective monitoring and control mechanism and also to take early remedial action.
200 Garment Factory Programme
I was Chairman of the People’s Bank and one evening I had a call from the secretary 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 People's Bank having over 350 branches and over 10,000 employees with a good quality, well trained, experienced senior management and 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 and in overall development of the economy of the country.
There were many new changes taking place at the GCEC at this time. Some of the major challenges was 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 200 garment factories programme could be considered as one of the main achievements and contributions made by President Premadasa to uplift the rural economy of Sri Lanka with the help and support of the big companies 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 as a strategic tool for developing the rural economy and to help alleviate poverty in Sri Lanka and was far more effective than the billions of rupees spent by the international lending agencies to implement their trickle down approach through massive projects the benefits of which hardly reached the poor man. Credit should be given to USA for this gift of the garment quotas which enabled Sri Lanka to be one of the top exporters in garments and even after abolition of the quota system to produce quality products at competitive prices.
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 but were not successful to the same extent as they did not have the same vision and implementation capabilities as 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 and implementation of projects was carried out by the BOI. All approvals done under one roof at 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.
The Board of Investment of Sri Lanka (BOI)
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 fact in 1977 President J R Jayewardene who heralded the Open Economic Policy set up the Greater Colombo Economic Commission to attract foreign direct investment, set up Free Trade Zones and promote export-oriented projects.
The first Chairman of GCEC late Upali Wijewardena a leading entrepreneur businessman was selected by President J R Jayewardene to head it. 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 accounts 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 initiated by the now Prime Minister Ranil Wickremesinghe and they could be considered two of the very successful free trade zones in the world. President Premadasa set up the Koggala Free Trade Zone which was officially inaugurated as soon as I took over as Chairman.
The success of the 200 garment factories programme was the ease of doing business, grant of tax incentives, textile quotas and luxury vehicles given to investors 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 electorates. The staff of the BOI and others which included staff 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.
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, 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.
This was the new approach of 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’ attitude 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 major requirements of investors and complained about non availability of electricity supply, roadways 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.
Many have stated that the era of President Premadasa if continued would have led Sri Lanka to be a disciplined and industrious nation similar to Singapore which was built by another great leader Late Lee Kuan Yew.
(The writer is former Chairman and Director General Board of Investment of Sri Lanka, former Chairman People’s Bank and People’s Merchant Bank)
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