GCEC of 1978-when the economy took off
By E.P. Paul Perera
In 1978 the GCEC Law No. 4 was passed in Parliament and the GCEC head office was set up at Sir Baron Jayathilake Mawatha in Colombo Fort. Initially the Departments set up within the GCEC included (i) Engineering and Infrastructure Development, (ii) Personnel and Administrative (iii) Investment Approval, (iv) Finance (v) Investment Promotion, (vi) Legal, (vii) Regional Planning (Local Administration).

The first GCEC Board consisted of Ms Upali Wijewardena (Director General), Paul Perera, Deputy Director General (Administration), Sivali Ratwatte (DDG - Investment), Alavi Macan Marker and A.Y.S. Gnanam.

In mid 1978 the physical infrastructure in the country was in a poor state. The economy had been run down by socialist policies. No serious investor would have stepped into the country for want of proper infrastructure facilities and other services. The GCEC had many objectives as per the Parliament Act. One of the main objectives was to promote and facilitate foreign investment into the country.

The GCEC was also given the mandate to administer the affairs of the "Area of Authority" which included seven electorates extending from Kelani River upto Mahaoya - an area approximately the size of Singapore. President J.R. Jayawardena had three priorities on his political agenda. These were Employment; Employment and Employment!

Bringing in foreign investment projects into the country was of great importance if employment opportunities were to be created in their thousands for the youth. The GCEC was to be one of the key players if not the main player, to create such employment facilities in the country. The GCEC Board at that time took a decision to create "Free Trade Zones" initially within the Area of Authority. It was also decided to set up the first FTZ or the "Investment Promotion Zone" at Katunayake, opposite the International Airport.

Trincomalee was also suggested as an option to open this FTZ but the total lack of facilities in the area weighed heavily against that option. Despite having one of the world’s finest natural harbours, Trincomalee lacked the required port facilities to load and unload heavy cargo, its airport was only for domestic flights and its road, telecom and other infrastructure well below the standard required.

As most of the government agencies and departments who were responsible for the physical infrastructure in the country were somewhat dormant due to a preceding seven-year inward looking economy during the 1970-77 era, it was most essential that all such agencies and departments were woken up from their 'slumber'.

After the 1970-77 period of government when Sri Lanka was unfortunate to have gone through a dormant era of national development due to an inward looking economy, not only the basic infrastructure in the country was in shatters but also the major physical and human resources were limited due to many private sector firms having to perform much below par and the infamous "brain-drain" when many professionals and skilled personnel left the country to better pastures on account of the very limited scope and opportunities available to them on the one hand and the ill conceived JVP insurrection in 1971 on the other hand.

President Jayewardena was advised to summon all heads of government departments, corporations and other agencies who could assist or get involved with the GCEC to set up the first FTZ, for an inaugural meeting at the Presidential Office chaired by the President himself to set the ball rolling.
A" fast track" approach on the planning and implementation of the very first mega FTZ in Sri Lanka took place.

The heads of the institutions who participated at this inaugural meeting included among others, the Ministry of Finance and Planning, Ministry of Industries, Ministry of Housing and Construction, Survey Dept, Highways Dept, National Water Supply and Drainage Board, Ceylon Electricity Board, Telecommunications Dept., Labour Dept., a number of corporations responsible for infrastructure facilities, Legal Advisors, Representatives of Public Banks, Chief Valuer, Municipal Commissioners as well as a few MPs of the area (in and around Katunayake).

At this meeting President Jayewardene directed that all parties present should give all assistance to the GCEC in setting up of the first FTZ at Katunayake. The President also directed me to spearhead the main operations and give necessary directions and instructions for the smooth flow of work primarily in relation to the infrastructure development programme, not only within the confines of the Katunayake FTZ, but also in and around the "Area of Authority" of the GCEC as well as general infrastructure in the country including Electricity and Telecommunications.

In order to fulfil these obligations I took the initiative to expand the Engineering Services Department of the GCEC who were given the task of planning and execution of the infrastructure facilities within the Katunayake FTZ as well as other services necessary to make it a fully fledged Industrial Park which could attract mainly foreign investors into the country to set up export oriented industries. Such industries would create a large number of employment opportunities as well as bringing much needed foreign exchange into the country.

At that inaugural meeting it was also decided to summon periodic "Progress Control Meetings" to be chaired by the Secretary or the Additional Secretary to the President. All participants were also instructed that the highest priority was to be given on the FTZ programme and that the necessary instructions and communications will flow down from the Deputy Director General. This gave the necessary "muscle" to the latter's hand to direct operations from the apex with great effect. In fairness to all the government department departments and agencies who worked hand in glove" with the GCEC at that time they all took matters concerning the FTZ development very seriously and delivered what was expected of them.

With the infrastructure gradually being set up at Katunayake and the electricity and telecommunications also being upgraded to serve the FTZ, investors started coming in mainly to set up garment industries for the export market. Most foreign investors took advantage of the quotas available to Sri Lanka for the USA market and set up their ventures.

One could say that this was the beginning of the garment industry in Sri Lanka which now is among the top five foreign exchange earners to the country as well as employment promotion.

With such industries being set up, the labour began to grow to unprecedented levels and with exports taking place it was necessary to create additional internal departments within the GCEC. Departments such as "Industrial Relations", "Environmental Management". "Investor Services and Verification," "Monitoring", "Zone Management" "Fire & Security."

While there was close liaison between GCEC and other agencies such as the Labour Department, Central Environmental Agency, Customs Department, Road Development Authority, CEB, Telecom., Water Board, Local Authorities etc., there arose the need to get the investors at Katunayake IPZ to form into a Free Trade Zone Association to look after the common needs of the FTZ companies and deal with the GCEC management as well as the workers in the FTZ companies to form into Worker Councils in each company with representatives from the company management and elected representatives of the workers.

These Worker Councils were to closely liaise with the GCEC through the Industrial Relations Department and iron out any problem regarding the workers with the respective managements.

This concept was of great advantage both to the employers as well as the employees to maintain good industrial relations as well as create a "Strike-free" industrial climate, keeping away some of the redundant trade unions at arms length.

The Katunayake FTZ was planned to be developed as a self-contained industrial town with not only the infrastructure put in place within the 450-acre zone but also developing the off-site physical infrastructure such as adding to the existing housing stock close to the zone and in the hinterland, a bus interchange for the benefit of the factory worker, improving the roadways in the area, upgrading the water supply to the area, improving the sanitation and garbage collection, setting up a new police station adjacent to the zone, building shops and restaurants, permitting Banks to set up their facilities, medical centres, a daily pola, etc.

I subsequently took over the reins as Head of the GCEC in the early part of 1982 with the resignation of its first Director General, Mr. Upali Wijewardena. The formation of a Free Trade Zone Manufacturers Association to co-ordinate and facilitate both the individual as well as the common problems and issues concerning the investors at Katunayake was encouraged. The FTZ Manufacturers were thus able to have a close rapport with the Board and the Executive Staff of the GCEC. The FTZ Manufacturers and the GCEC Management were able to work as partners in progress in the development of the Katunayake FTZ.

The working relationships between the two partners were very close and appreciated by all concerned so much so that cricket matches not only among the internal departments but also with the FTZ investors were arranged and promoted. The inaugural cricket match between the GCEC and the FTZ Manufacturers Association was played on a Sunday at the Army Grounds for the "Paul Perera Trophy".

The GCEC team was captained by myself and as expected the GCEC team won the match convincingly!

Team spirit displayed by the staff of all departments was beyond doubt and the dividends reaped by the GCEC in terms of attracting foreign investments and the development of the FTZ Katunayake which became a "Showpiece" were evident. Heads of state, Presidents of Multinational Corporations, Cabinet Ministers and famous dignitaries visiting Sri Lanka found time to visit the fast developing Katunayake FTZ. A high level delegation from the People's Republic of China who visited the Katunayake FTZ during the early 1980s took back vast amounts of data information and ideas from the GCEC which apparently helped them establish the now famous "Senzieng Industrial and Commercial Township" north of Hong Kong.

Many other delegations from various countries visited the Katunayake FTZ, some through the auspices of UNDP/UNIDO and others independently, to collect information and ideas to set up their own industrial parks.

While the Katunayake FTZ had just begun with the physical development work initiated, the Minister in charge of the GCEC at that time, President JR Jayewardene himself was keen that a second FTZ be planned and developed within what was then known as the "Area of Authority" of the GCEC.

A probable site was identified at Walgama-Malawana in the Biyagama electorate. This site consisting of approximately 450 acres in two blocks, one 370 acres and the other 80 acres in extent across the road in close proximity to the former was tentatively earmarked for the second FTZ of the GCEC with the blessings of the then Minister of Youth affairs Ranil Wickremesinghe M.P. for the Gampaha District and directly concerned with the Biyagama electorate.
In addition to the money allocated by the Government for the development of the Katunayake FTZ, an initial amount of Rs. 125 million was also allocated for the proposed FTZ at Biyagama. Land acquisition matters were also initiated as instructed and supervised by myself and the land owners and occupants within the 450 acre site extended their co-operation knowing well that the establishment of a FTZ in that area was not only going to be of national importance, but also would be of great economic benefit to the entire community in the Biyagama electorate.

However, the decision to locate the second FTZ at Biyagama had its own ups and downs. A feasibility study was to be launched with the assistance of UNIDO. A team of UNIDO experts together with the Engineering Consultant to the GCEC Dr. A Visvalingam after a careful and close study of the site conditions at Biyagama came to an unexpected and abrupt conclusion that the particular location was not worth proceeding with to establish an Industrial Park in the guise of a FTZ.

The expert team indicated that the possibility of developing even a few industrial sites over and above one-acre in extent was remote and that the GCEC should look out for an alternative location. When the recommendation of the UNIDO experts to abandon the Biyagama site and go for another location went up to President Jayewardene, only the then Director General Mr. Upali Wijewardena was willing to go by that recommendation.

The irony of it all was that within a few days the Director General Upali Wijewardena arranged a "flying visit" to Koggala Airforce Base using his private "Cessna" plane for a "team" consisting of Senior Officials of the GCEC who were to inspect the former Race Course site at Boosa for a possible FTZ and a few other passengers accompanying Mr. Wijewardena visiting the Kamburupitiya "electorate" for future consideration of contesting the seat to Parliament. With these developments which did not get the "green light" from either myself or Mr. Ranil Wickremesinghe, the Senior Officials particularly the Senior Manager (Engineering) Mr. G.L. Perera and Senior Manager (LA & RD) Mr. G.K. Amaratunga were somewhat confused as to the way they should proceed with regard to both Biyagama and Boosa.

The way to proceed was indirectly indicated when the Cabinet took a decision to instruct the GCEC Board that the funds allocated for a second FTZ at Biyagama should not be spent for any other purpose other than for what was envisaged. To make matters easy for the "pro-Biyagama" section, petitions signed by well over six hundred residents in and around the former Race Course at Boosa protested to the President on establishing a FTZ fearing that their lands will be acquired for the purpose and hundreds of residents would be displaced.

Thus it was a "natural death" for the proposed Boosa site as a future FTZ.
After some deliberations involving Mr. Ranil Wickremesinghe, a few senior officials of the GCEC including Mr. K. Godage - Secretary General, Mr. D.H.N. Perera - Senior Manager (Investment Appraisal), Mr. G.L. Perera - Senior Manager (Engineering Services) and Mr. G.K. Amaratunga - Senior Manager (LA & RD) and myself, a decision was taken to offer the development and setting up of a FTZ at Biyagama as an investment project offering many fiscal incentives to any local or foreign real estate developer who would invest on the total infrastructure development and also operate and manage the FTZ on a long lease basis.

This novel concept at that time brought in a number of serious investors to submit financial proposals to develop Biyagama as a FTZ. Of the many proposals received a USA company, Knicker Bokker Inc., was short-listed. Many sessions between this investor and the GCEC to negotiate the terms and conditions for the Agreement took place. The US company went on to find financing sources and after much effort the company withdrew unable to obtain the necessary funds. As such the Biyagama FTZ was again in a dormant state.

Another development programme that was initiated was the reconstruction and rehabilitation of the infrastructure and service facilities of the Negombo town which was greatly neglected over the years. The Negombo town Redevelopment Programme estimated in 1978 at Rs. 600 million was to be a mega project which was to generate thousands of employment opportunities to the youth in the area. This project too was to attract many international firms engaged in infrastructure development work. While I was keen to invite competitive development and financial proposals from interested local and international firms, the Director General Mr. Upali Wijewardena was interested in taking a "short-cut" by way of identifying an international company as a suitable party for the project to my dissatisfaction. This difference of opinion together with the "Boosa" affair, led to somewhat a "strained relationship" between Mr. Upali Wijewardene and myself.

I had a great vision for the total development of the "Area of Authority" both as Deputy Director and later as Director General as bonded between the Mahaoya in the north and the Kelani Ganga in the south, an area approximately the size of Singapore.

On the guidance of the then President, I was able to identify 10 major investment-oriented projects within the "Area of Authority". These included among others, the Colombo-Katunayake expressway, well developed "Satellite" townships at Seeduwa and Katana, a Hospital to international standards, an International School with all facilities, an International Bank, a Container Station and Marshalling Yard etc.

The GCEC could boast of maintaining the status of being the most prestigious governmental institution during the 1978-1985 golden era of the Greater Colombo Economic Commission - now re-named the BOI - the Board of Investment.

The writer is a Presidents Counsel and was Director General of the GCEC, District Minister Polonnaruwa, and held the cabinet portfolios of Justice, Science & Technology and Lands.

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