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).
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.
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.
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.
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.
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.
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).
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.
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.
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.
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
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."
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.
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.
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.
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.
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
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".
GCEC team was captained by myself and as expected the GCEC team
won the match convincingly!
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.
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
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.
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.
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.
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.
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.
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.
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.
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.
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.
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
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.