IDB set for first legislative overhaul in 57 years

• Industries Ministry begins six-month reform drive to rewrite SME policy and restructure institutions

Chairman Yasas Hewage

The Industrial Development Board (IDB) is set to undergo its most significant transformation in nearly six decades, with the Government commencing a comprehensive review of the institution’s legal framework, organisational structure, and policy mandate as part of a broader overhaul of Sri Lanka’s industrial development architecture.

Speaking at the public launch of the World Bank Group’s Country Partnership Framework (CPF) for Sri Lanka 2026-2030, IDB Chairman Yasas Hewage revealed that the legislation governing the Board is being rewritten for the first time in 57 years.

“The Act that we’re running is something that was crafted 57 years ago. This is the moment that is now being redone after 57 years,” Hewage said.

The move forms part of a wider reform agenda being undertaken by the Industries Ministry, which is also rewriting the country’s small and medium enterprise (SME) policy and restructuring institutions operating under its purview.

According to Hewage, the reform process is being conducted under an accelerated six-month timeframe aimed at laying the foundations for a new institutional framework better aligned with emerging industrial and enterprise development needs.

“We are rewriting the SME policy for the first time. We are restructuring all institutions within our Ministry to build this new entity,” he said.

The reforms signal a potential shift in the role of the IDB, which has historically focused on a broad range of industrial support activities.

Hewage suggested that the institution had gradually drifted away from its original purpose of helping enterprises scale and grow.

“The IDB’s role was to scale. It’s an industrial development institution. What have we done? We’ve gone and done everything except that,” he said.

The remarks indicate that policymakers are reassessing how industrial development institutions can better support enterprise growth at a time when Sri Lanka is seeking to accelerate private sector-led expansion following the country’s economic recovery.

Beyond institutional reform, Hewage highlighted what he described as a significant gap in management capability across segments of the industrial sector.

Drawing on engagements with industry leaders and enterprises, he argued that many firms have yet to develop the strategic leadership capacity required to compete effectively in an increasingly complex and competitive operating environment.

He noted that policy discussions often focus on entrepreneurship, youth employment, and grassroots enterprise development, while insufficient attention is paid to management quality and leadership capability within existing firms.

According to Hewage, strengthening the strategic capabilities of senior management teams will be critical to improving competitiveness, identifying growth opportunities, and navigating structural changes in both domestic and international markets.

He also pointed to the concentration of export activity among a relatively small group of companies, suggesting that improving the performance and leadership capacity of established firms could yield broader economic benefits.

The IDB Chairman said the Board has already begun mapping industry requirements and assessing structural gaps as part of the reform effort.

The broader restructuring initiative comes as the Government seeks to align industrial policy with wider economic transformation efforts, including private sector development, enterprise growth, and job creation.

While specific details of the revised legislation and institutional framework have yet to be released, Hewage indicated that policy reforms, organisational restructuring, and system-level changes would be developed over the next six months.

“Policies will be written. The structures will be redone. Without those, you can’t do system change,” he said.

The planned reforms represent one of the most significant reviews of Sri Lanka’s industrial development institutions in recent years and could reshape the role of the IDB and related agencies in supporting enterprise growth and industrial competitiveness.