Remembering President Premadasa’s contribution to economic development on 32nd death anniversary

The garment industry became the largest industrial export from Sri Lanka due to the vision of the late President Premadasa, one who practiced pro-poor political policies

The 200 Garment Factories program to manufacture garments for the export market at competitive prices using the skills of rural girls bringing in the hard-earned foreign exchange to the country was one of the significant achievements and contributions made by President Premadasa to revolutionise industrial development and uplift the rural economy with the help and support of the dynamic private sector who were implementing Premadasa’s can do attitude

• President Premadasa utilised American garment quota to successfully establish 200 garment factories program throughout the country
• Will President Trump’s 44% tariff policy destabilise the garment industry and Sri Lankan economy? 
• The major industrialisation, foreign exchange earner and job creator for women in Sri Lanka
• Private and public sectors supported President Premadasa’s “Can do attitude” and “Walk the Talk”

On the 32nd death anniversary of President Premadasa we should recognise the major contribution made to the economic development with his foresight to set up the 200 garment factories program using the USA garment quota as the major export-oriented industrial development project spread throughout the country creating employment and exports bringing in valuable foreign exchange to the country. Another important lesson to learn is that all future Governments continued and supported the garment factories program which is today the major industrial export from Sri Lanka.

The big question today is whether the Trump policies of 44% tariff imposed on exports of Sri Lankan goods will disastrously impact the garment industry which was built on the USA garment quota and strengthened over the years and will destabilise the Sri Lankan economy? 

Concept of 200 Garment Factories Program 

It was Kumar Dewapura Chairman of the Tri Star Group with the support of the Chief Minister Gamini Jayawickrema Perera who invited President Premadasa to open the garment factory in the Kurunegala district and explained how the USA garment quota was helping him to get the export market in USA and to export to big buyers like Marks & Spencer in the UK and that the USA Garment quota which at present is benefitting only a privileged few could be used to expand the garment industry. This gave the initial idea for the launch of the 200 Garment Factory program to President Premadasa. 

President Premadasa then decided to launch the 200 Garment Factory program under the then GCEC.

He then told his secretary Paskaralingam who gave me a call at People’s Bank and said that the President wants me to take over the GCEC immediately which was indeed a great shock to me. It was a new challenge assuming the office on the invitation of President Premadasa as the Chairman and Director General of the Greater Colombo Economic Commission (GCEC) the investment agency responsible for foreign direct investment (FDI) in Sri Lanka in 1991, coming over from the People’s Bank where I was Chairman. 

President Premadasa speedily converted GCEC to the Board of Investment (BOI) of Sri Lanka and BOI took over the development of entire Sri Lanka from the Greater Colombo area and was responsible for the implementation of President Premadasa’s very ambitious 200 Garment Factory program utilising the USA garment quotas the major export-oriented industrial project of the Government and providing employment to village girls who made quality export oriented garments to the world market mainly USA, EU and UK. The USA quotas which were hardly used or wasted earlier were distributed proportionately to set up factories in the designated non-difficult, difficult and most-difficult areas throughout the country. 

The GCEC/BOI was a very powerful investment organisation which was set up with the open economic policies by President J.R. Jayawardena in 1977 created to approve foreign direct investment and set up Export Processing Zones to locate manufacturing industries for the export market coming directly under the President and BOI had powers to sign agreements with foreign investors with the guarantee from the Constitution namely in the three areas of tax holidays, approval to open a foreign currency banking account with any commercial bank and undertaking Customs functions for the imports and exports relating to GCEC/BOI companies. 

Commencement of 200 Garment Factory program

The target was 200 garment factories with a new factory building, new sewing machines, minimum of 500 employees in each factory providing job opportunities to 100,000 mainly females and BOI assisted them in recruiting workers from Janasaviya families. All factories had to provide breakfast to the workers preferably from produce from their villages. The investor to put up a clock tower in the town to signify the opening of the garment factory. 

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 going to produce export quality garments to the main markets of USA and UK.

At the commencement of the program I remember inviting the top garment association committee of 8 to 10 members for a meeting where I explained the 200 Garment Factory program and after the discussion at the end they sarcastically told me that maximum we could achieve will be a meagre 7 to 8 factories. This meant we had to look at other methods to make the program a success. 

President Premadasa used innovative strategies to launch the 200 Garment Factory program at the start which accelerated and attracted investors both local and foreign to jump start the project. The president got Kumar Dewapura who gave the idea and supported him in setting up of the first, second, third garment factories which were opened by the president in quick intervals of time with much fanfare and publicity in the newspapers, radio and TV. This opened the eyes and gave the confidence to those in the garment industry, top business magnates and members in the Garment Association as well as other medium investors who came rushing to obtain areas to invest in the 200 Garment Factory program and a leader in the garment industry Hirdramani Industries immediately signed two agreements to set up two factories in the Avissawella district with other investors lining up at the BOI to start garment projects. My office was full of investors with the BOI staff working day and night to serve the investors expeditiously as the number of applications were increasing daily. 

The 200 Garment Factories program to manufacture garments for the export market at competitive prices using the skills of rural girls bringing in the hard-earned foreign exchange to the country was one of the significant achievements and contributions made by President Premadasa to revolutionise industrial development and uplift the rural economy with the help and support of the dynamic private sector who were implementing Premadasa’s can do attitude. For the first time we saw factories shifting from the Katunayake and Biyagama free trade zones in the Colombo and Gampaha Districts to far outstation districts of Moneragala, Badulla, Tissamaharama, Anuradhapura, Ratnapura, Avissawella, Kurunegala, Kandy, Galnewa, Amparai, Nuwaraeliya, Mahiyangana, Wattegama, Dehiattakandiya, Ranna, Dikwella, and many other distant places. A major achievement hitherto not seen in Sri Lanka!

Those who joined the 200 Garment Factories Programme are today not only leaders in the garment industry locally, but global leaders with factories spread over many countries and some of them include MAS, Brandix, Hirdramani, EAM Maliban Group, Hela Clothing, Lucky Industries, BAM Group, Orit Apparels, Star Garments, Smart Shirts, Penguin Sportswear, Omega Line, Vogue Tex, Timex Garments, Orit Apparel, Aitken Spence (Garments) and many others. 

USA Garment Export Quotas and the growth of the garment industry: 

Exports were promoted by utilising the USA Garment Quotas by President Premadasa as a strategic tool for developing the rural economy and to help alleviate poverty in Sri Lanka. Credit should be given to the USA Government for this gift of the garment quotas which enabled Sri Lanka to become well established as one of the top exporters in garments and even after abolition of the quota system to continue producing quality garments at competitive prices.

The investors both local and foreign who were drawn into the 200 garment factories program were granted the export quotas from USA depending on the area selected ranging from 10,000 dozens for non-difficult, 25,000 dozens for difficult and 50,000 for most difficult areas.

Credit should also be given to the USA government, as the late president was able to utilise the USA Garment Quotas for the upliftment of the rural economy and move industrialisation from the city to the village.

Increase in quotas was also obtained to set up garment factories in the war affected North in Vavuniya and in the East in Batticaloa.

The then USA ambassador visited the opening of a garment factory in Puttalam with the USA OPIC investment delegation and they were highly impressed and agreed to support the project. Thereafter, she also visited many other openings where USA investors had set up factories or as joint ventures.

The garment industry became the largest industrial export from Sri Lanka due to the vision of the late President Premadasa, one who practiced pro-poor political policies. With the factories coming in the outstations 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. 

A major credit for the USA Government which provided the garment export quotas for the economic development of Sri Lanka.

At the time of President Premadasa’s untimely death, 160 areas had been allocated to construct garment factories and 117 factories were opened by the late president, six were ready for opening and 37 factories were under construction. A feat unmatched in the industrial and export development in Sri Lanka.

The 200 Garment Factory program was one of the very few projects that were supported by all future Governments that came into power after President Premadasa and enabled the apparel and garment exports which were app. $ 764 million in 1991 when the 200 Garment Factory program was launched to expand to greater heights and in 2022 the exports reached $ 5.483 billion while in 2023, Sri Lanka exports totalled $ 4.440 billion, a decrease of 19% compared to 2022, while in 2024 it was $ 4.700 billion showing a growth of 5%. The exports to USA were $ 1.9 billion in 2024 which is app 40% and quite substantial. The garment industry is the highest industrial export earner and highest employer of females and meeting tough environmental and working conditions to achieve global standards. Today we also have many green garment factories. 

Many of the garment factories that joined the 200 Garment Factories program in 1999 have expanded their operations both locally and overseas and are now global multinational companies such as MAS, Brandix, Hirdramani’s bringing credit to the 200 Garment Factories Program and Sri Lanka.

Attraction of local and foreign investors and BOI One Stop Shop:

The investors both local and foreign were drawn into the 200 garment factories program by providing tax incentives, infrastructure such as land, electricity, telephone, water, roadways and the export quotas from USA depending on the area selected ranging from 10,000 dozens for non-difficult, 25,000 dozens for difficult and 50,000 for most difficult areas. 

This was the only time when the “One Stop Shop” concept for the approval and implementation of projects were carried out free of hassle to local and foreign investors under one roof at the BOI. 

Since the BOI was directly under the president we found that there was no political interference and we could work with the leader to achieve targets and goals according to set rules and regulations. 

The success of the 200 garment factories program was the ease of doing business, grant of tax incentives, textile quota to USA, BOI support in finding the labour, banks supporting the investors with loans and banking facilities, BOI supporting visas for foreign investors and workers and a luxury Benz vehicle on the opening of the factory by the President per the applicable rules and regulations under BOI without any political or other interference. 

President Premadasa did not tolerate any political interference and we hardly ran into problems with any of the politicians in the electorates. 

The directors, management and staff of the BOI should be specially commended for the excellent manner in which they performed their duties. DDG Bimal Padmaperuma a former Chairman of the State Engineering Corporation who was given the task of visiting the factory sites and reporting the progress to the President, Senior Directors and staff such as Tuley Cooray, John Silva, G.L. Perera, Seneviratne director legal, H.B. Masinghe, L.D. Dickman, Sunil Fernando, Gowri Rajapakse, Sriya Ahangama, Rupa Perera, Chandana Peiris, Felix Perera, Daya Gunasekera, Mervyn Silva, Ranjan Siriwardena, Kulasekera and many others which included staff seconded from various ministries played a major role in making the 200 garment factories program 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 to achieve results maintaining honesty and integrity. 

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, others chaired by the finance secretary and myself were action oriented to solve problems of investors and not mere talk shops. 

As all the projects were outside the free trade zones, the investors were assisted to speed up their import and export facilities by the setting up of the separate BOI customs clearing centre under the one stop shop concept. 

I remember the frequent meetings we had at Sucharitha where President Premadasa invited investors who were given dates to open their factories and solved any problems they had on the spot. Always at these meetings the Chairman or GM of CEB, Roadways and Water Board were present as these were three major requirements of investors and were ready to provide solutions to investors who had any problems regarding the 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. 

We had investors from USA, UK, Hong Kong, Singapore and Germany investing in factories in the rural areas hitherto not even thought of by any investor local or foreign. 

In the 200 Garment Factory program 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 president first opening the newly constructed clock tower signifying the opening of the garment factory with a clock tower similar to the prestigious Colombo Fort Clock Tower. 

The opposition members ridiculed the 200 Garment Factory program as an industry making “Jangi” meaning “underwear for ladies”. Some other economists said it was a fly by night industry and not sustainable. However, President Premadasa stood firm and obtained the support of investors as he had taken the right decision in the best interests of the country and its citizens. 

Urgent need to meet the new challenges and Trump’s 44% increase in tariffs? 

The present Government has an unenviable task of meeting the challenges of President Trump who has increased tariffs to 44% and has given a grace period of 90 days within which period we should work out a solution to safeguard Sri Lankan exports especially garments, loss of employment, prevent economic instability and a shortage of foreign exchange.                                                                              

It should be noted that the garment industry in Sri Lanka is increasingly focused on sustainability, incorporating eco-friendly manufacturing practices, ethical labour standards, and a commitment to environmental responsibility. Sri Lanka’s commitment to sustainable practices has been recognised internationally, with many factories obtaining the Global Organic Textile Standard (GOTS) Certification and adopting green manufacturing techniques. These are factors which are very useful in our negotiations to get back our duty concessions. 

I am confident the Government will take into account the factors mentioned above together with the right and timely decisions after discussing with the garment industry leaders to act with skill, determination and competence for Sri Lanka to utilise its longstanding good relationships with the USA and skilful negotiating techniques for USA to hold back their decision by withdrawing the tariff increase. 

Further I am hopeful that those in the opposition who have built and nurtured the garment industry from the very early stages will support the Government in this hour of great need for the benefit of the country and its people, the principle for which Late President Premadasa stood firmly and displayed exemplary leadership to build the garment industry with the support of the USA Garment Quota.  

(The writer holds an FCA, FCMA, FCMA (UK), CGMA, FCPM. He was awarded Sri Lanka Sikhamani by the President of Sri Lanka. He is former Chairman and Director General Greater Colombo Economic Commission (GCEC) and First Chairman and Director General Board of Investment of Sri Lanka (BOI); former Chairman People’s Bank and People’s Merchant Bank during President J.R. Jayawardena and President R. Premadasa’s rule; Past President Institute of Chartered Accountants of Sri Lanka (CASL), South Asian Federation of Accountants (SAFA), Organisation of Professional Associations of Sri Lanka (OPA), Association of Management Development Institutions of South Asia (AMDISA), Founder President Institute of Certified Management Accountants of Sri Lanka (CMA), Founder President Chartered Professional Managers of Sri Lanka (CPMA), Founder President Association of Accounting Technicians of Sri Lanka (AATSL).)