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The industrial sector is the major driving force in any country to record a high economic growth or it is the backbone of any economy. But no previous Sri Lankan Governments paid much attention to remove impediments which hinder the healthy growth of the industrial sector.

But with the aim of ushering in a new era in the industrial sector, the Government took a series of measures after 1994 to remove infrastructure bottlenecks and evolve macro economic fundamentals which affected rapid industrialisation during the last six years.

The country's infrastructure necessary to attract investors was below par. Therefore, the Government while providing incentives for investors to embark on new projects placed great emphasis on improving basic infrastructure facilities required for rapid industrial development.

As a result, telecommunications, expansion in electricity generation, port facilities and the reduction in Customs delays took place in the country. The number of telephones increased to 653,144 in 2000 from 204,350 in 1995. Thermal power generation increased by 418 MW from 272 MW in 1994 to 690 MW to date. As result, the installed capacity had increased to 1827 MW in 2001 from 1409 MW in 1994. Five major power projects are on line, targeting 1155 more Mega Watts.

In addition, measures were taken to improve the country's road network which was a major hindrance in attracting investments to rural areas. Therefore, steps were taken to build four major highways at a cost of Rs.54 billion such as the Southern Highway, Colombo - Katunayaka Expressway, Colombo Outer Circular Highway and Alternate Highway from Colombo to Kandy despite spending billions on the war. In addition, many roads and bridges were rehabilitated for faster and comfortable transportation.

Meanwhile, various incentives to investors in successive budgets have had beneficial effects on the development of the industrial sector. These include tariff and tax concessions for the importation of machinery and raw materials, development of specific infrastructure facilities in Industrial Parks and regional export processing zones and the improvement in the administration of apparel quotas.

The Government drafted a master Plan for industrialisation and investment promotion in collaboration with the Japan International Cooperation Agency (JICA) and the United National Development Organisation (UNIDO) to reshape industrial strategy and to expose Sri Lankan manufacturers to regional and global competition.

Under this Master Plan six industries were identified for future promotion and specific strategies were formulated to develop them. The need to rationalise investment incentives was emphasised in the budget proposals in 2000.

Under this, a specific proposal was introduced to rationalise some of the concessions offered by the BOI. The Budget 2001 proposed similar incentives and facilities for both BOI and non BOI firms to harness the future growth potential of non BOI industries and to remove distortions and create a level playing field.

At the same time, manufacturers were educated to reduce costs of production such as sub contracting, outsourcing of production, enhancing the efficiency of working capital, reducing wastage, waste material recycling and saving energy.

Capitalising the vast incentives offered, investment flows to Sri Lanka recorded a 102 per cent growth. Investments had increased to Rs.311 billions in 2000 when compared with the investments in 1994 which amounted to Rs.154 billion by foreign and local investors. The total number of industries in operation in 1994 were 663 (from 1977 to 1994) but it doubled to 1328 projects during the last six years making a historic achievement due to the prudent economic management and investment promotions of the Government.

From January to September this year alone, the BOI had signed Rs.25 billion worth investments for 151 projects. Of the total agreements signed, 60 percent will translate into actual investment. The estimated direct employment generation of these projects is 27,735.

At the same time, the Government established many Industrial Parks around the country to reduce the acute unemployment problem regionally and halt the convergence of industries in Colombo and suburbs.

As a result 20 Regional Industrial Parks were established at a cost of Rs.523 million while providing 25,695 direct and indirect employment opportunities. The Industrial Development Ministry had approved 689 projects worth Rs.30 billions under the Advanced technology Incentive Scheme which has the capacity to create 129,297 direct and indirect employment opportunities.

In addition, the Government was able to build international standards the Seethawaka Industrial Park at Avissawella which had created thousands of employment opportunities.

The Seethawaka Industrial Park is South Asia's largest international-standard industrial park which has a capacity to provide over 60,000 employment opportunities when in full operation. Already 34 firms are in commercial operation providing 23,500 direct and indirect jobs. Fifteen factories are now under construction.

This Park offers a multitude of facilities but rates lower than similar Industrial Parks in South Asia. The Seethawaka Industrial Park has been designed according the international standards comprising modern facilities. It will consist of 70 factories producing a wide range of goods for export. A green belt around the Park has also been designed to provide a pleasing environment for industrialists and the workers.

The Park consists of unique facilities including well-paved and wide roads, 132/3 KV Grid Sub station ,33 KV distribution system, Telephone Exchange - 360 lines, abundant water with adequate purification facilities, Central Sewerage Treatment Plant and a Solid Waste Disposal System including the incinerator, etc.

In addition to the key facilities, Banking and Customs services, a Fire Brigade and Security System, a Fuel Station, an Administrative Centre and Environmental Monitoring Facilities have also been encompassed in the Park.

Most of the industries located in this park would be labour intensive ones such as Garment and apparel, soft toys, Gems and jewellery, light industries, assembly of electronic and electrical products, wooden furniture, Rubber based products, Food and beverage industries, carton and box manufacture, printing and packaging,etc.

Due to rapid industrialisation in the recent past, the unemployment rate reduced to a great extent to 7.7 per cent in 2000 from 13.1 percent in 1994. Once the Industrial parks are in full operation ghd unemployment rate will reduce significantly.

At the same time, industrial export earnings increased to Rs.326 billion in 2000 from Rs.119 billion in 1994. The contribution of the industrial export to the total exports increased to 78 percent last year while reducing the agricultural export earnings to 18 percent.

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Copyright 2001 The Associated Newspapers of Ceylon Ltd.
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