Financial Times

Transforming BOI into a world-class outfit
Saliya Wickramasuriya, chairman/director-general of the Board of Investment, has a tough assignment on his hands – restructuring a powerful government agency to a world class service organisation. “It’s a huge challenge but we need to move on,” he said in an interview, adding that the agency should be efficient, effective and investor-friendly and empower top officials to take decisions. Some employees are opposing the changes. Excerpts:

We have decided to change the organisational structure of the Board of Investment into five divisions from the current vertical structure. We have combined functions to core areas aimed at delivering a world class service.
The newly appointed Deputy Director Generals of BOI are Duminda Ariyasinghe – Marketing, Prasanna Weerakoon – Operations, L D Dickman (acting) – Infrastructure, Tissa Fernando (acting) - Corporate Services and A M C Kulasekara (acting) – Investments.

The position of Secretary-General with DDG status – a designation provided for in the BOI Act – has been revived and he would replace the senior advisor category that prevailed in recent years.

The Marketing division is a combination of promotions, research and planning. It will provide medium and long term strategies and transforming economic policies into investment opportunities.

There would be focus on project proposals, approvals and compliance. In the financial monitoring sphere we would be looking at the performance, balance sheet, employment, investments of BOI companies.

Would this alert the BOI to companies that are in bad shape?
Yes but more than that BOI companies need to provide audited accounts to receive whatever tax holidays they are entitled to. Without these reports, the monitoring department wouldn’t be able to approve the tax benefit.
This particular group in the BOI will ensure that companies are on track. This process is carried on an annual basis.

The BOI requests the audited accounts of more that 1,600 enterprises but only 40 percent comply with the request. It was less before.

Asking for audited accounts --is it by law or a request?
If companies want to benefit from tax holidays, then that could only be done by perusing their annual reports.

How would this data help the BOI?
It would show us that the company is proceeding according to planned growth as prescribed in the agreement. The monitoring process helps with lots of other things – we would know their liquidity, cash flows, whether the company has underperformed and if so why, whether we could help in the recovery.

Would it help to know in advance when companies are in troubles?
It would. We have in fact brought in a traffic lights-type grading system of companies based on labour compliance, wages, human relations, welfare, etc. Companies are graded under green, yellow and red tags with the intention being to foresee possible closures. Knowing before hand the problems a company faces would help us to step in and see whether we could help in the recovery and minimise problems for employees. We are also improving our Business Intelligence collection process.

What about verifying the background of an investor?
That’s what we want to do. We really don’t know company A or company B. In the case of well-known companies, that’s not a problem but in the case of others we need a background check, annual reports, who are the bankers and other information that would help us make a sound decision.

We need to know who we are dealing with. We need to have as much facts as possible before approving an investment. All these changes in the BOI are at various levels of implementation; some have been implemented; some are being implemented as we go along.

Operations’ is a new division focusing on customer support. It would look after zones and regions with the main objective being to improve the operating environment of investors and help in more investment.

Quality management: We recently issued our first quality policy and are gearing up for ISO certification. We have issued a Master training plan, investment policies, guidelines for employees and a code of conduct.

New zones and property: We have a lot of property. We are also planning three new zones – 1,500 acres at Welikande in Polonnaruwa bordering the buffer zone and two other zones on the southern highway trail.

We hope to create a public-private sector partnership in running these zones which would be owned by the BOI and managed by a private party. We have acquired the land at Polonnaruwa. An investment will result in development, jobs for the area. The BOI has to lead than follow. Everyone is conservative but we need to take some risks.

At the 200-acre Horana zone, we have engaged an Indian company competent in economic zones to provide us a kind of bid document which can take to the market.

Our core business is not running zones but stimulating the economy. All the new zones would be privately managed and publicly owned.

At the Horana zone, we want to attract high-value factories that would feed the garments industry in backward intergration process. This would help save enormous sums of foreign exchange in raw material imports. We will continue to manage the old zones.

Infrastructure: this is also a new department which hopefully would be a champion of large scale national projects. There are good projects at line ministries but large scale projects are lingering as coordination is a problem.
This group would analysis incoming projects. For example if we see a need for water treatment plans, power projects and so on that would boost investment in a particular area -- we will then suggest and provide assistance on technical and other input to get them off the ground.

This unit will drive national projects and not be passive. The overriding mandate of the five deputy directors general is to take responsibility for their various functions. The policy advisory committee will operate under the director-general.

Any opposition to the restructuring?
This is a substantive change of culture in the organisation mainly to ensure transparency and properly organised work roles. There are some in the BOI who are reluctant to relinquish their area of responsibility. I agree we have not been able to convince everybody that the changes are in their own interest and the national interest.

However those who object are in a minority. The changes have been made in a global context. We are measured by another’s yardstick. We have to attract foreign investors and provide them a world class service.

In this process, we are bound to break a few eggs, demolish a few mafias and some comfort zones of some officials who are either ignorance of the benefit of change or deliberately oppose it. The majority are supportive and many segments have contributed to this restructure.

We need to go ahead and do it. Those who oppose it for the sake of preserving their current autonomy will lose this status. We are re-defining governance and responsibility. In fact 95 percent of BOI operations and decisions would be tackled by the DDGs leaving only 5 percent of the day-to-day operations to the chairman.

This process empowers these officials and removes them from political interference or uncertainty when governments change. Nobody passes the buck anymore. In fact they have begun taking decisions. We are neither inducting new people - except for about five - nor getting rid of anyone.

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