Good Governance


This was an essential part of the CBK vision for Government. Good Governance embodied three main aspects.

1. The guarantee of fundamental freedom;
● the freedom to believe, think and worship,
● to speak freely, freedom of association,
● equal rights and opportunities for all, the right to be included in all aspects of the social-political economic life of the country
● free and equal access to the Law
● it also meant Media freedom, the right of the citizen to information and the right of the media to report without fear

2. Good Governance implies honesty and integrity in Government. It implies that leaders of Government and political leaders be at the service of the people, that they hold power in trust for the people who elected them and never as their personal or family right.

3. Good Governance also means efficient governance. It implies that the government must possess a clear vision of progress for the country and then be capable of implementing it effectively.

Democratic and Fundamental Freedoms

● Laws & Regulations
● Institutions

Transparency and the Fight against Corruption

● Setting up the Commission for Bribery and Corruption with renewed strength and authority.
● Drawing up of new Tender Procedures documents, in order to minimize avenues for corruption and improving transparency in the award of Government tenders. All Government tenders had to be awarded according to the stipulations of this document.
● It dealt with the award of tenders of all types – direct procurements, unsolicited proposals and public/private partnerships.
● The President was personally involved in reviewing all matters that could lead to corrupt practice.
Yet, this was not sufficient. The review and award of the Government contracts needed to be institutionalised. Hence the creation of the National Procurement Agency (NPA). Its main objectiveswere;
● Regulation and supervision of tender procedures
● The NPA could be seized by anyone with regard to irregularities in the award of tenders


The part privatization of the State owned enterprises was another area that was ripe for corruption.
PERC was set up with the objective of regularizing the privatization of public enterprises.


1. It was formulated policies, systems and procedures for implementing the privatisation

2. Big international players were brought into partnership with large State owned enterprises. This transformed loss-making, inefficiently-managed State enterprises into profitable business enterprises.

3. Some institutions that were privatized by PERC were:


a. Sri Lanka Telecom
b. SriLankan Airlines
c. National Insurance Corporation
d. Tea & Rubber Estates
e. Part privatisation of the Colombo Port and some power generation projects
f. Several industries – State, Hardware, Textiles Corp. etc

PERC was ableto contribute to improving the income of the Government while transforming loss-making State oned ventures into profit-making ones. Secondly, it also modernized backward badly managed State ventures.

The World Bank and other international funding agencies expressed appreciation of the achievements of PERC.

Efficient Governance

The concept of Good governance not only included good governance but also efficiency in Government. Both concepts are required for Good governance.

A clear vision and policy with actions plans are required to achieve this.

The President herself formulated new systems for formulating actions plans by each Ministry and for every subject. This contained quantity and time targets for every item of work.

The President, together with the relevant Ministry and officials, held monthly review meetings and progress of work as per the action plan.

It was found that personal involvement at the higher levels was not sufficient for long-term successful performance. New institutions were formed to take over the work carried out by the President for several years. They are the NCED, SEMA, NPA and PERC

Established in 2004 by the CBK Government, this special agency was created to institutionalise the monitoring and review of government tenders. The agency came directly under the supervision of the President and worked to streamline government procurement while at the same time promoting honesty and transparency in government dealings. The agency succeeded in revising and improving tender procedures, developing a standard of bidding procedures, and formulating guidelines for procurement of consultants, public-private partnerships, and provincial counsels

The NPA was in operation from 2004 to 2008. Despite the fact that the NPA was meant to be a permanent organisation designed to encourage good governance, it was closed in January 2008.

Within three years of its establishment, the NPA gained recognition by the World Bank as a model to be emulated across the Region. Sri Lanka was selected from the Asian Region for a pilot project by the World Bank to implement country procurement systems for World Bank projects.

Achievements of the NPA
1. Revision and improvement of tender procedures
2. Guidelines for drug and medical consumables, procurement of consultants, public-private partnership and unsolicited proposals and Provincial Councils
3. Development of standard bidding procedures and indicative specifications
4. 50 procurement divisions were established in key ministries and Provincial Councils and liaison officers and procurement assistants appointed
5. Introduction of procurement planning in ministries and line agencies
6. Cabinet Appointed Procurement Committee (CAPC)
7. Procurement appeal board created
8. Creating a Diploma in Public Procurement and Contract Administration (an accreditation scheme for PC and TEC members, 175 officers accredited). The first ever academic qualification launched in Sri Lanka
9. NPA website was created incorporating all information regarding procurements

The turnaround in the Sri Lankan economy began in the 1990s when privatization was pursued aggressively. The CBK Government, although left leaning, followed a policy of "Capitalism with a human face". Hence, privatization of state owned businesses, proceeded where necessary, while ensuring prudence and welfare.

The key motivations for privatization included improving the efficiency of the enterprises through the infusion of private capital, knowledge and expertise. It was also intended to reduce the burden on the government budget.

In 1995, state enterprises were non-profitable, obsolete ventures. Reform was required to transform these enterprises to meet the needs of the new economy and make them more competitive.

PERC became the sole authority to undertake the privatization programme in a more efficient and transparent manner, while taking essential care ensure workers’ interests. The latter is rare in most countries, where workers are being short shrift in such structural changes.

PERC was entrusted with the required legal powers under the Public Enterprise Reform Act No. 1 of 1996. Large state enterprises were partially privatized to big multinationals with the Government remained the majority shareholder. The management of the enterprise was entirely handed over to the foreign, private sector partner.

This injected efficient management, financial strength and the turnaround of the loss making obsolete ventures.

The Commission utilized various reform strategies including selling state bodies which were no longer suitable for running, transferring to international buyers convertible foreign bonds owned by the government, engaging the participation of entrepreneurs in the tender process to make use of the share market, and assigning five-year commercial monopolies to bodies like Shell Gas and Telecom without burdening the consumer.

PERC completed 35 transactions in two years. These included 20 plantation companies, nine manufacturing and trading companies, four enterprises in the utility and service sector, and one enterprise in the agricultural sector.

The government ensured that employees were not deprived of their employment and safeguarded the common service conditions of employees. On some occasions, 10 percent ownership was conferred to employees.

The total privatization proceeds that came into the capital account from 1995 to 1997 amounted to US dollars 373 million.

With the onset of liberalization and privatization, the significance of the role of regulation in the private sector was also recognized.

SEMA was established by the CBK Government in June 2004 to ensure the efficient management of Sri Lanka's state owned non-privatised public enterprises. As many of the State Owned Enterprises were rife with problems and full of inefficiencies, SEMA was created to improve their financial strength and commercial viability. The private sector took a lead role in the work of SEMA

SEMA provided vital inputs to policy formulation, restructuring initiatives and legislative enactments pertaining to the enterprises and peripheral entities impacting SEMA enterprises. Additionally, SEMA served as a vital element in providing donor confidence as exemplified in the re-capitalization of the People's Bank through the ADB where SEMA was a constituent party to the agreement.

Key Factors that have Facilitated SEMA's Role
● Being established under a Presidential Directive with its Chairman reporting direct to the President enabled SEMA to effectively liaise with Line Ministries, Boards and Managements of SOEs.

● The SEMA Board consisted of the cream of private sector corporate managers. They brought dynamism and were experienced in extracting performance ensuring budgets are delivered, and skilled in producing necessary surpluses or reducing deficits.

● They were able to engage in a neutral environment, unhindered by political or personal agenda

● Professionally Qualified Staff with experience in competitive business environments

● Access to Technology

SEMA created several clusters, grouping them into several similar enterprises. They were:

Banking Cluster
Peoples Bank, Bank of Ceylon, National Savings Bank and the State Mortgage and Investment Bank

Energy Cluster
Ceylon Petroleum Corporation and the Ceylon Electricity Board

Ports Cluster
Sri Lanka Ports Authority and Airport and Aviation Services Ltd

Trading Cluster
State Pharmaceuticals Corporation

Transport Cluster
Sri Lanka Railways and the Sri Lanka Central Transport Board and Cluster Bus Companies

Water Cluster
National Water Supply and Drainage Board

The initial foray into managing the enterprises began with the preparation of robust, medium term, commercially focused Development Plans which intended to improve the return or reduced the drain on public funds invested. These plans include meaningful restructuring initiatives to improve performance management, promote sustainable development and delivery of public services.

It was the first time that prepared Business Plans and SEMA trained the staff to formulate their corporate plans. These were reviewed and improved upon with the collective expertise of the SEMA Board ensuring the ownership of the plans remained essentially within the enterprises. This single factor alone was a significant milestone for state enterprises.

For the first time, Boards and Senior Management of these enterprises were held accountable by SEMA and regularly called upon for meetings and quarterly reviews for their operational and financial progress.

Performance was monitored against the plans.Prompt action was taken to correct any slippage at much shorter intervals than before. Decision-making improved with the availability of information.

The NCED initiated a new model for development and advanced a new economic policy framework that sought to build the Sri Lankan economy through a proactive participatory process that involved both the private and public sectors. Once again it was the firm time the private sector was brought into Government economic planning.

The main objectives of the council were to push for homegrown strategies to capitalize on global opportunities, institutionalize the consultative and participatory process in national planning and policy formation, align public & private sector strategies, empower stakeholders, and graduate to a 6-8% GDP growth path over the medium-term.

To accomplish these objectives, the CBK Government was committed to providing the necessary infrastructure, promoting competition, and accelerating growth in a regionally balanced manner. It maintained the state-ownership of strategic enterprises, but strengthened them through restructuring. Thus, creating more efficient service providers able to compete with their private sector counterparts. Additionally, it bolstered small and medium-sized enterprises to enable them to compete in a global economic environment.

Finally, the NCED gave priority to integrating the cooperative sector at the regional level and emphasis placed on human resource and skills development, good governance, ecological and environmentally sensitive production and manufacturing practices, socially responsible usage of labour and corporate social responsibility, in aiming to achieve sustainable development.


Today's children will be our future leaders, decision makers, builders and healers. Protecting this valuable human capital today should be a key priority for any democratic nation. -CBK

In the early 1990s, Sri Lanka ranked high in the infant and child mortality, literacy, and school enrolment categories. Sadly, the nation was also recording a high incidence of sexual abuse, exploitation and was listed amongst the countries that had children engaged in the commercial sex trade.

President Kumaratunga, recognized the need for more coherent policies and legislation to protect children and combat violence and abuse towards them. Under her purview, a Presidential Task Force was enacted in 1996 to provide advice on the steps required to address this issue. Based on their recommendations, the National Child Protection Authority (NCPA) was established the same year.

The NCPA was the first time that high-level political recognition was given to prevent and control the growing prevalence of child abuse in Sri Lanka. The Authority's creation was an important step towards fulfilling the State's obligations to prevent and control child abuse and exploitation, in keeping with the International Convention on the Rights of the Child. It was the first of its kind in the developing world.

The functions of the NCPA include promoting the prevention of abuse and exploitation, formulating policies relating to child abuse and exploitation, providing recommendations for legal reforms regarding prevention and treatment of child abuse, coordinating the therapy and rehabilitation of children victims,training police officers on how to deal with child abuse, and working alongside many groups and agencies involved in combating child abuse.

During the Presidency of CBK, the NCPA initiated six vital island wide programmes and over 13,190 ground levels projects at a total cost of Rs. 384.73 million. The projects reached over 1,538,390 families.