By:Staff Writer
March 09, Colombo (LNW): Sri Lanka’s proposal to merge three major industrial development institutions into a single authority marks one of the most significant structural reforms in the country’s industrial governance in decades. While policymakers present the move as a modernization effort, analysts say its success will depend largely on implementation.
The reform, announced by Industry and Entrepreneurship Development Minister Sunil Handunnetti, proposes replacing the Industrial Development Board, the National Enterprise Development Authority, and the Small Business Development Division with the newly proposed Sri Lanka Industrial Transformation and Innovation Authority.
Government officials argue that the three institutions—each established to support different segments of the industrial sector have increasingly overlapped in responsibilities. By combining them, the state hopes to reduce administrative duplication and create a more coherent industrial development strategy.
Economists say a unified institution could improve policy coordination and reduce the bureaucratic barriers frequently cited by entrepreneurs. Businesses seeking technical assistance, regulatory approvals, or investment incentives have often been required to navigate multiple agencies, slowing project implementation.
The government believes SITIA could function as a “one-stop hub” for industrial development, offering integrated services ranging from innovation support to enterprise development.
At the same time, the reform is linked to a broader national strategy to expand industrial infrastructure. Authorities plan to establish 33 industrial zones across the country to stimulate regional economic activity and attract long-term investors.
Projects already underway include a manufacturing zone at Suriyawewa, a prepared industrial estate at Aluthapola, a chemical production zone in Paranthan, and a leather industry park in Valachchenai.
Investors are expected to be offered 35-year land leases within these zones, with pricing based on government land valuations. Officials say the arrangement is designed to encourage stable, long-term investment in manufacturing and industrial production.
Yet the consolidation effort also carries potential risks. Institutional mergers in the public sector often face transitional challenges, including staff restructuring, operational integration, and potential delays in service delivery.
Some industry observers caution that smaller enterprises could lose direct access to specialized support structures previously provided by agencies focused solely on SME development. Others worry that excessive centralization might slow decision-making if the new authority becomes too bureaucratically heavy.
On the other hand, supporters believe the reform could help align industrial policy with emerging global trends such as innovation-driven manufacturing, technology adoption, and export-oriented production.
If effectively managed, SITIA could strengthen Sri Lanka’s industrial ecosystem by improving coordination between policy, infrastructure, and investment promotion. But if poorly executed, critics warn the merger could simply replace three bureaucracies with one larger and more complex institution.
As Sri Lanka continues to rebuild its economy, the success of this ambitious institutional restructuring may ultimately determine whether the country’s industrial sector can become a stronger engine of growth.