Sri Lanka to commence talks to reach preferential trade deal with Bangladesh
The government of Sri Lanka has reportedly decided to commence discussions to finalize a Preferential Trade Agreement (PTA) with Bangladesh.
The Sri Lankan government, according to local media reports, is confident a PTA will boost trade between Sri Lanka and Bangladesh, which is relatively small at US$ 200 million.
The Cabinet of Ministers had made the decision following the agreement reached between Sri Lanka and Bangladesh in March to strengthen economic relationship via a free trade pact during Sri Lankan Prime Minister Mahinda Rajapaksa’s state visit to Dhaka.
The proposed PTA is to contain a short list of goods as the initial step, according to the proposal made by Sri Lanka’s Trade Minister Bandula Gunawardena, local media reports noted.
Both Sri Lanka and Bangladesh act as stakeholder member countries of the SAARC Preferential Trading Arrangement (SAPTA), South Asian Free Trade Area (SAFTA), Global System of trade Preference (GSTP), Asia-Pacific Trade Agreement (APTA) and Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), media reports further noted.
According to reports, trade between Sri Lanka and Bangladesh was low despite special provisions under these accords and the PTA would be a catalyst to enhance volume.
Sri Lanka’s imports from Bangladesh account for 0.3% of the total while last year, the value was recorded at US$ 48 million, which was an increase from US$ 41 million in 2019 but lower in comparison to US$ 44 million in 2017. Sri Lanka’s exports to Bangladesh account for only 1.5% of the total and last year, the value was US$ 153 million, which was a decline from US$ 162 million in 2019, the Daily FT has reported.
The report has further noted that once finalised, Bangladesh will be the third South Asian country with which Sri Lanka has a free or preferential trade arrangement after India and Pakistan, which have both helped enhance bilateral trade.
According to the Central Bank, Sri Lanka’s exports through FTAs with India and Pakistan remained high in 2020 as a share of total exports to these countries at 59% and 71%, respectively.
OSL take:
Sri Lanka already enjoys operational free trade agreements with India and Pakistan and the latest move to reach a preferential trade agreement with Bangladesh, Sri Lanka will further expand it’s trade ties in the South Asian region. The country is fast becoming a business hub in the South Asian region given it’s geographical positioning in the Indian ocean and the many trade agreements as well as trade concessions enjoyed by the country. With Sri Lanka’s ongoing development programme covering all key economic sectors, the island is positioning itself as an ideal business destination. Foreign businesses/investors could therefore explore business/investment opportunities in Sri Lanka.
| Article Code : | VBS/AT/20210618/Z_1 |