Sri Lanka to sign Preferential Trade Agreement with Indonesia by March 2025
The Morning: Sri Lanka and Indonesia are seeking to sign a Preferential Trade Agreement (PTA) by March 2025 as both countries completed the first round of negotiations last week, the Indonesian Trade Ministry said.
In a statement, Indonesian Trade Ministry said that the first round of negotiations of the PTA already took place virtually earlier this week which zeroed in on the work plan and draft agreement text and that the negotiators are set to enter more substantial chapters in the coming rounds.
“Indonesia and Sri Lanka are … aiming to substantially conclude the negotiations by end-2024. We have also set a target to sign the agreement in March 2025,” the statement said.
Also, both parties are expected to meet for the second round of talks in Colombo on 19-20 June where both countries will discuss the text concept, as well as market access.
During the negotiations launching ceremony held last month, Indonesian Deputy Trade Minister Jerry Sambuaga said the PTA would become a building block to a free trade agreement (FTA) with Sri Lanka.
Unlike the PTA whose scope is still limited, an FTA is more ambitious in nature and usually aims to remove the tariffs across all or most goods. Jakarta also said at the time that the upcoming PTA could help Indonesian goods such as palm oil, paper, and fatty acid to gain better access to the Sri Lankan market.
Indonesia-Sri Lanka trade was valued at $ 369.7 million throughout 2023. About $ 326.6 million of the trade figures were Indonesian exports to Sri Lanka. In January 2024 alone, the bilateral trade amounted to $ 23.5 million.
Indonesia mainly exports copra, petroleum, paper, cartons, tobacco, as well as coal to Sri Lanka. Knitted fabrics and tobacco processing machines were among Indonesia’s top imports from Sri Lanka.
OSL take:
As part of its target of achieving regional hub status, Sri Lanka is engaged in actively reviewing and further strengthening the existing trade agreements the country has with other countries while also looking at forming new trade ties with more countries. Sri Lanka enjoys operational free trade agreements with several countries in the region while enjoying trade concessions like the GSP and GSP Plus from the US, UK and EU that have helped boost Sri Lanka’s exports sector. IIt is in this backdrop that Sri Lanka entered into a new free trade agreement with Thailand. The country is also looking at finalizing several new free trade as well as preferential trade agreements several more countries this year. All these agreements and concessions places Sri Lanka at a strong position in becoming a trading hub in the South Asian region. Sri Lanka ongoing economic activities and the expansion in key economic sectors have all helped boost the country’s attraction as an emerging business destination. Given the growth and business potential in the country, foreign businesses/investors could confidently explore the growing opportunities in Sri Lanka while also looking at setting up base in Sri Lanka to engage with other countries in the region.