Sri Lankan Minister says more FTAs in the making to boost economy
Daily FT: The Government revealed yesterday that Sri Lanka is working towards more Free Trade Agreements (FTAs) to boost exports, foreign investments and economic growth.
Foreign Affairs Minister Ali Sabry PC yesterday revealed FTAs with China, Indonesia, Malaysia and Vietnam are being pursued by the end of this year.
The Government’s aggressive foray to finalise FTAs was shared by Sabry following the signing of a deal with Thailand recently.
Speaking at a briefing titled ‘Collective Path to a Stable Country’ at the President Media Centre (PMC), Sabry emphasised the importance of strengthening and carrying forward President Ranil Wickremesinghe’s program to establish FTAs with other countries.
“This is crucial to ensure Sri Lanka’s economic stability and prevent future downturns,” Sabry added at the briefing which was also attended by Chief Negotiator of the Office for International Trade K.J. Weerasinghe.
Sabry expressed optimism that these agreements will open up new markets for Sri Lankan businesses, contributing directly to the nation’s economic growth.
Sabry highlighted the recent FTA with Thailand as a historic step towards achieving President Wickremesinghe’s vision of a stable economy. He emphasised that this agreement has already provided Sri Lanka access to a $ 2.2 billion market, representing a significant advancement.
This agreement, along with technical assistance from Thailand, is expected to attract substantial investments in key sectors like fisheries, tourism, agriculture, and renewable energy.
The Minister signifies the Government’s commitment to diversifying Sri Lanka’s trade partnerships and strengthening its economic resilience through strategic FTAs.
By expanding access to new markets and promoting trade, these agreements aim to create a more robust and sustainable economic foundation for the country.
Sri Lanka significantly lags behind regional competitors like Vietnam and Bangladesh. This issue was highlighted by Minister Sabry, who pointed out the vast difference in export earnings. While Vietnam boasts exports of $ 370 billion and Bangladesh at $ 60 billion, Sri Lanka struggles with a mere $ 12-14 billion.
Minister Sabry further emphasised this disparity by comparing historical and present data. In the 1990s, exports contributed a significant 30% to Sri Lanka’s GDP, compared to a meagre 15% today. This decline reflects a missed opportunity to capitalise on the global market, unlike neighbouring countries that actively pursued FTAs.
“The main reason behind Sri Lanka’s export struggles is its limited market access. While focusing primarily on the domestic market, countries like Vietnam and Bangladesh actively expanded into larger international markets through FTAs. This strategic move fuelled their export-driven growth, leaving Sri Lanka behind,” the Foreign Affairs Minister pointed out.
“Recognising this challenge, President Ranil Wickremesinghe embarked on a long-term program to establish FTAs with Asian countries. By unlocking new markets and empowering the export economy, this initiative aims to revitalise Sri Lanka’s economic growth and build a more resilient future,” Sabry added.
It was pointed out that these developments are seen as crucial steps towards stabilising Sri Lanka’s economy and laying the foundation for future prosperity. The Minister emphasised the potential for further economic growth through increased trade with the wider world.
OSL take:
Sri Lanka is already a signatory to free trade agreements (FTAs) with a considerable number of countries while also enjoying trade concessions from the US, EU and the UK. With Sri Lanka’s target of becoming an emerging business destination in the South Asian region, the government of Sri Lanka is in a process of reviewing and strengthening the existing trade agreements while exploring more countries to reach FTAs and preferential trade agreements (PTAs) with more countries in the region. Sri Lanka is currently in the process of signing new FTAs Singapore, China, etc while looking at a PTA with Bangladesh. All the trade ties enjoyed by Sri Lanka with other countries has placed the country in a unique position of becoming a trade hub in the South Asian region. The country’s geographical positioning in the Indian Ocean has also added to its trading advantages. With Sri Lanka on a clear growth path as a trading hub in South Asia, foreign businesses/investors while exploring business/investment opportunities in the country, could also look at setting up base in Sri Lanka to engage with other countries in the region using Sri Lanka’s preferential treatment enjoyed with the respective markets.
| Article Code : | VBS/AT/20240219/Z_2 |