President Maithripala Sirisena, the first Sri Lankan head of state to visit Malaysia in many years, received a rousing welcome at Putarjaya, the administrative capital of the South East Asian country.
On his arrival in Malaysia, the President received a guard of honour from the country’s security forces at the Kuala Lampur international airport.
The Sri Lankan President held discussions with top Malaysian authorities, including the country’s Prime Minister, on strengthening bilateral ties between the two countries.
The Sri Lankan government’s move to strengthen relations with Malaysia was a calculated one.
Malaysia, which suffered a massive economic tornado in the mid-90s, is well on the path to be a “High-Income Country” as defined by the World Bank (Gross National Income per capita above 12,615 USD, as of 2012).
Malaysia went from 6,700 USD per capita in 2009 to 10,060 USD per capita at the end of 2013.The rate of growth of private investments has seen a fivefold increase, speaking volumes for the rapid headway the country has made, on the economic development front.
Investments coming into Malaysia have exceeded expectations allowing to create 1.3 Million with a target of 3.3 Million to be created by 2020.
On the other hand, the Straits of Malacca which runs between Indonesia, Malaysia and Singapore, has long been a major gateway for trade to and from Asia, and is once again rapidly rising in importance.
Recently, it has served as the main transit route supplying vital commodities to Asia and other regions.
A report published in the World Economic Forum website stated that of the 87 million barrels of oil produced per day, approximately 15.2 million passed through the Straits of Malacca, the shortest sea route between African and Persian Gulf suppliers and Asian markets. This is some 19 times the amount that passed through the Panama Canal and four times more than the volume through the Suez Canal over the same period.
Outcome
It was against this backdrop that the Sri Lankan President held discussions with the Malaysian Prime Minister on the possibility of a Free Trade Agreement (FTA) between the two countries.
The matter was previously discussed when Malaysia’s Minister of International Trade and Industry Datuk Seri Mustapa Mohamed led a 44-member trade and investment delegation to Sri Lanka, in May, this year.
They held meetings with Sri Lanka’s Development Strategies and International Trade Minister Malik Samarawickrema and Industry and Commerce Minister Rishad Bathiudeen. During the discussions, the Malaysian Minister said, he would discuss the possibility of a trade agreement with his cabinet when he returns to Malaysia.
The Malaysian government, at the discussions last week, communicated to the Sri Lankan delegation that a breakthrough in this regard would be made next year.
The joint statement issued by the Sri Lankan and Malaysian leaders, after the bi-lateral discussions, says the following:
“The two leaders reaffirmed their commitment to further strengthen bilateral trade and investment cooperation, and to deepen their economic engagement for mutual benefits. President Maithripala Sirisena assured that the Malaysian investors would enjoy a conducive investment climate in Sri Lanka, and invited those Malaysian investors to pro-actively look at the attractive investment opportunities in Sri Lanka. Both leaders welcomed the significant interest shown by Malaysian companies to partake in the business opportunities provided by Sri Lanka.
In promoting trade, Malaysia and Sri Lanka agreed to explore the possibility of initiating the Malaysia – Sri Lanka Free Trade Agreement (FTA).
Both sides reaffirmed their desire to promote greater opportunities for students to pursue higher education in each other’s country. The two leaders also acknowledged the increasing two-way tourist movement and recalled the close cultural affinity of the peoples of the two countries, including the presence of a large Sri Lankan community in Malaysia, which is a positive factor in fostering and sustaining current and future linkages to imbue greater dynamism to the friendly relations between Malaysia and Sri Lanka.”
The Sri Lanka – Malaysian business forum, attended by a number of business leaders from both countries, was another significant event during President Sirisena’s tour.
FTA
The President, opening the business forum, told the Malaysian businessmen that Sri Lanka offered a wide range of investment opportunities as the government has declared the next three years as years of development.
BOI Chairman Upul Jayasuriya, a member of the presidential delegation, went on to explain the investment opportunities available in Sri Lanka and the mechanisms to facilitate FTIs.
Speaking at the forum, the Malaysian Minister of International Trade and Industry Datuk Seri Mustapa Mohamed said, the Malaysian and Sri Lankan business communities should strengthen cooperation and invest in each other’s country to enhance bilateral trade and investment.
“Malaysia has a strong presence in Sri Lanka, mainly, in the services, tourism and manufacturing sectors and the Malaysian government was committed to encourage a conducive trade environment with Sri Lanka and deepen economic engagement,” he said.
The Minister also pointed out that Malaysia is Sri Lanka’s fourth largest trading partner and one of the biggest investors is Dialog Axiata Group Bhd with over US$2 billion, representing over 1.3% of the country’s gross domestic product.
From January to September this year, trade between both countries increased by 11% to US$ 439.2 million from US$428.5 million in the corresponding period of 2015, while the total investment in 2015 stood at US$ 125.83 billion.
Foreign Minister Mangala Samaraweera, another member of the Sri Lankan delegation who addressed the forum, explained the political situation in the country. The Foreign Minister said, Sri Lanka had its rifts in destiny, but the people had changed the political trajectory of the country in January, 2015.
“Since then, democracy has made a rapid headway and Sr Lanka today, is a vibrant democracy. Democratic reforms would be entrenched in the new constitution,” Samaraweera said, addressing the Sri Lanka - Malaysian business forum, yesterday.
“Reconciliation is imperative. That was the reason why Sri Lanka co-sponsored a resolution at the UNHRC. We are also in the process of devising transition of the justice mechanism,” the Foreign Minister added. He said, the government would soon set up a state body serving as a one stop shop for development and investments.
It was clear that the Sri Lankan government had attached great importance to draw the support of key international players in 2017.
Important meetings
In March, President Maithripala Sirisena is expected to meet US President elect Donald Trump and Russian President Vladmir Putin.
The President’s meeting with Trump can be a turning point in terms of the US – Sri Lanka relations. The Sri Lanka President has already made it clear that he will work with the US President-elect to mitigate the impact of war crimes allegations against Sri Lanka.
From Sri Lanka’s point of view, this will be the preferred outcome of the President’s meeting with Trump.
President Sirisena’s meeting with Putin, needless to say, will also draw the attention of international media.
The meeting between the Sri Lankan and Russian Presidents will happen in the wake of Forbes ranking Putin as the world’s most powerful person, for the fourth consecutive time.
“From the motherland to Syria to the U.S. presidential elections, Russia’s leader continues to get what he wants.” Forbes said, explaining why Putin consolidated his position as the world’s most powerful man for four years.
Why Russia
It is also important to examine the background of Putin’s invitation to the Sri Lankan President.
Since 2014, Russia has been re-adjusting its foreign policy in South Asia. The country, over the past two years, built up strong ties with Pakistan and offered help in terms of military cooperation.
Before 2014, Russia did not sell arms to Pakistan, thinking it would affect the interests of India, the regional giant which had long-standing bilateral relations with Russia. Therefore, the past two years has seen a significant shift in Russia’s foreign policy concerning South Asia – particularly India and Pakistan.
It is against this backdrop that Putin has invited the Sri Lankan President to visit Russia in March, this year. It is now up to the Sri Lankan government to capitalize on Russia’s new shift, without upsetting other key players in the region.
Special Provisions Bill
The Development Special Provisions Bill, an important legislation introtroduced by the government, kept the top-brass of the ruling alliance occupied last week.
The Bill, gazetted in late November, envisages the creation of regional bodies for purposes of co-ordinating development, with more powers to the Minister in charge of economic development, and confers immunity from prosecution regarding acts done ‘in good faith’.
It was introduced as a remedy for all major issues faced by investors keen to do business with Sri Lanka.
The Bill proposes the setting up of a Policy Development Office, to plan and implement policy decisions and a high-powered Agency for Framework.
A Rural Modernization Board to fast track development in rural areas is another body suggested in the Bill. It also proposes the establishment of five Regional Development Boards (RDBs) – namely, the Southern Development Board, the Northern Development Board, the Wayamba Development Board, the Central Development Board and the Eastern Development Board.
The Chief Secretaries of each province will be among those who will be members of these boards.
The President will summon Cabinet Ministers, Provincial Chief Ministers and Chairpersons of Parliamentary Oversight Committees to discuss plans, programs, schemes and projects under the act.
The Minister in charge of the subject will cut across bureaucracy, red tapes, other government ministries, state institutions and Provincial Councils and Local Government bodies. He or she will have powers over every aspect of state apparatus to facilitate development.
Speaking at the Malaysian business forum last week, Foreign Minister Mangala Samaraweera described the mechanism ‘one stop shop’ for development.
The Cabinet of Ministers, on Tuesday, again approved the Development (Special Provisions) Bill and discussed the implementation of its provisions.
The Bill also had the green light from the Cabinet Sub-committee on economic management.
No Super Minister
The Prime Minister and the International Trade Minister explained to Cabinet members that it was not an attempt to appoint a ‘Super Minister’ with overarching powers.
They said, it was a comprehensive solution to many problems faced by investors over the past few years.
The Prime Minister also said, he would discuss the Bill with all provincial Chief Ministers on Friday.
Chief Ministers of Southern, Western, Eastern and Uva provinces were present at the meeting held at Temple Trees.
Speaking to the Chief Ministers, Prime Minister Ranil Wickremesinghe said, the Development (Special Provisions) Bill was not aimed at bringing the provincial council subjects under the central government.
The Premier reiterated that the objective of introducing this Bill was to get provincial councils more involved in the national development process.
He added that this Bill will make no impact on any subjects coming under the provincial councils.
The Chief Ministers, in response, appreciated the government’s efforts to get provincial councils more involved in the development process.
They said, they would submit a set of their proposals with regard to this Bill after discussions with other Provincial Chief Ministers.
The Prime Minister said amendments to the Bill can be submitted to Parliament during the committee stage.
NPC
The Prime Minister’s meeting with the Chief Ministers took place soon after the Northern Provincial Council (NPC) unanimously decided not to support the Development (Special Provisions) Bill. This was announced by NPC Chairman C V K Sivagnanam at the Council meeting on Friday. The Bill was rejected by the Council even before taking it up for debate.
Speaking to the media, Northern Provincial Councilor Sivajilingam said, they rejected the Bill as it was detrimental to the powers and functions of Provincial Councils. “It has concentrated all powers to the Central Government. Therefore, we did not go into considering it clause by clause, but rejected it in its entirety” he said.
Sivajilingam also stated Chief Minister C V Wigneswaran was not invited for the meeting with the Prime Minister.
“Chief Minister Wigneswaran received no letter inviting him to this meeting. Therefore, he was here with us when we unanimously rejected the Bill” he said.
However, the government has now announced that the Bill would be presented to Parliament in February. There are indications that certain provisions of the Bill will be amended during the Parliamentary process, based on the recommendations by the SLFP, the TNA and other political parties.