The proposed Free Trade Agreement (FTA) between Sri Lanka and Singapore, set to be a ‘benchmark’ for the other FTAs, is scheduled to be signed between the two nations during the three-day visit of Singaporean Prime Minister, Lee Hsien Loong to Sri Lanka beginning tomorrow, Business Observer reliably learns.
The proposal to sign the FTA, which consists of provisions regarding trade in goods and services, service liberalization, investments and public procurement, was approved by the Cabinet of
Ministers last week subject to the clearance of the Attorney General following
the proposal put forward by International Trade Minister, Malik Samarawickrama.
“One can be assured that movement of natural persons or Mode 4 is not included in the FTA as even from the Singaporean government’s point of view, they are very strict about their manpower policy.
It is Mode 3 and only the intra-corporate transferees will take place,” a high ranking official of the Ministry of Development Strategies and International Trade said. The official said that experts of the two countries have already agreed to the provisions of the proposed FTA and steps have been taken to include appropriate amendments taking into account the observations made by several ministers regarding the draft agreement.
“Singapore is already zero duty and therefore though Sri Lanka may not gain much benefit from the trade side, we will however be able to gain access to higher quality products. These in turn will create a benchmark for Sri Lankan companies to compete and follow suit,” the Ministry official said. It is expected that the proposed FTA will spur investment from Singapore in services and manufacturing sectors while the investment chapter will give protection to investors, predictability and other benefits. “What we are mainly looking at is the signal this gives to the world - that Sri Lanka has done a high quality agreement with a high quality country, and the signal this gives to Singaporean investors,” the official pointed out.
Meanwhile, economists opined that the proposed FTA with Singapore will act as a benchmark for all the other upcoming FTAs while creating a favorable environment for investment and attracting foreign direct investment from Singapore. On the other hand, it will position Sri Lanka positively in the eyes of the international community as a country with liberalized trade policies. “This will be a landmark agreement for Sri Lanka given that it is the first trade agreement that the country is forging in over a decade. In addition, it will be the first comprehensive agreement for Sri Lanka going beyond goods, and includes services, investment, and economic cooperation.
“And to do this with Singapore – a country regarded as being one of the most trade open countries and having high quality institutions – is an especially important milestone for the country,” the economist pointed out.