Sri Lanka is in the process of negotiating a Free Trade Agreement (FTA) with Thailand while also carrying on similar negotiations with China, Indonesia and Malaysia in keeping with the government’s export oriented and outward looking economic policy, Minister of Development Strategies and International Trade, Malik Samarawickrama told a forum in Colombo last week. An interactive forum titled the ‘Power of Interaction: With Asian Region Diplomats’ organized by the Ceylon Chamber of Commerce (CCC) was attended by high level diplomats representing 11 countries in Asia.
“We have brought macro economic stability vital to attract foreign direct investments to the country since we took over the government in 2015 at a time when the country had difficult relations with the rest of the world,” Samarawickrama said.
According to a senior advisor to the Ministry of Finance negotiations for a FTA with Thailand is to commence in the coming months enabling the country to benefit from a region that comprises a population of around three and half billion when FTAs with countries in the region have been finalized.
“Reorientation towards Asia for export oriented Foreign Direct Investments along with FTAs coming on stream will help export diversification and drive FDIs from a vast region that has much to offer Sri Lanka,” Economic Advisor to the Ministry of Finance and Media Deshal de Mel said.
Foreign Direct Investment to Sri Lanka crossed US$ 1 billion last year surpassing the $ 802 million recorded in the previous year.
The $ 1.63 billion FDIs reported last year was higher than the $ 1.61 billion notched in 2014. Samarawickrema said certain professionals are only concerned about their own interests and not the country. We have kept to the interest of the country and the stakeholders despite the strong opposition from detractors.
“The FTA with Singapore is a broad strategy to boost trade with Asia going beyond the conventional markets in Europe and the USA,” the minister said.
However, the recent FTA signed with Singapore has been rejected by professional bodies on grounds that it is not in favour of Sri Lanka and that the agreement has many gaps that need to be filled. Professionals have called for an open debate on the trade agreement in parliament and have threatened to go to courts if the agreement is not re negotiated .
The minister said the domestic mechanism for bilateral trade will be in place as anti dumping laws have come into force preventing unfair trade.
“We have commenced removing para tariffs of over 1,000 items to expand trade and investment links with China, Indonesia, Thailand, Japan, USA and Europe,” the minister said.
Referring to the years prior to 2015 de Mel said the focus had been borrowing and creating external liabilities without external inflows which has resulted in bunching of external debt to be settled in the next four years.
“The major issue was the fiscal balancing by enhancing revenue which is around 11.5 percent to the GDP which is significantly lower than in the countries in the region,” de Mel said.
He said the new Inland Revenge Act which is a rule based framework has brought in transparency and simplification to the tax system which will boost revenue collection supported by new technology.
Minister Samarawickrema said new industrial zones will be set up in the South in keeping with the aim of attracting FDIs for export oriented manufacturing .
“We need the Asian counterparts to grow together and Asia to play a vital role in this regard. The partnership with the Asian region will forge new business opportunities for all countries in the region,” Samarawickrema said. - LF