‘Comprehensive economic partnership agreements vital to boost trade’ | Sunday Observer

‘Comprehensive economic partnership agreements vital to boost trade’

Sri Lanka has not been able to plug into the Global Value Chain (GVC) due to the absence of trade facilitation measures, efficient and transparent transport and logistics policies and market liberalisation measures, said Chairman, National Agency for Private Public Partnership of the Ministry of Finance and Media Thilan Wijesinghe while addressing the ‘2018 L.S. De Silva Memorial Lecture’ at the Institute of Engineers of Sri Lanka last week.

He said the country takes pride and lords it over others for its strategic location and having the best port that is ranked the 15th in connectivity and logistics related activity, but the recent ranking in many spheres shows the country is way below others.

“Sri Lanka is ranked 94th among 164 countries in the quality of logistics. Ranking in delivery in logistics since 2010 has been poor and it is worst in international shipment, quality of logistics and timeliness,” Wijesinghe said.

He said Sri Lanka is ranked 85th out of 140 countries in global competitiveness in the 2018 edition of the Global Competitiveness Report of the World Economic Forum (WEF) and 64th out of 136 countries in the travel and tourism competitiveness index issued by the WEF in 2017.

In ICT competitiveness too the country is ranked low as it still has no online bookings for train and bus tickets. SriLankan Airlines has only 11 percent online bookings whereas in most other airlines it is around 30 to 40 percent. In the hygiene and environmental sustainability index Sri Lanka is ranked way below other countries.

“In the Ease of Doing Business (EDB) Sri Lanka is ranked 100 among 193 countries. We also ranked poorly in timeliness and fiscal positions. We are not doing well in rankings,” Wijesinghe said.

He said today trade has increasingly being unbundled. Parts of the Boing 747 is manufactured in many locations but assembled at one point. In GVC China has grown by six fold and India fivefold. Logistics providers should be excited about the trend.

Value-added trade contributed about 30 percent to the GDP of developing countries compared to 18 percent in developed countries in 2013. The GVC has a direct impact on the economy, employment and income and creates opportunities for development. However, there are limitations to the GVC approach. Its contribution to growth may be limited if the work done in-country is relatively low in value addition.

“Sri Lanka’s ranking in the ability to enter into Free Trade Agreements (FTAs) - a vital factor to boost trade, is poor. Sri Lanka has only five FTAs whereas Singapore has 20 and Vietnam, Thailand and Malaysia have many. Empirical evidence is contrary to the opposite views on FTAs,” Wijesinghe said.

He said there was speculation as to how a small country like Sri Lanka could enter into an FTA with India, as it could easily be gobbled up. However, the fact is that within a span of six years, Sri Lanka’s exports to India grew from US$ 55 million in 2000 to US$ 550 million. Sri Lanka made use of every single tariff line, but during the past seven to eight years exports from Sri Lanka have been declining.

“Therefore, it is clear that there is a need for comprehensive economic partnership agreements with a focus on services. FTAs should be modified to face contemporary realities,” Wijesinghe said. 

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