FTA between Malaysia and Sri Lanka at least two years away
A Free Trade Agreement (FTA) between Sri Lanka and Malaysia is at least two years away. However, according to Malaysian Minister of International Trade and Industry Mustapa Mohamed, such a pact would help Sri Lanka redress the trade balance which is presently heavily in favour of his country. The senior Malaysian minister who was in town this week at the head of a 44-member trade and investment mission met Sri Lankan counterparts Malik Samarawickrema, Minister of Development Strategies and International Trade and Rishad Bathiudeen, Minister of Industry and Commerce last Thursday and one of the topics of discussion was an FTA between the two countries. ‘”We agreed in principle that an FTA should be established between the two countries but it is still early days,” warned Mr. Mohamed.
“We had a discussion and now I got to go through a long domestic process including getting the endorsement of my own cabinet.” He said: “In our experience, an FTA will help break trade barriers and also help in promoting trade between the two countries. If an FTA is in place, I think it will help Sri Lanka’s exporters but there is a lot of work to be done. It will take at least a minimum of two years before we can sign such an agreement.” Trade between the two countries last year amounted to US$547 million according to Dhara Wijayatilake, chief executive of the Ceylon Chamber of Commerce who chaired the seminar on ‘Business Opportunities in Malaysia’.
Of this $512 million were on imports from Malaysia (mainly palm oil, chemicals and petroleum products) while Sri Lankan exports accounted for a paltry $35 million mainly from rubber and the apparel industries Malaysia is signatory to 13 FTAs, seven bilateral including countries diverse as Japan and Turkey with the remaining being as part of ASEAN. “We started small in ASEAN but today trade with our fellow-ASEAN countries accounts for 24 per cent of our annual figures. An FTA promotes trade and we hope there will be one with Sri Lanka in the future. It can be done,” vouched Mr. Mohamed.
Although trade between the two countries might be heavily weighted towards Malaysia, the country is Sri Lanka’s number one investor with Dialog-Axiata itself accounting for $2 billion much to the pride of Mr. Mohamed. “Dialog is the biggest investment from a Malaysian company. The partnership began in 1995 and today it is the number one mobile operator in the island. It also employs 4,245 people with another 133,000 having indirect employment,” pointed out Mr. Mohamed. The Malaysian investment mission stopped over in Sri Lanka after visiting India in a bid to promote Malaysia as a profit and regional centre for businesses and investment.
Also as part of the 44-strong delegation were private sector companies comprising mainly of small-and-medium-sized enterprises involved in diverse areas like herbal medicine to fruit drinks. “The last time I came to Sri Lanka was around 1984-85 and I’m impressed with the changes I have seen,” added Mr. Mohamed. The Malaysian Minister hoped that Malaysian companies would be involved when the Megapolis project gets underway. “I believe there is something like $40 billion investment opportunities and I know a number of Malaysian companies are waiting anxiously for news and more information on this project.”