Sri Lanka in tough negotiations to finalise trade agreement with India
Sri Lanka is currently in tough negotiations on finalising a new trade agreement with India this year and the two countries so far have conducted eight rounds of negotiations, a senior cabinet minister said adding that the proposed arrangement will encompass trade in Services, Investment, and Economic and Technology Cooperation.
The country needs a longer-time period to negotiate a free trade agreement with China as it is concerned about the economic impact of a hurried deal, he pointed out.
The two countries have already conducted seven rounds of negotiations, and some issues in the negative list should be sorted out, he added.
Large and smaller Singapore companies looking to invest in Sri Lanka will benefit from the new free trade agreement signed in January this year with the approval of the cabinet, Minister of Development Strategies and International Trade Malik Samarawickrema told a media conference in Colombo on Friday.
It will see Singapore companies enjoying potential tariff savings, among other benefits while deepening economic ties and facilitates greater trade flows between the two countries, he claimed.
Sri Lanka will, over 15 years eliminate tariffs on 80 per cent of Singapore’s exports and the agreement also includes one of the most liberal rules of origin, which will allow more exports from Singapore to qualify for the lower tariffs
Singapore and Sri Lanka are also committed to granting better access to each other’s services markets.
In the meantime Foreign Direct Investment (FDI) into Sri Lanka grew to US$1.9 billion in 2017, more than double from the $802 million achieved the previous year, Minister Samarawickrema said.
This FDI growth was a direct result of the Government’s reorientation of economic policy towards investment and export driven growth, rather than debt-funded public infrastructure spending, he noted.
The FDI target for this year is $2.5 billion and of this the country has been able to attract $465 million during the first three months although the target was $315 million, he revealed.
The Board of Investment (BOI), the agency tasked with promoting and facilitating FDI, has approved $1 billion worth of projects during the first quarter of this year with considerable growth across key sectors, Minister Samarawickrema said.
Among the highest growth sectors were export-oriented Manufacturing (+27 per cent) and Services which includes Tourism and IT (+50 per cent) and Infrastructure (+190 per cent).
The highest FDI came from China, followed by Hong Kong, India and Singapore.
Over the past two years, the BOI has targeted both new investors, leveraging the country’s strengths and advantages, as well utilizing existing investors to increase reinvestments and to utilize their external networks to bring in new investors in sectors such as export-oriented manufacturing.
The BOI will set up new export promotion zones in a 400 acre land in Bingiriya and in another 165 acre site in Mawathagama and separately in Milleniya shortly and the budgetary allocation for the new zones will be Rs. 2.5 billion, he disclosed.
Sri Lankan merchandise exports have also grown to over $15.1 billion in 2017, while this year’s target will be $17.4 billion, he said adding that Sri Lanka reached 1$ billion in export revenue during the first quarter of 2018.