2002 FTA with Pakistan has shown encouraging results, reveals Sri Lanka

With the 2005 implementation of the Free Trade Agreement (FTA) between Sri Lanka and Pakistan, Sri Lanka has witnessed very encouraging results in its bilateral trade.

Exchanges between the two countries have increased substantially and Pakistan is now the second largest trading partner of Sri Lanka in the SAARC region after India, said Minister of Industry and Commerce Rishad Bathiudeen.

Minister Bathiu-deen was addressing the Federation of Pakistan Chamber of Commerce and Industry on 5 July. He was leading a Sri Lankan delegation to Pakistan for Ministerial level discussions on the Joint Economic Commission.

The value of total trade between the two countries has increased from US$ 158 million in 2005 to US$ 342 million in 2010 reporting a substantial growth in bilateral trade in both exports and imports.

“As we are all aware, Sri Lanka and Pakistan have been enjoying friendly and cordial relations in diverse fields. Among them trade and economic activities play a very important role. I need not emphasise the fact that Pakistan has been a very close and a genuine friend of Sri Lanka. Our two countries are connected with deep-rooted bilateral cooperation, sharing common views and expectations on many regional and international issues. I am pleased to mention that both nations have always stood by each other in difficult times. We need to keep this momentum and the spirit for the mutual benefit of our people,” Minister Bathiudeen said.

Speaking of the Joint Economic Commission effort, Minister Bathiudeen said: “Under this 10th Session of Sri Lanka Pakistan Joint Economic Commission bilateral forum, we explore ways of bilateral cooperation in various fields. Of course, the expansion and development of trade, economic and commercial activities between our two countries is very much a priority in our agenda. Within this context, with a view to further enhance and strengthen our bilateral relations our two countries have concluded the Free Trade Agreement, under the purview of these discussions back in 2002.

“With the implementation of the Free Trade Agreement in June 2005, we have witnessed very encouraging results in our bilateral trade. Trade exchanges between the two countries, have increased substantially. I am pleased to note, that Pakistan is the second largest trading partner of Sri Lanka, in the SAARC region, after India.

“Even though our bilateral trade has been increasing over the years, it has not shown the full potential. As you are aware, our two countries are very close to each other in many aspects; geographically, politically, historically and culturally, etc. We need to harness this close relationship further and make full use of the opportunities available before us with a view to enhancing our bilateral cooperation, for the mutual benefits of both countries.

“What is important at this stage is for the business community in both the countries to look for new opportunities, created under the FTA, and explore them, to the full potential. Except for a few 100 products, listed in each others’ Negative Lists, all other products are eligible for duty concessions and duty free access, to each others’ market under the Pakistan-Sri Lanka Free Trade Agreement. This certainly gives an opportunity for the business community of both the countries for greater market access.

“Sri Lanka has a lot to offer to the Pakistan market. We produce high quality agricultural, manufactured and industrial products. We are well known for our natural rubber, tea, coconut and coconut based products, spices and betel leaves in the agricultural sector, for which there is a good demand in Pakistan. Sri Lanka is emerging as a new destination, for trade and economic activities, in this part of the world. We have now gained a ground, for manufactured and industrial products, in addition to our traditional products.

“Porcelain tableware and kitchen ware, ceramic tiles, furniture, electrical switches and sockets, fibre board of wood, herbal cosmetic products and plastic articles are some of the products that Sri Lanka has been able to promote in this important market of Pakistan. Similarly, Pakistan has a lot to offer to us, from agricultural products to manufactured and industrial products. There are many more opportunities in our countries and for this, the business community needs to engage and enhance interactions with its counterparts and explore those emerging opportunities

“Sri Lanka has recorded an impressive 8.1% economic growth, which is the highest growth-rate that it has achieved during the last few decades. The economy is expected to grow, even at a higher rate of 9% in 2012, and 2013. At the same time, our per capita GDP has also increased substantially, to record US$ 2,400. What is important to note is that we have witnessed these improvements in our economy across almost all the sectors. “With these macroeconomic developments, Sri Lanka is now seen as a fast growing economy in Asia. While we project an increasing growth of our economy, the Government is fully aware of the basic needs of the business community. Well-developed infrastructure facilities, such as roads, telecommunications, ports, airports, banking, IT facilities, etc., are an essential and integral part in the business activities.

“The Government has therefore focused very much on the need for developing the most needed infrastructure facilities, in our process of faster economic growth. Foreign investors and entrepreneurs, are given special attention to undertake business activities in line of their business, within the Government economic policy. We have opened almost all sectors, of our economy for foreign investments. You can operate your own industries without any involvement of Sri Lankan partners. In other words, 100% foreign ownership of investments projects is allowed. There are no restrictions whatsoever in repatriation of profits and doing transactions through international currencies.

“We as a Government will always look forward to facilitate the international business community within the framework of our open economic policy. In this direction, the Government is interacting with the international business community and assists it in establishing its manufacturing units and investment projects.”

Inviting Pakistan’s business community to Sri Lanka’s mega export exhibition in 2012, Minister Bathiudeen said: “We are in the process of organising in March 2012 an international exhibition and business forum, ‘EXPO 2012’.

This would certainly be a good opportunity for you to visit Sri Lanka, in large numbers and meet with the Sri Lankan business community and establish lasting and fruitful business relations. I wish to invite you all to participate in this important event.” FPCCI Chairman Coordination Raza Khan speaking on the occasion said that the 8.1% per capita GDP hike to $ 2,400 and economic freedom standing at 57.1 proves that investors have trust in the policies of the Sri Lankan Government.

He added that the visit of Minister Bathiudeen to Pakistan would prove a significant milestone in the history of both countries and would go a long way in strengthening ties.