Brand Korea returns

South Korea, one of the largest international investors in Sri Lanka in the ’90s, wants to re-enter the country in a significant way. “The Sri Lankan Government deserves credit for running the economy well. We were the largest investor in Sri Lanka in the ’90s. Korean investors now say that Sri Lanka is advantageous for re-entry and want in,” revealed Jong Moon Choi, the Korean Ambassador to Sri Lanka on 4 March.

Choi was addressing Rishad Bathiudeen, Minister of Industry and Commerce, when he called on the minister at the Ministry of Industry and Commerce, Colombo 3.

Almost 21,000 Sri Lankans are now employed in Korea, remitting $ 300-400 million back home annually.  According to the Department of Commerce, total trade between Sri Lanka and South Korea stood at $ 366.7 million in 2012, increased by 44% from 2004-2012.

The value of exports from Sri Lanka to South Korea was $ 44 million in 2012 leading to an unfavourable trade balance of $ 278 million. Sri Lanka’s exports that totalled $ 18.4 million in 2004, rose to $ 30.9 million in 2010 and in 2012, hit $ 44.1 million, thereby recording 139% rise from the 2004 volumes. Apparel has emerged as the dominant export item from Sri Lanka, taking 30% of total export share to South Korea while raw bristle fibre of coconut (coir), gloves, mittens and mitts, furniture, lamps and fittings, and activated carbon natural rubber are some other major export items.

In 2012, the value of imports stood at $ 322 million. Motor cars and vehicles surpassed iron/steel as the largest import items from South Korea in the same year, showing a considerable increase during the last five years (rising by 86% in 2012 from 2008’s $ 5.67 million). Sri Lanka and South Korea are also members of the Asia Pacific Trade Agreement (APTA – formerly the Bangkok Agreement), and Lanka’s trade with South Korea under APTA grew by 46% in 2010 in comparison to 2007. In fact, in 2010, one fifth of total exports to Korea exited Sri Lanka under APTA.  In terms of investments, the total Korean investment (FDI) during the 1990s stood around $ 55 million.  In 2011, Korean FDIs to Sri Lanka under the BoI stood at $ 2.8 million. At present there are 116 Korean projects/companies in operation in Sri Lanka under the purview of BoI law Sections 17 and 16. The Sri Lanka-South Korea Bilateral Investment Treaty came into force in July 1980.   

 “Sri Lanka’s improved stability, low labour costs, investor friendly rules, regulations and incentives are motivating factors for South Korean investors who are keen in highway construction and solar energy projects here, among others,” said Choi.  Discussing trade, he added: “There is a high demand and potential for Sri Lankan fruits in Korea – amongst them are pineapple, papaya, durian and coconuts. We are very keen to import more and more such fruits from Sri Lanka which we believe to be very good. Currently, we import them from Southeast Asia but Sri Lankan fruits are of much better taste and quality. Demand for Ceylon Tea is rising among the Koreans who otherwise import more than $ 1 billion worth of coffee annually.”

“We warmly welcome more investors from South Korea to Sri Lanka’s resurgent development agenda, thanks to President Mahinda Rajapaksa’s vision. We also thank the Korean government for increasing Overseas Development Assistance (ODA) on the 2010 request of Basil Rajapaksa, the Minister of Economic Development,” Minister Bathiudeen said, while addressing Choi.

“We also encourage Korean investors to enter agro farming and agro modernisation in Sri Lanka where we see ample scope. Specially, Korean investors can enter Lanka’s fruits and vegetable cultivation aimed at the demanding Korean market,” Bathiudeen stressed.