- Tells Parliament despite 70 years of freedom
- SL has not achieved economic independence
- Govt. attempting to reverse trend and make up for lost time
- SL aiming for $ 17.2 b export revenue by year-end, $ 2.5 b FDI
- Insists FTA well-negotiated, national interests protected
- Results of FTA already flowing in with $ 16 b worth of proposals
By Ashwin Hemmathagama
The Free Trade Agreement (FTA) signed between Sri Lanka and Singapore to liberalise and facilitate trade and investments between the two countries was identified as the need of the hour and driving force to reach development targets, Strategic Development and International Trade Minister Malik Samarawickrama told Parliament yesterday, rejecting any downsides from the agreement which received Cabinet approval on 16 January 2018.
“It is true that we have had independence for over 70 years, but can we honestly say that our country has gained economic independence? Even after 70 years there are millions of people finding it difficult to place two meals on the tables, who are struggling to educate their children and those who are looking for decent employment. The inability to attain economic independence is primarily due to petty politics. At the same time, we need to change the trade policies that have been followed up to now. Inward-looking protectionist policies have not brought the results that we seek. On the contrary, when we look at countries such as Singapore, Malaysia, Thailand, Vietnam, Taiwan and so on, we see the rapid development that has taken place in those countries by liberalising their trade policies and improving the ease of doing business.
While these countries made trade and investment the center of their development drive, we didn’t. We now have the chance to reverse the negative trend and try and make up for the lost time,” the Minister stated during a debate held yesterday in Parliament.
In contrast, Sri Lanka has recorded the highest ever export earnings of $ 15.15 billion in 2017 and the Government is looking at increasing this to $ 17.2 billion by the end of this year. FDI has also been favourable to Sri Lanka. In 2017 it stood at $ 1.9 billion and the target for this year is set at $ 2.5 billion. In Malaysia it is $ 230 billion. Even Bangladesh, a country that was a much later entrant to the international trade game, is now at $ 41 billion.
FDI received by these countries was $ 77 billion to Singapore, $ 12 billion to Vietnam, $ 9 billion to Taiwan and $ 5 billion to Thailand. All these countries focused on FTAs, trade liberalisation and attracting foreign investment to reach this level. All of these countries have been able to grow their economies and bring better jobs and raise people’s living standards within a short period of time. This shows how far behind Sri Lanka is by not thinking new to keep up with our competitors, explained the Minister.
Rejecting charges that the FTA goes against the interests of Sri Lanka, the Minister said: “This FTA with Singapore has been very cleverly negotiated by us. Unlike other FTAs signed by Singapore with other countries where the level of liberalisation is more than 90% of tariff lines, in the FTA with Sri Lanka, we limited it to 80%. So 20% of tariff lines or 1,487 items were kept protected because of a concern over domestic industries and revenue. Items like footwear, confectionery and many other sensitive items have been kept out of the agreement. The linearisation program under FTA has been carefully designed to have the least impact on domestic industry and revenue collection. We have included all revenue sensitive items in the negative list of items which will not be subjected to the removal of tariffs. Therefore, 97.8% of revenue from customs duty is protected.”
According to the Minister, with the FTA coming into effect Sri Lanka has received proposals from Singapore for investment amounting to $ 14.8 billion in an oil refinery for the export of petroleum products. In addition, a proposal for a steel manufacturing plant for exports amounting to $ 1 billion, a flour milling plant worth $ 50 million and a sugar refinery worth $ 200 million are also found on the list of FDI from Singapore.