The Sri Lanka-Thailand Free Trade Agreement (SLTFTA), recently signed, holds significant potential for Sri Lanka’s economic growth, according to experts. Research from the Institute of Policy Studies (IPS) suggests that the agreement could lead to a 38% increase in Sri Lankan exports through tariff elimination.
Dr. Asanka Wijesinghe, a Research Fellow at IPS, emphasized the importance of Sri Lanka focusing on specific sectors like manufacturing, apparel, rubber products, and food products when pursuing Free Trade Agreements (FTAs). These sectors, he noted, face high tariffs in Thailand, offering a prime opportunity for export growth.
The Ceylon Chamber of Commerce also sees FTAs as a strategic tool for Sri Lanka. Chairman Duminda Hulangamuwa stressed the need to leverage these agreements to become more competitive in the global market, particularly against countries like Vietnam, Thailand, Malaysia, China, and Singapore. He highlighted the potential for sustained economic growth of 8-9% through increased international trade, a significant improvement from the current 2-3% growth rate.
Chief Negotiator K. J. Weerasinghe emphasized the need to align with the government’s vision of attracting investments and gaining global market access. He acknowledged that Sri Lanka has missed trade opportunities in recent years and urged swift action to capitalize on future agreements like the potential FTA with the EU for electronic vehicle components.
The importance of FTAs for Sri Lanka’s small domestic market was emphasized by Renuka Weerakoon, Director General of the Board of Investment (BOI). She highlighted the potential for increased market access, foreign direct investment (FDI), job creation, foreign exchange, innovation, technology transfer, and international trade networks through these agreements.
Deshal de Mel, Advisor to the Ministry of Finance, pointed out that the SLTFTA is part of a broader strategy to achieve qualitative improvements in Sri Lanka’s economic growth. He emphasized the role of FTAs in the economic recovery strategy and the need for Sri Lanka to integrate into global and regional value chains. He noted the overreliance on the non-tradable sector in Sri Lanka’s growth and called for a shift towards non-debt-creating avenues and diversification beyond traditional exports.
Mr. de Mel emphasized that FTAs provide access to regional trade value chains and create opportunities for participation in regional trade agreements, ultimately driving sustainable economic growth through increased competitiveness in global markets.
The signing of the SLTFTA with Thailand marks a significant step for Sri Lanka as it seeks to boost exports, attract foreign investment, and achieve sustainable economic growth. By strategically leveraging FTAs and focusing on key sectors, Sri Lanka has the potential to unlock its full economic potential and integrate more effectively into the global marketplace.