The much touted Sri Lanka – Singapore FTA was signed on 23 January 2018, marking a milestone moment in the trade and economic relations between the two islands. This blog analyses the key features of the FTA and the benefits Sri Lanka can reap from the partnership.
With the Malaysia’s Prime Minister, Najib Razak’s visit to Sri Lanka, there has been a renewed interest in entering into a FTA with Malaysia. If such a FTA comes into fruition, how will it impact Sri Lanka’s trade? Preliminary estimates by IPS suggest that likely gains from bilateral trade liberalization in goods will be limited to few products, but there might be gains from other areas of cooperation, namely in investment flows to Sri Lanka.
Due to the failure of developed countries to adequately financially assist developing countries, the latter are increasingly looking towards creating outward oriented economies that are more suitable for foreign direct investment and export promotion. As such, the share of South-South Foreign Direct Investment (FDI) of total world FDI has risen from 3% at the beginning of the century to around 14% in 2009, and has risen even further in recent years. In this context, this blog analyses the importance of South-South investment to developing countries, with a focus on Sri Lanka.
When it comes to free trade agreements, Sri Lanka should not lament about the trade deficit or the export basket but move forward with the rest of the world to gain maximum benefits from such FTAs. The India-Sri Lanka FTA has worked in favor of Sri Lanka but more work needs to be done to broaden and deepen it to reap the maximum benefits from it for Sri Lanka in an equitable manner.
Sri Lanka’s petroleum imports are rising at an alarming rate. This article by Vishvanathan Subramaniam examines recent trends in global oil markets and analyzes corresponding impacts on Sri Lanka’s economy. It suggests that while global oil prices are expected to decline in the short to medium term, Sri Lanka cannot be expected to maximize growth potential and ensure energy independence due to several structural inefficiencies.