By Ranil Wickremesinghe –

Prime Minister Ranil Wickremesinghe

We believe that maintaining the Freedom of Navigation is of paramount importance for Sri Lanka to become the Hub in the Indian Ocean. It is only then that we can reap the full benefits of our strategic location as well as the availability of ports on all coasts and two international airports with good land connectivity. The air and sea connectivity will naturally promote logistics. Colombo will also be a center for offshore finance and business. Finally Sri Lanka will offer a competitive platform for manufacturing and services. 

Let me refer to Sri Lanka’s decision to develop its major sea ports, especially the Hambantota port which some claim to be a military base. I state clearly that Sri Lanka’s Government headed by President Maithripala Sirisena does not enter into military alliances with any country or make our bases available to foreign countries. We will continue military cooperation such as training, supply of equipment and taking part in joint exercises with friendly countries. Only the Sri Lanka Armed Forces have the responsibility for military activities in our Ports and Airports. We are also working with foreign private investors on the commercial development of our ports. 

*Text of the speech delivered by Prime Minister Ranil Wickremesinghe at the 2^nd Indian Ocean Conference – 31^st to 1^st September 2017, Colombo:

H E Vincent Meriton, Vice President of Seychelles; 

H E Smt. Sushma Swaraj, Minister of External Affairs of India;

H E Dr Vivian Balakrishnan, Foreign Minister of Singapore;

H E Tofail Ahmed, Minister for Commerce of Bangladesh;

H E Iwao Horii, Parliamentary Vice-Minister for Foreign Affairs of Japan.

Your Excellencies,

Ladies and Gentlemen,

Just a few hundred metres from Temple Trees, is an Ocean that is destined to define the future of the world. Sri Lanka, located enviably in the centre of the Indian Ocean is well poised to play a significant role in determining this future. Our shores are washed by the waters of this great ocean. It has shaped us as a distinct people. Our future development is intrinsically linked to it and we share responsibility in keeping its waters safe. We believe, as people of the Indian Ocean, “Peace, Progress and Prosperity” are goals that need to be pursued together.

We will continue to take a leading role, in bringing our partners in the Indian Ocean together to deliberate on issues of importance to all of us. It is in this context, that I warmly welcome you to the 2^nd Indian Ocean Conference. Thank you for being present here today. 

Our good friend and neighbour, India, envisioned this forum to provide the re-establishment of the Indian Ocean Region as an economic entity. A welcome initiative to  remedy the undeveloped architecture for a closer regional cooperation. The India Foundation, held the inaugural Indian Ocean Conference in Singapore last year to consider ways and means of increasing regional connectivity. This is a topic which is vital to Sri Lanka both politically and economically. Together, we have convened political leaders, key officials, academics and researches to deliberate on the future of the Indian Ocean.

Ladies and Gentlemen,

We are meeting at a time when global and financial economic power shifts point toward Asia. The global economic power rebalance – away from the established advanced economies in North America and Europe, will continue well into the latter part of the century. Economic dominance, technology and military might, the basis of political power in the West has eroded to a significant extent by the extraordinary economic development of Asia in the last 50 years. The “HSBC World in Forecast 2050” forecasts 19 countries from Asia to be the largest economies by 2050. By 2030 Asia is expected to surpass the West in terms of Global power, based on population, GDP, technology and military spending. 2016 Annual meeting of the Global Future Council convened by the World Economic Forum concluded that by 2030 there will not be a single hegemonic force, instead there will be a multipolar world – USA, China, India, Germany, Japan, Russia as the key players.

These predictions are reassured by the recent Price WaterHouse Coopers (PWC) Report: World in 2050. It concludes that 9 (Bangladesh, India, Indonesia, Pakistan, Malaysia, Thailand, China, Saudi Arabia, Australia, Iran) out of 32 countries are predicted to be leading economies of the world, will be from the Indian Ocean Region. This reality will increase our strategic importance in the globe.

In practical terms, some countries in Asia have already taken over from the advanced Western countries in purchasing power parity. Despite projected slowdown, it is predicted that the Chinese economy will supersede the US economy by 2028. India has shown great potential to become the second largest economy in the world in terms of Purchasing Power Parity by 2050.   Indonesia and Malaysia  are also predicted to achieve remarkable rates in economic growth and to have great potential to overtake some of the western countries in the Purchasing Power Parity by 2030. 

ASEAN is poised to cover thirty percent of the global GDP, once the Regional Comprehensive Economic Partnership Agreement among the ASEAN countries is concluded.

Despite these promising predictions, intra trade in the Indian Ocean region including  the Bay of Bengal remains low. For example, South Asia remains the least economically integrated region in the world. Unlike the European and Pacific nations, there is an absence of political will to promote Indian Ocean Economic Cooperation more specificially, trade liberalization and connectivity. Trade and connectivity are central to achieving and maintaining a high regional growth rate. The IORA Summit in Jakarta this year also focused on increasing economic and strategic integration of the region. The Jakarta Concord agreed to  at this IORA meeting contains a commitment to enhance trade and investments in the region by (a) increasing intra IORA flow of goods, services and investments and (b) continuing regulatory reforms to promote competitiveness investments and ease of doing business. Therefore, let us make a start by implementing IORA Action Plan 2017-2027 recommendations on trade and investment proposals within the next four years. The plan envisages organizing capacity building and technical support for regional trade and investments with focus on facilitating and reducing barriers. Let this conference recommend to IORA the need for a credible strategy which will include:

• preventing protectionist trade measures
• implementing ease of doing business measures
• commitment to the WTO Trade Facilitation Agreement
• remove high tariffs – para tariffs and non tariff barriers over agreed time period.

Businesses in the Region must grow for intra-regional trade to develop. These Businesses require capital for expansion, which is a scarce commodity in the region. This is why I have called for the establishment of an Indian Ocean Development Fund. This Fund will make financial resources available to National Development Banks which will promote growth and expansion in the region by providing capital   for business expansion.

In Jakarta, IORA also emphasized on the Blue Economy of the Indian Ocean. While other oceans in the globe are experiencing a decline of its fish stocks, that trend is not visible in the Indian Ocean. As I speak today, many fishing fleets of countries, where fish trade is an industry continue to harvest fish stocks in the Indian Ocean. These fish stocks are of great and growing importance to the bordering countries for domestic consumption and export.

It is estimated that 40 % of the world offshore oil production comes from the Indian Ocean with large reserves of hydrocarbons being tapped in the offshore areas of Saudi Arabia, Iran, India and Western Australia. Beach sands rich in heavy minerals and offshore placer deposit are actively excavated by Sri Lanka and other bordering countries. The recent UN Conference on Oceans concluded that preserving the health of the oceans is vital for the existence of mankind. In order to avoid irreversible damage to the Oceans, IORA must coordinate efforts by all member countries to address overfishing, pollution from offshore and land-based activities, biodiversity and habitat loss.

The creation of wealth and enhanced economic activity in the Indian Ocean region will not only bring benefits but will pose enormous security challenges to all of us. It is evident that most of the world’s armed conflicts are presently located in the Indian Ocean region. The waters of the Indian Ocean are also home to continually evolving strategic developments, including the rise of regional powers with nuclear capabilities. Conflicts in the Gulf, unrest in Iraq and Afghanistan, rise of violent extremism, growing incidents of piracy in and around the Horn of Africa loom over our region.  Given the rising conflicts in the Middle East and West Asia, world’s major powers have deployed substantial military forces in that part of  the Indian Ocean Region. 

In our view, the vital Sea Lanes of Communication in the Indian Ocean that fuels the global economy needs to be open for all and must be used for mutual benefit in a sustainable manner. It is essential to maintain peace and stability in the Indian Ocean Region which  ensures the right  of all states to the freedom of navigation and over flight. That unhindered lawful maritime commerce are conducted in keeping with current international laws and regulations. In terms of the Maritime build up taking place in the Indian Ocean, we see major players such as India, Australia, USA, China, and Japan envisaging various projects ranging from ocean excavation to placing remote sensors for ocean research. The latter three are increasing their forward naval presence.  Naval power will play a greater role in the regional maritime affairs. This will in turn lead to Naval power competitions, with plans for sea control as well as sea denials. 

As you would be aware, there are 10 critical choke points in the Indian Ocean that remain vulnerable to air and maritime encounters and possible terrorist attacks by non-state actors. Given the rising conflicts in the Middle East and West Asia, world’s major powers have deployed substantial military forces in the Indian Ocean Region. This trend will continue for some more time until  the world community gets together and resolve the causes for these conflicts. 

These traditional and modern security concerns are yet to be addressed internationally. Articles 34 – 56 of UNCLOS are insufficient to deal with the concerns that are related to freedom navigation in the Indian Ocean. Therefore, Sri Lanka intends working with all our partners in creating a shared vision for economic and security engagement. We remain convinced that a code of conduct that ensures the freedom of navigation in our Ocean will be an essential component of this vision.  In this regard, as I mentioned earlier Sri Lanka will soon commence exploratory discussions on convening a meeting to deliberate on a stable legal order on freedom of navigation and over flight in the Indian Ocean. Taking such a course of action will enable the littoral states to take the initiative to manage competition and determine our own fate. 

We believe that maintaining the Freedom of Navigation is of paramount importance for Sri Lanka to become the Hub in the Indian Ocean. It is only then that we can reap the full benefits of our strategic location as well as the availability of ports on all coasts and two international airports with good land connectivity. The air and sea connectivity will naturally promote logistics. Colombo will also be a center for offshore finance and business. Finally Sri Lanka will offer a competitive platform for manufacturing and services. 

Let me refer to Sri Lanka’s decision to develop its major sea ports, especially the Hambantota port which some claim to be a military base. I state clearly that Sri Lanka’s Government headed by President Maithripala Sirisena does not enter into military alliances with any country or make our bases available to foreign countries. We will continue military cooperation such as training, supply of equipment and taking part in joint exercises with friendly countries. Only the Sri Lanka Armed Forces have the responsibility for military activities in our Ports and Airports. We are also working with foreign private investors on the commercial development of our ports. 

In the absence of an effective multilateral trade agreements for the Indian Ocean region Sri Lanka has decided to enter into bilateral agreements with the neighboring littoral states. This is the only option available. We already have Free Trade Agreements with India and Pakistan. We are in the process of deepening our FTA with India to enable greater economic cooperation. We will finalize a FTA with Singapore and then to conclude similar trade agreements with other countries in the Bay of Bengal region. We are also negotiating an FTA with China. Furthermore, Sri Lanka is also entitled to EU’s concession granting GSP+ facilities.

Sri Lanka’s development as a shipping, air and business hub together with the above Trade Agreements will contribute to the development of intra regional trade. The Economic growth in our region can only be accelerated by increasing intra regional trade and infrastructure development thereby strengthening connectivity. This requires our governments to evolve strategies to expand the trade sectors of our national economies enabling the creation of regional value chain. 

Therefore let me reaffirm that Sri Lanka is open to trade with all our partners. We aim to become as in the past, a destination of choice for all those looking to tap in to the potential of the Indian Ocean. We intend taking a leading role in initiating a legal order in the Indian Ocean to ensure freedom of navigation. We look forward to engaging  with all interested Littoral states in creating  a “policy framework to promote intra regional trade within a time line” so that economic activity in the Indian Ocean region can be enhanced. It is our belief that if we all work for these common objectives, sustainable peace and prosperity in our region can be undoubtedly achieved. I wish you all a successful conference and a great stay in Colombo.

Thank you.