{"id":189239,"date":"2018-03-29T07:23:55","date_gmt":"2018-03-29T01:53:55","guid":{"rendered":"https:\/\/www.colombotelegraph.com\/?p=189239"},"modified":"2018-03-31T23:53:40","modified_gmt":"2018-03-31T18:23:40","slug":"slsfta-what-it-means-for-sri-lanka","status":"publish","type":"post","link":"https:\/\/www.colombotelegraph.com\/index.php\/slsfta-what-it-means-for-sri-lanka\/","title":{"rendered":"SLSFTA &#038; What It Means For Sri Lanka"},"content":{"rendered":"<p class=\"p1\"><span class=\"s1\"><b>By Arusha Cooray<span class=\"Apple-converted-space\">\u00a0&#8211;<\/span><\/b><\/span><\/p>\n<div id=\"attachment_189240\" style=\"width: 130px\" class=\"wp-caption alignright\"><a href=\"https:\/\/www.colombotelegraph.com\/wp-content\/uploads\/2018\/03\/Dr.-Arusha-Cooray.jpg\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-189240\" class=\"size-full wp-image-189240\" src=\"https:\/\/www.colombotelegraph.com\/wp-content\/uploads\/2018\/03\/Dr.-Arusha-Cooray.jpg\" alt=\"\" width=\"120\" height=\"125\" \/><\/a><p id=\"caption-attachment-189240\" class=\"wp-caption-text\">Dr. Arusha Cooray<\/p><\/div>\n<p class=\"p4\"><span class=\"s1\">Sri Lanka and Singapore signed the Sri Lanka-Singapore Free Trade Agreement (SLSFTA) on 23<\/span><span class=\"s2\"><sup>rd<\/sup><\/span><span class=\"s1\"> January, 2018. This is a comprehensive free trade agreement which covers goods, services, e-commerce, telecommunications, foreign direct investment, intellectual property and public procurement. Under the SLSFTA, Sri Lanka will progressively dismantle <\/span><span class=\"s3\">tariffs on 80 per cent of Singapore&#8217;s exports over the next 15 years. <\/span><span class=\"s1\"> This agreement is a significant step forward towards establishing stronger economic and political ties between the two nations. <\/span><\/p>\n<p class=\"p4\"><span class=\"s1\">In 2017, Sri Lanka\u2019s bilateral trade with Singapore was valued at $2.7 billion, accounting for approximately 2.5% of GDP, while Singapore\u2019s trade with Sri Lanka was 0.5% of Singapore\u2019s GDP.<\/span><span class=\"s3\"> Singapore is Sri Lanka\u2019s eighth largest trading partner, while Sri Lanka is Singapore&#8217;s 37<\/span><span class=\"s4\"><sup>th<\/sup><\/span><span class=\"s3\"> largest trading partner.\u00a0<\/span><span class=\"s1\"> It is anticipated that this agreement will increase the volume and value of Sri Lanka\u2019s exports through new production possibilities, and access to new markets. The SLSFTA additionally has the scope for enhancing competitiveness through reduction in input prices, and access to finance. Sri Lanka currently runs a trade deficit with Singapore. This agreement will potentially help Sri Lanka to narrow its trade deficit with Singapore. Sri Lanka\u2019s exports to Singapore are currently dominated by trade in goods. The SLFTA also presents opportunities for expansion in services. <\/span><span class=\"s3\">Sri Lanka\u2019s overall trade in services is relatively low (13% of GDP), compared to Singapore\u2019s trade in services, 103.4% of GDP in 2016.<\/span> <span class=\"s1\">Despite the rapid increase in Sri Lanka\u2019s service exports such as tourism, tourist arrivals from Singapore comprise only 0.93% of total tourist arrivals to Sri Lanka. The SLSFTA thus has the potential for broadening trade in services including tourism, telecommunications, transportation, education, hospitality, health and finance among other areas. <\/span><\/p>\n<p class=\"p4\"><span class=\"s1\">The removal of tariffs will further increase business opportunities for local enterprises, providing greater access to import and export markets, and entry into new markets. Increased competition and access to a wider variety of markets will also benefit consumers through greater choice and lower prices. Sri Lanka however, needs to be cautious of not becoming a dumping ground for imports coming from third party (non-SLSFTA) countries attempting to evade tariffs through Singapore.<\/span><\/p>\n<p class=\"p4\"><span class=\"s3\">Turning to investment, Singapore is Sri Lanka\u2019s fourth largest investor, preceded by China, Hong Kong, and India. FDI into Sri Lanka from Singapore accounted for 5.3% of GDP over 2014-17. While FDI into Sri Lanka has exhibited a rising trend, Sri Lanka attracts disproportionately only a very small proportion of FDI (US$ 0.09 billion in 2015) compared to its regional counterparts (Singapore US $65 billion in 2015). <\/span><span class=\"s1\">Despite the fact that a number of <\/span><span class=\"s3\">Singapore companies have set up affiliates in Sri Lanka in sectors including food and beverage processing (Prima Ceylon Pvt Ltd), infrastructure development (<\/span><span class=\"s1\">Shing Kwan Group, Next Story Group), construction (Woh Hup, Ley Choon), security (Certis Cisco)<\/span><span class=\"s3\"> among others, the greater predictability provided by the SLFTA presents possibilities for further integration through financial markets and capital flows. <\/span><span class=\"s1\"> FDI inflows will deliver significant gains for Sri Lanka in the form of technological know-how, innovation and investment in research and development. The e<\/span><span class=\"s3\">ntry of foreign affiliates into the downstream sector can also create an increased demand for local inputs. While FDI inflows can <\/span><span class=\"s1\">lead to skill development and productivity increases for local firms, Sri Lanka should be mindful of not engaging in harmful bidding wars for FDI, which can lead to a \u2018race<\/span><span class=\"s3\"> to the bottom,\u2019 eroding the country\u2019s tax base and channelling public expenditures away from priority sectors. <\/span><\/p>\n<p class=\"p4\"><span class=\"s1\">The SLSFTA is Sri Lanka\u2019s first treaty which covers government procurement, permitting Singapore companies and state-owned enterprises to bid for projects. This agreement can help the government to cut down on spending by increasing supply sources of goods and services and create greater competition for government procurement. The agreement also provides a basis for strengthening bilateral cooperation mechanisms on electronic accreditation procedures and paperless trading, and improving mutual commitments on intellectual property.<\/span><\/p>\n<p class=\"p4\"><span class=\"s1\">Trade agreements also have an important bearing on labour standards. Currently, of Sri Lanka\u2019s total labour migrants, 0.5% are employed in Singapore. This agreement can generate greater employment opportunities for nationals of both countries, and lead to improvements in labour standards through the exchange of best practices. <\/span><\/p>\n<p class=\"p4\"><span class=\"s3\">While the SLSFTA provides an important platform for pursuing trade negotiations with other countries in the region, and <\/span><span class=\"s1\">mechanism for accession to the Regional Comprehensive Economic Partnership, t<\/span><span class=\"s3\">he expected effects of the SLSFTA will depend to a great degree on the adoption of complementary institutional structures and policies. Currently Sri Lanka ranks 111 on a scale of 1 \u2013 190 on the World Bank\u2019s Ease of Doing Business Index as opposed to Singapore, which ranks 2 on the Index (where 1 stands for high ease; securing construction permits, registering property, obtaining an electricity connection etc.). Despite the fact that government regulation is important for protecting the needs of local industry, increased t<\/span><span class=\"s1\">ransparency and government accountability are necessary prerequisites for increasing effici<\/span><span class=\"s3\">ency in public procurement and fostering entrepreneurial activity.<\/span><span class=\"s1\"> While the benefits of FDI include the transfer of new technology, managerial skills, and innovation, FDI inflows do not automatically ensure technology spill-overs.<\/span><span class=\"s3\">\u00a0<\/span><span class=\"s1\">Studies suggest that FDI will have positive spill-over effects on an economy only in the presence of a minimum threshold of human capital, well developed infrastructure facilities, and strong economic fundamentals. Therefore, in order to attract larger FDI inflows and achieve the full potential of FDI, sizable investments in infrastructure and skill development are required over the medium term. The experience of Taiwan and Korea highlight the significance of local technology creation led by the government which resulted in technology diffusion to local firms and positive FDI spill-overs. Similarly, fiscal consolidation and monetary policy focusing on maintaining low and stable inflation are important pre-requisites for Sri Lanka\u2019s success to not only realizing the full benefits of the agreement, but also future tariff negotiations with other nations at a bilateral, and broader regional level. M<\/span><span class=\"s3\">aximizing the benefits of this agreement will thus require increased policy coordination not only between the two countries, but also within Sri Lanka, between policy makers, the private sector and the government.<\/span><\/p>\n<p class=\"p4\"><em>*Arusha Cooray holds a PhD in Economics from the University of New South Wales. She is currently lecturing at the University of New South Wales.\u00a0She has also held academic positions at the\u00a0 University of Sydney, Victoria University,\u00a0University of Nottingham Malaysia,\u00a0University of Wollongong, University of Tasmania, Macquarie University and the\u00a0University of Colombo.\u00a0She is a fellow of the Centre for Poverty Analysis Sri Lanka and Centre for Applied\u00a0Macroeconomic Analysis, Australian National University. Her\u00a0 research interests lie in the area of applied macroeconomics<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p> [&hellip;]<\/p>\n","protected":false},"author":284,"featured_media":189240,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,46,8],"tags":[],"class_list":["post-189239","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-colombotelegraph","category-constitutional-reforms","category-editorial"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>SLSFTA &amp; What It Means For Sri Lanka - Colombo Telegraph<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.colombotelegraph.com\/index.php\/slsfta-what-it-means-for-sri-lanka\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"SLSFTA &amp; What It Means For Sri Lanka - Colombo Telegraph\" \/>\n<meta property=\"og:description\" content=\"[&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.colombotelegraph.com\/index.php\/slsfta-what-it-means-for-sri-lanka\/\" \/>\n<meta property=\"og:site_name\" content=\"Colombo Telegraph\" \/>\n<meta property=\"article:published_time\" content=\"2018-03-29T01:53:55+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2018-03-31T18:23:40+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.colombotelegraph.com\/wp-content\/uploads\/2018\/03\/Dr.-Arusha-Cooray.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"120\" \/>\n\t<meta property=\"og:image:height\" content=\"125\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Arusha Cooray\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Arusha Cooray\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"6 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.colombotelegraph.com\/index.php\/slsfta-what-it-means-for-sri-lanka\/\",\"url\":\"https:\/\/www.colombotelegraph.com\/index.php\/slsfta-what-it-means-for-sri-lanka\/\",\"name\":\"SLSFTA & What It Means For Sri Lanka - Colombo Telegraph\",\"isPartOf\":{\"@id\":\"https:\/\/www.colombotelegraph.com\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.colombotelegraph.com\/index.php\/slsfta-what-it-means-for-sri-lanka\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.colombotelegraph.com\/index.php\/slsfta-what-it-means-for-sri-lanka\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.colombotelegraph.com\/wp-content\/uploads\/2018\/03\/Dr.-Arusha-Cooray.jpg\",\"datePublished\":\"2018-03-29T01:53:55+00:00\",\"dateModified\":\"2018-03-31T18:23:40+00:00\",\"author\":{\"@id\":\"https:\/\/www.colombotelegraph.com\/#\/schema\/person\/408b6d1acad2b792b9cd8caf80fb566b\"},\"breadcrumb\":{\"@id\":\"https:\/\/www.colombotelegraph.com\/index.php\/slsfta-what-it-means-for-sri-lanka\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.colombotelegraph.com\/index.php\/slsfta-what-it-means-for-sri-lanka\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.colombotelegraph.com\/index.php\/slsfta-what-it-means-for-sri-lanka\/#primaryimage\",\"url\":\"https:\/\/www.colombotelegraph.com\/wp-content\/uploads\/2018\/03\/Dr.-Arusha-Cooray.jpg\",\"contentUrl\":\"https:\/\/www.colombotelegraph.com\/wp-content\/uploads\/2018\/03\/Dr.-Arusha-Cooray.jpg\",\"width\":120,\"height\":125,\"caption\":\"Dr. Arusha Cooray\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.colombotelegraph.com\/index.php\/slsfta-what-it-means-for-sri-lanka\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.colombotelegraph.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"SLSFTA &#038; What It Means For Sri Lanka\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.colombotelegraph.com\/#website\",\"url\":\"https:\/\/www.colombotelegraph.com\/\",\"name\":\"Colombo Telegraph\",\"description\":\"In journalism truth is a process\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.colombotelegraph.com\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.colombotelegraph.com\/#\/schema\/person\/408b6d1acad2b792b9cd8caf80fb566b\",\"name\":\"Arusha Cooray\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.colombotelegraph.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/086ba0ddb8fb20f3d26f6aca27deea4e92790f5998ac7c2fd95d347e058ea9aa?s=96&d=identicon&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/086ba0ddb8fb20f3d26f6aca27deea4e92790f5998ac7c2fd95d347e058ea9aa?s=96&d=identicon&r=g\",\"caption\":\"Arusha Cooray\"},\"url\":\"https:\/\/www.colombotelegraph.com\/index.php\/author\/arushacoo\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"SLSFTA & What It Means For Sri Lanka - Colombo Telegraph","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.colombotelegraph.com\/index.php\/slsfta-what-it-means-for-sri-lanka\/","og_locale":"en_US","og_type":"article","og_title":"SLSFTA & What It Means For Sri Lanka - Colombo Telegraph","og_description":"[&hellip;]","og_url":"https:\/\/www.colombotelegraph.com\/index.php\/slsfta-what-it-means-for-sri-lanka\/","og_site_name":"Colombo Telegraph","article_published_time":"2018-03-29T01:53:55+00:00","article_modified_time":"2018-03-31T18:23:40+00:00","og_image":[{"width":120,"height":125,"url":"https:\/\/www.colombotelegraph.com\/wp-content\/uploads\/2018\/03\/Dr.-Arusha-Cooray.jpg","type":"image\/jpeg"}],"author":"Arusha Cooray","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Arusha Cooray","Est. reading time":"6 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.colombotelegraph.com\/index.php\/slsfta-what-it-means-for-sri-lanka\/","url":"https:\/\/www.colombotelegraph.com\/index.php\/slsfta-what-it-means-for-sri-lanka\/","name":"SLSFTA & What It Means For Sri Lanka - Colombo Telegraph","isPartOf":{"@id":"https:\/\/www.colombotelegraph.com\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.colombotelegraph.com\/index.php\/slsfta-what-it-means-for-sri-lanka\/#primaryimage"},"image":{"@id":"https:\/\/www.colombotelegraph.com\/index.php\/slsfta-what-it-means-for-sri-lanka\/#primaryimage"},"thumbnailUrl":"https:\/\/www.colombotelegraph.com\/wp-content\/uploads\/2018\/03\/Dr.-Arusha-Cooray.jpg","datePublished":"2018-03-29T01:53:55+00:00","dateModified":"2018-03-31T18:23:40+00:00","author":{"@id":"https:\/\/www.colombotelegraph.com\/#\/schema\/person\/408b6d1acad2b792b9cd8caf80fb566b"},"breadcrumb":{"@id":"https:\/\/www.colombotelegraph.com\/index.php\/slsfta-what-it-means-for-sri-lanka\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.colombotelegraph.com\/index.php\/slsfta-what-it-means-for-sri-lanka\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.colombotelegraph.com\/index.php\/slsfta-what-it-means-for-sri-lanka\/#primaryimage","url":"https:\/\/www.colombotelegraph.com\/wp-content\/uploads\/2018\/03\/Dr.-Arusha-Cooray.jpg","contentUrl":"https:\/\/www.colombotelegraph.com\/wp-content\/uploads\/2018\/03\/Dr.-Arusha-Cooray.jpg","width":120,"height":125,"caption":"Dr. Arusha Cooray"},{"@type":"BreadcrumbList","@id":"https:\/\/www.colombotelegraph.com\/index.php\/slsfta-what-it-means-for-sri-lanka\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.colombotelegraph.com\/"},{"@type":"ListItem","position":2,"name":"SLSFTA &#038; What It Means For Sri Lanka"}]},{"@type":"WebSite","@id":"https:\/\/www.colombotelegraph.com\/#website","url":"https:\/\/www.colombotelegraph.com\/","name":"Colombo Telegraph","description":"In journalism truth is a process","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.colombotelegraph.com\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.colombotelegraph.com\/#\/schema\/person\/408b6d1acad2b792b9cd8caf80fb566b","name":"Arusha Cooray","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.colombotelegraph.com\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/086ba0ddb8fb20f3d26f6aca27deea4e92790f5998ac7c2fd95d347e058ea9aa?s=96&d=identicon&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/086ba0ddb8fb20f3d26f6aca27deea4e92790f5998ac7c2fd95d347e058ea9aa?s=96&d=identicon&r=g","caption":"Arusha Cooray"},"url":"https:\/\/www.colombotelegraph.com\/index.php\/author\/arushacoo\/"}]}},"jetpack_featured_media_url":"https:\/\/www.colombotelegraph.com\/wp-content\/uploads\/2018\/03\/Dr.-Arusha-Cooray.jpg","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.colombotelegraph.com\/index.php\/wp-json\/wp\/v2\/posts\/189239","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.colombotelegraph.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.colombotelegraph.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.colombotelegraph.com\/index.php\/wp-json\/wp\/v2\/users\/284"}],"replies":[{"embeddable":true,"href":"https:\/\/www.colombotelegraph.com\/index.php\/wp-json\/wp\/v2\/comments?post=189239"}],"version-history":[{"count":3,"href":"https:\/\/www.colombotelegraph.com\/index.php\/wp-json\/wp\/v2\/posts\/189239\/revisions"}],"predecessor-version":[{"id":189337,"href":"https:\/\/www.colombotelegraph.com\/index.php\/wp-json\/wp\/v2\/posts\/189239\/revisions\/189337"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.colombotelegraph.com\/index.php\/wp-json\/wp\/v2\/media\/189240"}],"wp:attachment":[{"href":"https:\/\/www.colombotelegraph.com\/index.php\/wp-json\/wp\/v2\/media?parent=189239"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.colombotelegraph.com\/index.php\/wp-json\/wp\/v2\/categories?post=189239"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.colombotelegraph.com\/index.php\/wp-json\/wp\/v2\/tags?post=189239"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}