SINGAPORE: Negotiations for a Sri Lanka-Singapore Free Trade Agreement (SLSFTA) are underway, the Ministry of Trade and Industry (MTI) said on Monday (Jul 18).
Minister for Trade and Industry (Industry) S Iswaran and his counterpart, Minister for Development Strategies and International Trade Malik Samarawickrama, signed a joint statement to officially launch the negotiations.
The signing was witnessed by Prime Minister Lee Hsien Loong and Sri Lanka Prime Minister Ranil Wickremesinghe.
"With this free trade agreement in place, we believe that we can substantially increase our volume of exports into Singapore,” said Mr Samarawickrama. “At the same time, we would like to welcome the industrialists in Singapore to set up their manufacturing plants in Sri Lanka and make use of the resources that we have - which include a highly educated and skilled workforce."
Said Mr Iswaran: “The launch of the SLSFTA negotiations signals the commitment of both governments to promote stronger economic ties and enhance trade flows by lowering barriers of entry and providing increased market access for Singapore and Sri Lankan companies.
"Amidst an uncertain economic environment, Sri Lanka offers good potential for Singapore companies looking to tap opportunities in new markets."
Mr Iswaran added: "Several of our companies have already expressed their keen interest in areas such as urban planning, infrastructure planning and development in the tourism sector and also in certain aspects of manufacturing. So the potential is there.
"I think the free trade agreement, once concluded, will pave the way by lowering barriers to trade, and by creating greater confidence for our companies to undertake investment activities. And I think that in turn will be supported by the people-to-people ties that we have between the two countries."
SINGAPORE, SRI LANKA SHARE WARM RELATIONS: PM LEE
Mr Wickremesinghe is in Singapore for an official visit from Jul 17 to 19. This is his first official visit to Singapore since he was elected as Prime Minister last year. Mr Lee said Singapore and Sri Lanka share historical links and warm relations.
Prime Minister Lee Hsien Loong and his Sri Lankan counterpart Ranil Wickremesinghe speaking at the Istana in Singapore. (Photo: Ranil Wickremesinghe's Facebook page)
Mr Lee added that there are opportunities to further deepen bilateral relations as Sri Lanka opens up its economy to trade and foreign investment, among other reforms.
“The Prime Minister shared his many ideas on areas like civil service training, vocational education and urban planning and we've just signed MOUs in these three areas,” said Mr Lee. “So we welcome the opportunities to work more deeply together."
“I also hope to build on our long cultural and people-to-people linkages. The cultural cooperation MOU will open up new opportunities for exchanges, especially to tap into Sri Lanka's deep and rich cultural heritage," he added.
“There's tremendous scope for us to work together in a win-win situation, because we have to realise that the next centre of growth is going to be the Indian Ocean,” said Mr Wickremesinghe. “Therefore, it is necessary that Sri Lanka and Singapore work together, and we work together not only on economic issues, but I think we must exchange our views on security and political developments."
During his trip, Mr Wickremesinghe also called on President Tony Tan Keng Yam.
Sri Lankan Prime Minister Ranil Wickremesinghe with Singapore President Tony Tan Keng Yam at the Istana in Singapore. (Photo: Ranil Wickremesinghe's Facebook page)
BILATERAL TREATIES TO INCREASE OPPORTUNITIES
In his speech at the South Asian Diaspora Convention 2016 that same day, Mr Iswaran said that there is demand for new and upgraded infrastructure across the South Asian region.
And while Singapore companies, such as Sembcorp and Prima Group, have already made inroads by investing in both India and Sri Lanka, he added that bilateral investment treaties are set to create more investment opportunities in the region.
For instance, the avoidance of double taxation agreements with South Asian partners serve to make investing in the region more attractive to investors in Singapore, he said.
"This network of economic connectivity agreements are an important foundation on which we can build the activities - not just on the infrastructure, but also deepening economic activity between Singapore and South Asia," said Mr Iswaran.
International Enterprise Singapore and the Ministry of Megapolis and Western Development of Sri Lanka also signed an agreement on Monday to collaborate on business development in Sri Lanka's Western Region Megapolis.
Bilateral trade between the two countries was S$2.05 billion in 2015, according to MTI, with local exports totalling S$1.9 billion that year, while Singapore's imports totalled S$146 million.
OPEN SKIES WILL HELP BUSINESSES PROSPER, TOURISM TO THRIVE: PM LEE
Speaking at a dialogue session held as part of the South Asian Diaspora Convention, Mr Lee called for more convenient air links between countries. He also spoke about deepening economic ties between Singapore and South Asia through bilateral and regional agreements.
"In a messy world, all sorts of non-compatible levels exist. In an ideal world, we will just have one multilateral deal under the WTO and everybody applies the same standard - it's global. But WTO has been working hard since 2001, the Doha round, nothing has happened or something has happened but really not very much," said Mr Lee.
He added: "We have to make progress. So the question is we have to make progress with like-minded countries doing what they can, and hopefully over time, more of such groupings add up together cumulatively to something which is second-best, but better than nothing.
"I think that the CEPA with India, the TPP with partners America and the rest and the RCEP with India, China and others, it's very messy. It means an awful lot of work for our trade negotiators. It means a lot of overhead for our businessmen who now have to understand what all the rules are and which applies under what circumstances, but I think it's something, it's better than nothing.
"When relations are growing, our air services never quite expand quickly enough. If we can open up and have open skies ideally, I think all the airlines will scramble to work hard, some of them will complain they are working too hard, but business will prosper, tourism will thrive and investments will thrive and I think that will make a big difference towards integration and globalisation for our countries."
"REGION CAN PROSPER IF SOUTH CHINA SEA TENSIONS ARE MANAGED"
Mr Lee also weighed in on disputes over the South China Sea, after the Permanent Court of Arbitration ruled last week that China has no historic rights to resources within the sea areas falling within the "nine-dash line".
He said territorial disputes over the South China Sea could upset the peace and prosperity that Southeast Asian countries enjoy, but the region can continue to develop and prosper if the tensions can be managed.
Mr Lee said that as China develops, the US has maintained a presence in Southeast Asia. It has helped to hold the peace, contributing to the economy and in terms of soft power.
He added that this has made a difference in the region, but tensions over the South China Sea could potentially affect this.
"The countries involved, who are parties to it, I think do not want it to cause a drastic upheaval in the status quo and do not want to collide, and are trying their best not to collide. But there are interests at stake and it's not so easy to resolve the problem. So if it can be managed and tensions kept down, and we just find ways to live and let live, then I think we can continue to develop and prosper," said Mr Lee.
"We've been in a similar position before, during the Cold War. Southeast Asia was on the frontline and it could have gone wrong, but fortunately the position held and we passed that phase, and sunshine broke out again and things were good for all of Southeast Asia. And we hope that we can maintain the position, but if it turns out that the clouds and the dark clouds come, we will have to find a way to navigate through the complexity," he added.