Harsha praises ETCA in Singapore


Deputy Foreign Minister Dr. Harsha de Silva has said that India and Sri Lanka hoped to finalise an Economic Technology Cooperation Agreement (ETCA) by 2017. The ETCA would enhance the scope of existing Indian Sri Lanka FTA to extend freer movement of goods and services with the added emphasis of cooperation in the development of technology and in investments, Dr de Silva said.

The Deputy Minister was addressing a Public Forum organized by the Institute of South Asian Studies, National University of Singapore, 9th January 2017

The Minister said that ETCA would provide an impetus to the existing synergies and has the potential to promote rapid growth of the sub regional economy between Sri Lanka and the five South Indian states, that is Tamil Nadu, Kerala, Karnataka, Andra and Telengana which today accounts for and economy of 500 billion dollars. 

The following are excerpts of his speech: "We are witnessing momentous changes in the structure of the global economy brought about by the relentless winds of globalization and the current manifestation of Western neo-liberalism.

It is reasonable to be concerned at the rapid pace of changes, and what it means for our economies.

The effect of Brexit and (and other possible exits from the EU) and the trade policies of the US-President-Elect will take some months, even years, to manifest.

And many will be observing with interest the interactions between China and the incoming US Administration.

It is in this context that many say that "Uncertainty is the new normal in business life". Those countries and organizations which thrive in an era of uncertainty will be those who seize the opportunities presented by these uncertainties and take actions that can avert disasters and promote confidence and recovery.

So the emerging and uncertain global dynamics will present both challenges and opportunities to us in the Indian Ocean.

The Government of Sri Lanka has a clear vision of what it wants Sri Lanka to be in the world today.

We are repositioning Sri Lanka to maximise our relationships with both our historic and new trading partners to leverage our geo-strategic position to make us a hub of the Indian Ocean as well as a transshipment port for the Bay of Bengal trade.

To fully tap this potential, Sri Lanka is engaging in initiatives with regional players who have major economic stakes in the Indian Ocean.  

Sri Lanka is now pushing towards further integrating with the world by undertaking reforms to facilitate trade, and encourage productive foreign investment.

We have set a target of boosting exports to US$ 20 billion by 2020; an increase in exports of nearly 80% during 2016-2020.

It is unfortunate that in the last decade or so the previous government in Sri Lanka lost its focus on exports. Exports to GDP fell from 34% of GDP to less than 14%. So, it is critical that we implement our plans to leverage on our competitive advantages as now planned.

Unlike ASEAN which provides its members with a largely stable and peaceful regional environment to focus on economic development at formative stages of their countries’ development, SAARC has not been able to achieve the same level of regional integration.

These geo-political realities require that Sri Lanka build strong bilateral relations with Bay of Bengal members of ASEAN in addition to its fellow South Asian members. In addition, we cannot be content with our traditional markets, and we must look beyond for new opportunities.

We are also negotiating a FTA with Singapore. Singapore already has a Comprehensive Economic Partnership Agreement (CEPA) with India. Therefore, we believe that by next year the Singapore-India (CEPA), the Indo-Lanka ETCA and the Sri Lanka-Singapore FTA will enable the southern sub region of South Asia and Singapore to establish a tripartite arrangement for trade and investments. 

Sri Lanka is supporting the One Belt - One Road economic initiative, in line with the major historical role we played in the Maritime Silk Route. This will consolidate our position to become the Hub of the Indian Ocean while further integrating us with the Asian markets. 

Chinese investments will be primarily directed to industrialization and further development of the Hambantota Air Sea Hub in southern Sri Lanka.

In addition a 1.4b dollar reclamation is now underway adjacent to the city of Colombo for the creation of a 560 acre Financial City, under English law, to fill the vacuum for offshore financial service between Singapore and Dubai.  

Chinese investors have made significant commitments to invest equity in the China-debt strapped Hambantota port and the Mattala international airport the previous Government built; now as PPP ventures.

Our government is currently negotiating a 1.3 billion USD lease agreement with CMPort of China to lease the currently empty deep sea port to integrate with the proposed industrial zone.

It was just this Saturday we inaugurated the 15,000 acre, that is 50 square kilometer ‘Sri Lanka China Logistics and Industrial Zone’ to become a serious player in global production networks.

It was revealed at the inauguration that Chinese investors were ready to bring in 5 billion USD in investments in to the zone in just the next 3 years.

The economic cooperation with Japan is as important to us. We are grateful that four decades of Japanese donor assistance has made a significant impact on our economic and social developments in Sri Lanka.

The Japanese Prime Minister has also appointed a senior official to especially coordinate Japanese Sri Lanka Joint Comprehensive Partnership Programme that was entered in to last year.

After some lull, Japan is once again also getting involved in several major infrastructure projects in Sri Lanka including Light Rail and expressways.

Many may not be aware that Sri Lanka also is home to the second largest natural harbor in the world in Trincomalee; said to be one of the finest deep sea harbors in the world.

In fact, there have been many sea battles to control the harbour. The Portuguese, Dutch and the English have each held it in turn. In 1942 the Japanese Imperial Navy attacked Trinco harbour and sunk three British warship anchored there.

While it has a large 99-unit tank farm built by the British during the war and mostly unused, except for some tanks by the Lanka Indian Oil Company, we have now initiated action to develop the port centered the larger Trinco development zone.

The government is working with India and Japan to develop Trincomalee with Surbana Jurong of Singapore already being contracted to draw up a city master plan.

The proposed container terminal at the Trincomalee Port will serve trade in India’s east coast as well as Bangladesh and Myanmar.

With the strong interest in utilizing the zones along the Southwest Corridor centered around the Colombo port and the Western Megapolis; logistics and industrial zone centered around the Hambantota air-sea hub and the North East corridor centered around the Trincomlee port development by investors from China, Korea, and Japan and also likely from India, we plan to create an export market focused on Europe, China, Japan and USA and the crescent of markets around the Indian Ocean.

Among the Middle East, Iran, Afghanistan, Pakistan, India, Bangladesh, Myanmar, Thailand, Malaysia, Singapore and Indonesia there exists a fast-growing population currently of over 2 billion people. This combined market has the potential of 3 billion consumers by 2050.

Going forward, our development strategy will be aimed at capturing trading opportunities within these identified Indian Ocean markets by pursuing trade liberalisation agreements with their governments.

We have already made the application to the European Union to regain the GSP+ facility for preferential access to the single market and are hopeful of an agreement by next year. European Commission has expressed their confidence that the GSP Plus trade concession would be given favourable consideration.

A concerted effort is also underway to improve the business climate domestically. Far-reaching governance reforms that are rules based have made investment and business more secure and certain.

Sri Lanka is taking measures to increase investor’s ease of doing business more directly. For example, we are bringing a number of government agencies together to create a one-stop investment and trade-facilitation shop under the Agency for Development.

We are reviewing our laws and regulations to create a simple rules-based business environment: including those related to land ownership, as well as tariffs and para-tariffs. We have adopted policies that enable private enterprise to thrive: for example, Sri Lanka has a simple 3 tier tax rate with the lowest at 14 percent. Together these reforms – alongside our educated workforce and solid infrastructure – are making Sri Lanka the most attractive, secure and competitive investment destination in the region.

In conclusion, I would like to point out that those of us who are geographically located in the Indian Ocean region have a primary interest in the security of the Indian Ocean, which is directly linked to our economies.

Therefore, managing competition and strengthening cooperation would be essential given both these economic and strategic security factors which have a direct impact on the future of this region. There will always be tension, such as between large countries and their smaller neighbors.


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