Scrapping trade barriers could double Sri Lankan exports to South Asia: World Bank
ECONOMYNEXT – Sri Lanka has the potential to more than double its exports to South Asia to 2.8 billion dollars from 1.2 billion dollars by overcoming trade barriers, a new World Bank report has said.
“Increased intraregional trade will provide a greater variety of goods and services at cheaper prices for Sri Lankan consumers, better access to inputs for producers and exporters, increased investment, export diversification and growth,” a statement said.
While South Asia is the world’s most rapidly growing region, it is also the world’s least integrated.
Man-made trade barriers have hampered intraregional connectivity and kept South Asian countries from maximizing their prospects, the World Bank said.
Trade within South Asia accounts for only 5 percent of the region’s total trade, compared for 50 percent in East Asia and the Pacific.
Sri Lanka’s exports to South Asia are equivalent to only 11 percent of its global exports.
The report, ‘A Glass Half Full: The Promise of Regional Trade in South Asia’, launched Monday, highlights four critical obstacles to regional trade – border tax distortions, nontariff barriers, connectivity costs, and trust deficits – and offers options for policymakers to address them.
The report helps to quantify commonly known benefits associated with a more integrated South Asia, saying the 1.6 billion dollars gap between the actual and potential value of Sri Lanka’s exports to South Asia is equivalent to 15 percent of Sri Lanka’s total global exports.
“Closing the gap will not only enhance but also help diversify Sri Lanka’s trade,” it said.
“There is evidence that Sri Lanka will benefit financially and improve its services sector and human resources if it removed trade barriers and invested in better connectivity,” says Idah Pswarayi-Riddihough, World Bank Country Director for Sri Lanka and the Maldives.
In addition to tariffs, para tariffs such as port and airport development levy and cess create an anti-export bias.
“Paratariffs more than double the average import tariff in Sri Lanka,” the report said.
Additionally, 44 percent of Sri Lanka’s imports are not provided concessional treatment under the South Asia Free Trade Agreement (SAFTA).
About 23 percent of its exports to South Asia suffer from the same non-concessional treatment. Non-tariff measures further increase the cost of imports.
(COLOMBO, 08 October 2018)