COLOMBO (EconomyNext) – More Chinese firms are showing interest in investing in Sri Lanka which is also set to join the Asian Investment and Infrastructure Bank at China’s invitation, the foreign affairs ministry said.
"With the new government’s commitment to reforms, Chinese firms that had not taken an interest in Sri Lanka are now exploring opportunities on the island," a statement said after President Maithripala Sirisena’s state visit to China.
"Sri Lanka also accepted China’s invitation to become a founding member of the Asian Investment and Infrastructure Bank, which will have a registered capital of 100 billion US dollars."
It said President Sirisena’s visit was a "significant success".
Sri Lanka’s economy will benefit from increased access to the vast Chinese market, greater foreign direct investment from Chinese firms, access to infrastructure financing through the Asian Infrastructure Investment Bank and Chinese development assistance.
The Ministry of Foreign Affairs noted that Sri Lanka and China agreed to work towards the successful conclusion of the proposed China-Sri Lanka Free Trade Agreement.
"Importantly, the new government appears to want to increase Sri Lanka’s level of preferential access highlighting the need to ‘recognize the asymmetries between the two economies’."
China, the world’s second largest economy, is likely to become a critical export market, especially as it moves away from an investment led to a consumption driven economy, the statement said.
"The FTA bodes especially well for the garments sector, which Sri Lanka Apparel claims employs over a million workers. In addition to trade, Sri Lanka and China agreed to further cooperate in the tourist sector."
The visit also enabled Sri Lanka to access to capital and expertise, the statement said. As Chinese firms start expanding abroad, Chinese foreign direct investments in Sri Lanka are rising dramatically albeit from a low base.
"During the visit the Sri Lankan government emphasized the new government’s commitment to establishing a rule based investment environment through instituting reforms that ensure transparency and the rule of law."