COLOMBO (EconomyNext) – Sri Lanka’s new government wants to have more liberalized economic relations with India and supply better quality professionals to serve regional markets, while exploiting its distinct ‘economic location’ and efficiency, an official said.
"We have to live together and therefore we have to work together," Eran Wickremeratne, Deputy Minister of Investment Promotion and Highways said.
"Our future is tied with yours," he told the third Indo Ceylon Economic Dialogue forum organized by the Federation of Chambers of Commerce and Industry of Sri Lanka and PHD Chamber of Commerce and Industry, based in New Delhi, India.
The Indo-Lanka Free Trade Agreement (FTA) signed in 1998, despite all obstacles, has made India the third largest market today for Sri Lankan exports after Europe and the United States.
"There are many shortcomings in the FTA but duty free access in some areas certainly has helped," Wickremeratne said.
"We want to see a more evening out of our trade relationship with India. We want to expand this relationship from an FTA to a Comprehensive Economic Partnership Arrangement (CEPA)."
In 2008 talks on a CEPA stalled because of problems in non-tariff barriers, standards, certification and several layers of government and administrative obstacles in the trade between the two neighbours, Wickremeratne said.
"We want to see a more liberalized environment – liberalised both in services and investments between the two countries. We welcome investments from India, and internationally."
Wickremeratne said the former Mahinda Rajapaksa regime’s economic model was largely based on debt finance.
"This government’s model is based on investment and exports. Therefore we welcome investments.
"The future of investments will not primarily rely on tax incentives. They will rely on Sri Lanka’s unique selling propositions – such as its economic location.
"We have a historical advantage in shipping and sea routes. We have efficient port in Colombo and more capacity in southern Sri Lanka now."
Wickremeratne said the government also wants to make use of the island’s better trade facilitation and human resource base compared with the region.
"We also want to provide efficiency as part of our unique selling proposition – from ports to bureaucracy. Over the next few years our government will invest heavily in the public service to make Sri Lanka a much more pleasant place and improve ease of doing business."
Apart from using the island’s ‘economic location and efficiency, the government also wants to "add effort to whatever we are doing," Wickremeratne said.
"We will provide better human resources for the markets in the area. The government is committed to raising spending on education from 1.6 percent of Gross Domestic Product to six percent of GDP.
"Now our spending on education is even lower than our neighbours in South Asia. But our eyes are set on higher goals."
The government is looking at Europe and New Zealand where spending on education is around 5-7 percent of GDP.
"That’s the direction in which we will go over the next few years."