Singapore firms bullish on news of Sri Lanka FTA

This article is more than 12 months old

Singapore businesses said they are bullish about the Sri Lanka market and expect to benefit considerably from a free trade agreement (FTA) that both countries will sign today.

One area they have high hopes for is tariff reduction, as imported goods sometimes face tariffs of up to 60 per cent to 80 per cent.

Details of the deal will be unveiled after its signing, witnessed by Sri Lanka President Maithripala Sirisena and Singapore Prime Minister Lee Hsien Loong, who is on an official visit.

But amid cheers, a backlash against the FTA by domestic groups indicates a protectionist reflex that Singapore firms say is one of the challenges they have to deal with.

"Sri Lanka is a promising market for Singapore small and medium-sized enterprises. (It offers) compelling business opportunities... at sizes digestible by Singapore companies," said Singapore Business Federation chairman Teo Siong Seng, who is leading a delegation in conjunction with Mr Lee's visit.

Referring to the government led by Prime Minister Ranil Wickremesinghe that took office in 2015, he added: "The new pro-business government has been working hard to attract investments and introduce reforms."

One boon from the country's open stance is better infrastructure due to investment from China. Mr Malaravan Ron, Singapore owner of capsule hotel Star Anise, which opened in Colombo in 2016, said the drive from Colombo to nearby city Galle now takes 2½ hours, down from 6 hours.

Singapore-based Pastamania is also expanding into Sri Lanka. Mr Wilson Lim, executive director at Commonwealth Capital, which owns the restaurant's franchise, said Sri Lanka's higher per capita gross domestic product than India makes it an ideal springboard into the region.

If the FTA can lower the existing high tariffs on food, it will be a boost for Singapore firms, he added.