S’pore to sign free trade agreement with Sri Lanka

This article is more than 12 months old

Singapore will sign a free trade agreement (FTA) with Sri Lanka this week - its 13th bilateral deal and, significantly, its first since the Trans-Pacific Partnership (TPP) faced a setback last year when the United States withdrew from it.

The signing will be witnessed by Prime Minister Lee Hsien Loong and his host, President Maithripala Sirisena, tomorrow.

Mr Lee arrives today in the capital city Colombo, kicking off a three-day official visit.

While details about the FTA have not been made public, analysts and businesses said they expect a boost in trade between the two economies and greater access for Singapore firms to the growing market.

The deal, they noted, also signals Singapore's determination to keep up efforts to ink bilateral FTAs, at a time when multilateral deals like the TPP are in doubt, amid a rising protectionist tide in many countries.

"Sri Lanka is a promising market and a fast-growing economy. It's also a beautiful country with great tourism potential," said Maybank Kim Eng economist Chua Hak Bin.

"On the whole, this FTA is likely to open up huge opportunities for Singapore companies."

The size of Sri Lanka's economy - US$81 billion (S$106.9 billion) in 2016 - is just over a quarter of Singapore's, but its annual growth has averaged 6.2 per cent since the end of the civil war in 2009.

Its population is also close to four times that of Singapore.

Trade between the two countries last year was $2.7 billion, up from $2.05 billion in 2015.

With China pouring billions into the South Asian island country, investing in, among other things, a port and a financial centre, the FTA could also help Singapore benefit indirectly from the fruits of the Belt and Road Initiative there, said CIMB Private Bank economist Song Seng Wun.

Singapore Business Federation chairman Teo Siong Seng called the FTA "a good step forward" and said it will help increase Sri Lanka's awareness of Singapore companies.

He called on the Government to consider participating in infrastructure projects in Sri Lanka, and bringing Singapore firms along.

"Establishing a special economic zone for Singapore companies will also be beneficial," added Mr Teo, who will lead a business delegation to Sri Lanka, in conjunction with Mr Lee's visit.

During his visit, PM Lee will be hosted to an official lunch by Mr Sirisena, and a dinner by Prime Minister Ranil Wickremesinghe.

He will also receive a courtesy call from Mr R. Sampanthan, leader of the opposition.

Mr Lee will be accompanied by Mrs Lee, Foreign Minister Vivian Balakrishnan, Minister for Trade and Industry (Industry) S. Iswaran, and MPs Liang Eng Hwa and Saktiandi Supaat. - ELGIN TOH