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| Sunday, 13 March 2005 |
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Entrepreneurs told: Exploit Lanka, Pakistan FTA by Gamini Warushamana Pakistan has called upon Sri Lankan entrepreneurs to make optimum use of the opportunities that have been opened under the Pakistan-Sri Lanka Free Trade Agreement (FTA). Pakistan's High Commissioner Bashir Wali Mohamad said that the agreement goes beyond a simple trade agreement and its scope covers investment opportunities as well. "I would urge you to visit Pakistan, individually as well as in delegations to see the unprecedented opportunities for investment and joint ventures. I am sure your Pakistani counterparts would be contemplating similar projects in Sri Lanka. That is the only way to fully exploit the vast potential of the FTA", he said. He was addressing the business community and journalists at a seminar organised by the National Chamber of Commerce of Sri Lanka (NCCSL). Bashir stressed the importance of interaction between the business communities of the two countries and free flow of economic and trade information. The banking sector should exploit the FTA. The Pakistan High Commissioner said that the thriving operations of three leading Pakistan commercial banks (Habib Bank Limited, Muslim Commercial Bank and Union Bank of Pakistan) in Sri Lanka reflect the economic environment that exists in the two countries. He invited the Sri Lankan banking sector to open branches in Pakistan to synergise the role of financial institutions to tap the new opportunities. Bashir said that Pakistan has taken several steps to further strengthen the bilateral economic relations between the two countries. Accordingly the session of the joint ministerial commission is being scheduled for the end of April and Pakistan's first single country exhibition will also be held to coincide with the session. Pakistan International Airlines has doubled its frequency of flights between Karachi and Colombo. The Pakistan government has opened a concessional export credit line for Sri Lankans to purchase plant and machinery from Pakistan. Director General of the Institute of Policy Studies Dr. Saman Kelegama pointed out the importance of the FTA as a tool to expand regional trade. He said that there is always a deficit in Sri Lanka-Pakistan trade. In 1984 there was a surplus and after our tea lost to Kenya again there was a deficit and it continues. Under the FTA Sri Lanka can export 10 million Kgs of tea to Pakistan at zero duty. Kelegama said that according to official statistics Pakistan is the third largest tea importer in the world. However, on account of illegal imports, Pakistan is the second largest tea importer. Therefore we have a good opportunity to increase our tea exports to Pakistan. There are challenges too. The Pakistan tea trade is dominated by large multinational companies and these companies made Kenya the leader in the Pakistani market. Pakistan mostly imports CTC tea from Kenya. But Sri Lanka does not produce CTC tea on a large scale and 90% of our exports are bulk tea, Kelegama said. President of the Sri Lanka-Pakistan Business Council A.S.Chatoor expressed his reservations about the increase of tea exports to Pakistan. Pakistan has got used to the cheaper and strong CTC tea from Kenya and therefore it is unable to fulfil the 10 million Kgs quota allocated to Sri Lanka. Another reason is that Sri Lankan tea is 30% higher in price than teas from other countries. Chatoor said Sri Lanka may be able to tap a small top end of the market and 3-4 million kgs can be exported to Pakistan. According to Kelegama, the reduced price of raw material and imported Indian products, reduced informal trade between countries, economics of scale and stimulation of FDI are the other benefits for Sri Lanka under the FTA. Sri Lanka can act as a conduit between Pakistan and India. The illegal trade at present between India and Pakistan could be channelled through Sri Lanka. It is also expected that the service trade between the two countries will also receive a boost after the FTA. Going by the India- Sri Lanka FTA the tourism sector has great potential for growth under the Sri Lanka-Pakistan FTA. After the FTA with India, SriLankan Airline extended its operations to nine destinations in India and this helped to increase Indian tourist arrivals, Kelegama said. |
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