Korea to boost investments in Sri Lanka

South Korea, one of the largest international investors in Sri Lanka in the '90s, hopes to re-enter the country in a significant way. “The Sri Lankan government deserves credit for running the economy well. We were the largest investor in Sri Lanka in the '90s. Korean investors said that Sri Lanka is advantageous for re-entry,” said Korean Ambassador to Sri Lanka, Jong Moon Choi when he called on Minister of Industry and Commerce, Rishard Bathiudeen at the Ministry recently.

Almost 21,000 Sri Lankans are now employed in Korea, remitting $ 300-400 million back home annually. According to the Department of Commerce, the total trade between Sri Lanka and South Korea which stood at $ 366.7 million in 2012, increased by 44 percent in 2004-2012. The value of exports from Sri Lanka to South Korea were $ 44 million in 2012 leading to an unfavourable trade balance of $ 278 million. Sri Lanka’s exports that was $ 18.4 million in 2004, rose to $ 30.9 million in 2010 and in 2012, hit $ 44.1 million, thereby recording a 139 percent rise from 2004 volumes.

Apparel has emerged as the dominant export item from Sri Lanka, taking 30 percent of the total export share to South Korea while raw bristle fibre of coconut (coir), gloves, mittens and mitts, furniture, lamps and fittings, activated carbon and natural rubber are some other major export items.In 2012, the value of imports stood at $ 322 million. Cars and vehicles have surpassed iron and steel as the largest items imported from S. Korea in the same year showing a considerable increase during the past five years (rising 86 percent in 2012 from 2008’s $ 5.67 million).

Sri Lanka and South Korea are also members of the Asia Pacific Trade Agreement (APTA, formerly the Bangkok Agreement) and Lanka’s trade with S. Korea under APTA grew by 46 percent in 2010 compared to 2007.In fact, in 2010, one-fifth of exports to Korea left Sri Lanka under the APTA. As for investments, Korean investments (FDI) during the 1990s stood at around $ 55 million. In 2011, Korean FDIs to Sri Lanka under the BOI was at $ 2.8 million. At present there are 116 Korean projects and companies in operation in Sri Lanka under the purview of the BOI. The Sri Lanka-South Korea Bilateral Investment Treaty came into force in July 1980.

“Sri Lanka’s improved stability, low labour costs, investor-friendly rules, regulations and incentives were motivating factors for S. Korean investors keen on highway construction and solar energy projects here, among others,” said Choi.

Discussing trade, Choi said, “There is a big demand for Sri Lankan fruits such as pineapple, papaya, durian and coconuts in Korea. We are keen to import more fruits from Sri Lanka which we believe to be good. Currently we import them from South East Asia but Sri Lankan fruits have much better taste and quality. The demand for Ceylon Tea is rising among the Koreans who import more than $ one billion worth of coffee annually,” he said.

“We warmly welcome more investors from S. Korea to Sri Lanka’s resurgent development agenda. We also thank the Korean government for increasing Overseas Development Assistance (ODA),” said Minister Bathiudeen.

“We also encourage Korean investors to enter agro farming and agro modernisation in Sri Lanka where we see ample scope. Korean investors can enter Lanka’s fruit and vegetable cultivation to meet the demand of the Korean market,” he said.