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.
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