Sri Lanka assured its industrialists that the forthcoming China FTA is designed keeping the local industry concerns in mind. Sri Lanka will also hold comprehensive informational sessions on the forthcoming China FTA after Lankan industrialists called for better transparency in the process on 14 August in Colombo.
“We will not allow local industries and employment to be hit by any Free Trade Agreements” said Minister of Industry and Commerce Rishad Bathiudeen on 14 August at the Ministry offices in Colombo. Minister Bathiudeen was addressing Lankan industrialists who gathered for a pre-consultation session for the forthcoming Budget conducted by the Ministry of Industry and Commerce. Joining Minister Bathiudeen were Secretary to Ministry of Industry and Commerce Chinthana Lokuhetti and other top officials.
Industrialists from footwear, electrical and electronic products, pharmaceuticals, cosmetics, rubber, wood, automotive components, boat building, processed food and packaging were gathered at the 14 August session. Reps from Ceylon Chamber of Commerce, Federation of Chambers of Commerce and Industry of Sri Lanka, Rubber Associations and Food Processors Associations were also joining the session with Minister Bathiudeen.
According to the Department of Commerce of Sri Lanka, in the five year period of 2012 to 2016, Chinese imports to Sri Lanka surged by a strong 67% (from 2012’s $2.56 Bn).Even on a Year on year basis, Chinese imports in 2016 increased by 15% to US $ 4.27 Bn from 2015’s $3.73 Bn. Among leading imports from China to Sri Lanka in 2016 were mobile phones, light-vessels and dredgers, semi-finished iron / non-alloy steel products, automatic data processing machines, fertilizers, projectors, and net fabrics.
Several industrialists voiced that they are in the dark regarding the FTA work’s progress with regard to sectoral coverage of each industry by the forthcoming FTA.
“Sri Lanka – China FTA is cross cutting and many local industries could be affected if proper study on impact of domestic industries is not done before agreeing to terms and conditions of the FTA. We came to know that the government may bring down the negative list from proposed 30% to very low 10%. If that happens, many of our domestic industries may close” said Managing Director of Tantri Motors, Athula Haputantri. “Also as many other industrialists gathered here experienced, we have been voicing our concerns in many forums but we do not have any responses, which is worrying. We believe Industry Ministry and its Department of Commerce should be more involved in this and also should talk with Customs, Finance Ministry and Cabinet Committee on Economic Management (CECM) in this. We call Minister Bathiudeen to mediate and help us by giving clarity on the progress. We the industry people too are keen for the FTA but now worried. In addition to lowering the negative list, there also appears to be decision to take off the cesses. Cess in the only protection that the local farmers and industrialists have against heavy import competition and if it’s removed, there can be a crisis for local industries. We also request the government to have only one window-BoI- for incoming FDI rather than multiple doors. We do not know even the new BoI industry investments and we know only after the BoI project starts that there is foreign competition for us. Foreign FDI is needed for the country but not at the cost of existing industries and employment here.” Tantri motors is a leading producer of tractor-trailers, tankers (including cement), construction plants & equipment, storage tanks, silos, overhead & gantry cranes and is also involved in exports of them.
Many other industrialists at the 14 August session readily agreed with Tantri Motors’ Haputantri and voiced similar concerns on their industry sectors as well. “We as Lankan industrialists, want to know which Lankan industry sectors would be opened for China FTA and what duty reductions would be given for imports” said Executive Director of Global Rubber Industries Ananda Caldera.
In response, the Industry and Commerce Minister Rishad Bathiudeen has assured them that his Ministry, with the Cabinet Committee on Economic Management (CECM) will consult all relevant industries before inking the pact. Thanking the industrialists for bringing these issues to his attention he also directed five of his top officials to commence a rapid assessment of all industries on China FTA and report back to him within two weeks. “We will not allow local industries and employment to be hit by any Free Trade Agreements. I am immediately directing my officials to conduct a rapid industry assessment of all the industries that want some assurance on the China FTA. I want my officials to produce the assessment results in two weeks. We will also hold comprehensive informational sessions on the forthcoming China FTA for our industrialists so that they are prepared. I also want the industrialists to understand that though a single window entry is good for FDI projects, any industry project need to register with our Industry Ministry along BoI approvals. I shall also speak with the Department of Commerce regarding import cess and China FTA and will immediately forward your concerns to Prime Minister Ranil Wickremesinghe’s Cabinet Committee on Economic Management (CECM).”
Minister Bathiudeen also discussed other industry aspects and issues with Lankan industrialists at the 14 August session.
According to the Department of Commerce under Minister Batbhiudeen, in 2016 Sri Lanka’s total bilateral trade with China was $ 4.4 billion, a huge 363% increase in comparison to a decade back in 2007 (at $965 Mn), and even an 11% annual YoY increase in 2016 -from 2015’s $ 4 Bn.