Thailand, Sri Lanka expect doubling in 2-way trade to $1 bn in 3-5 years

Thailand and Sri Lanka yesterday agreed to forge closer economic cooperation and  double bilateral trade to $1 billion (Bt30.2 billion) within the next three to five years, following closer ties in the public and private sectors. They also agreed to further discussions on the Bimstec FTA . 

After the bilateral trade meeting between Sri Lankan President Mahinda Rajapaksa and Thai Prime Minister Yingluck Shinawatra in Colombo, the two leaders agreed to set up a trade volume target of  Bt30.2 billion with the aim to achieve a more balanced economic partnership.

In addition, the two sides agreed to establish the Sub-Committee on Trade Related Matters to tie up economic cooperation in various sectors.

Last year, bilateral trade value was at US$545.3 million. Thailand locked into a trade surplus with Sri Lanka worth US$361.5 million.

Commerce Minister Boonsong Teriyapirom said that Thailand has also urged Sri Lanka to submit the schedule of concessions under Bimstec in order to accelerate the Bimstec FTA negotiations on Trade in Goods, with a view to bringing it to a successful conclusion.

In addition, Thai investors with hands-on experience of investing in Sri Lanka are urging Thai businesses to do the same as it could offer many opportunities compared to other countries in the South Asia region.

Duminda Ariyasinghe, executive director of the Board of Investment of Sri Lanka, said that Sri Lanka’s economy was growing rapidly and would play a more importance role in the Asian region. 

He said the country is keen to attract investment from Thailand, due to their strong political and private sector cooperation.

“Investment from Thailand is still small compared with other countries in Asean. However, it is likely to grow quickly as our two nations develop stronger ties,” said Dumindra.

He pointed out that Sri Lanka has high potential as both an investment centre and trading base for Thai enterprises to penetrate the South Asia market. With the largest port in South Asia, cheap labour, and a geographical location at the centre of South Asia, Thai investors could benefit from investing in the country, he said. 

The cost of labour in Sri Lanka is about US$120 per month, while in India it is US$306 a month and in Pakistan US$178 a month.

The country also offers incentives for investors via its BOI, including a tax holiday from 4 to 12 years – depending on the size and amount of initial capital investment.

Dumandra pointed out that sectors of interest for Thai investors in Sri Lanka included tourism and recreation; agro-based industries; food processing; manufacturing; IT; and infrastructure development in areas of construction and telecommunications.

So far, Malaysia is the biggest investor in Sri Lanka among Asean countries, with an initial capital worth US$1.26 billion, followed by Singapore with US$548 million and Thailand with US$25 million.

BOI executive said that Thai investment could jump to US$250 million in the next few years because of high competency of Thai investors in a broad variety of sectors.

Theprit Srichawla, president to Bischoff Gamma, a leading producer of fabric and textiles for fashion brand names, said that Sri Lanka was suitable for supporting export oriented business as it offered cheap labour and a banking system that facilitated smooth financial transactions.

Although there were some transportation difficulties because of narrow streets, the country was quickly developing its infrastructure to serve the growing industrial and tourism sectors, said Theprit.