Interview: Ganeshan Wignaraja
What areas should Sri Lanka prioritise as chair of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) for 2018-20?
GANESHAN WIGNARAJA: Sri Lanka’s leadership comes at a pivotal moment. The momentum for regional integration has stalled due to political differences between India and Pakistan. Given the economic and strategic needs of its members, Sri Lanka must lead effectively to lift both its position and the status of BIMSTEC in the region.
To this end, Sri Lanka should prioritise three areas during its chairmanship. The first is digital connectivity. Sri Lanka was designated to lead BIMSTEC’s work on technology and is the home of its only dedicated Technology Transfer Facility (TFF). Sri Lanka should focus on ensuring that the TFF is effective and efficient, while also encouraging member states to introduce technology-driven public goods like free internet connectivity.
The second priority is cooperating to safeguard regional security, a precondition for economic integration. As the Indian Ocean becomes increasingly important to powers like India and China, so does ensuring the security of the Bay of Bengal. Sri Lanka should urge other member states to ratify BIMSTEC’s existing security conventions and propose establishing coordinated maritime patrols to secure the bay.
Lastly, Sri Lanka should pursue regional trade liberalisation. BIMSTEC remains in the early stages of becoming a trading bloc, and a free trade agreement (FTA) has been under discussion since 2004. The successful conclusion of this FTA would provide a strong signal that BIMSTEC economies are keen to enhance both regional and global trade and investment integration.
What are the near-term prospects for bilateral FTAs after the mixed response to the Singapore FTA?
WIGNARAJA: Sri Lanka is a regional latecomer to FTAs: it has only five, most of which deal with limited goods liberalisation. The Sri Lanka-Singapore FTA ( SLSFTA) signed in early 2018 was seen as furthering our ambitions to attract inward investment and become a centre for trade in the Indian Ocean.
However, domestic-oriented businesses and certain professions have been concerned about the disruptive effects of SLSFTA, in terms of opening up import-competing goods sectors and non-tradeable services. Some of this could have been factored in if adequate preparation, such as holding stakeholder consultations, had been done by the Sri Lankan side before starting negotiations and conducting an impact assessment.
During his visit to Singapore in January 2019, President Maithripala Sirisena met with Lee Hsien Loong, Prime Minister of Singapore and raised the issue of renegotiating certain clauses of the SLSFTA. It seems likely the text will be amended through renegotiation. Sri Lanka appears that it will resume its FTA strategy, including negotiations with China, India and Thailand.
Why does the regional market matter to Sri Lanka?
WIGNARAJA: The rise of Asia has transformed the Indian Ocean into one of the world’s busiest East–West trade corridors. It carries two-thirds of global oil shipments and one-third of bulk cargo. Reforms in India, Sri Lanka and elsewhere are unleashing the private sector as the engine of growth. The 28 dynamic economies that border the Indian Ocean are expected to grow collectively at about 6% per year over the next few years, compared with less than 4% for the world economy.
This region represents a huge opportunity for Sri Lanka, which is strategically located at its centre. Diverse economies offer rapidly growing markets for our exports, as well as opportunities to build stronger links with global value chains and diversify our exports into higher-valued-added goods. At the same time, the vibrancy of the Indian Ocean economy will help to drive our ambitions in the trading, logistics and finance sectors. To realise these goals, however, Sri Lanka needs to work with other states to mitigate the growing maritime insecurity that threatens to undermine our prosperity.
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