Sri Lanka’s marketing campaign to attract foreign direct investments (FDIs) to the country has to tell the world that Sri Lanka has a 2.5 billion market, a leading economist said.
“Sri Lanka already has an FTA with India which is a 1.2 billion market, and we’re negotiating an FTA with China which has 1.3 billion. We should market to the world that Sri Lanka has access to a 2.5 billion market,” Dr. Indrajit Coomaraswamy said.
He noted that either FDIs could be attracted to set up companies to export to both India and China—which would improve employment and the level of technology available in Sri Lanka—or transhipments could be increased as well.
Both avenues would increase the net export levels of Sri Lanka, similar to how Singapore and Hong Kong came to economic prominence.
Sri Lanka has only averaged US$ 1 billion in FDIs since the war ended in 2009. The new government has set a US$ 3 billion FDI target for 2017.
“We could also tell India to sell to China through Sri Lanka and vice-versa,” Dr. Coomaraswamy said while speaking at the Industrial Association of Sri Lanka AGM.
He said that Sri Lanka should also attempt to attract FDIs from India and China to set up companies here and sell back to their markets through the FTAs.
However, he noted that Sri Lanka shouldn’t attempt to take a drastic step, as producing world-class industrial products is a challenge.
“We should attempt to plug into the value chains of India and China. We can manufacture one component of a product that they are producing,” he said.
Global giants in the electronics industry such as Samsung and Acer rose to the top by initially manufacturing chipsets and other components of existing electronics brands to gain exposure and capital.
Dr. Coomaraswamy said that attracting FDIs through such marketing strategies would make the government’s intention to set up tech parks and economic zones successful, as the government lacks the funding to set up the infrastructure necessary for the future.
As a word of caution, he said that Sri Lanka and India should negotiate a mutual recognition agreement on standards, while Sri Lanka recognizes Indian manufactory standards, India has not reciprocated.
Those engaged in the China FTA discussions too have expressed concern over whether China would recognize Sri Lanka’s standards. (CW)
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