The Bangladesh High Commission in Colombo is inquiring into the possibility of having a free trade agreement (FTA) with Sri Lanka due to high levels of inquiry into the subject, as was revealed during a trade discussion organized by Verite Research.
“We have business houses in Bangladesh that are continuously asking us when Bangladesh is going to enter into an FTA with Sri Lanka,” Bangladesh High Commission Trade Counsellor Muhammad Sakib Sadakat said.
This development came about after Bangladeshi businesses recently requested listings in the Colombo Stock Exchange’s upcoming dollar denominated board. Sadakat however added that some companies are saying that it is not the right time to sign an FTA with Sri Lanka, echoing the local situation on opposition to signing various FTAs. The Sri Lankan government is currently in negotiations to sign FTAs with China and Singapore, and is looking to broaden the existing FTA with India through further service and investment liberalization. Verite Economic Research Head Subhashini Abeysinghe noted that a closer economic relationship with Bangladesh is desired by the private sector.
“A lot of Sri Lankan businesses are very positive about Bangladesh and a free trade agreement with Bangladesh. A lot of companies I speak to see a huge potential in investing in Bangladesh,” she said.
While fast-moving consumer goods leader Hemas Holdings PLC, and energy sector player Laugfs Gas PLC have significant operations in Bangladesh to name a few examples, most of Sri Lanka’s apparel sector leaders have set up manufacturing plants in Bangladesh as well due to lower labour costs.
However, Abeysinghe noted that Bangladesh—where 82 percent of its total exports are in garments—will face difficulties in exporting apparel to Sri Lanka, similar to how Sri Lankan apparel companies face difficulties in penetrating regional markets. “Obviously you would want apparel to have access into the Sri Lankan market. I think in Sri Lanka apparel is almost duty free. I think there are no non-tariff barriers in apparel either. But your apparel exporters are not really manufacturing apparel to be worn by Sri Lankans,” she said.
She noted that apparel products made for big brands to be exported to the US and the EU are of different quality, price and taste to products in demand in the subcontinent. Therefore, she advised that Bangladeshi companies develop their own brands, similar to how MAS Holdings developed Amante, if they want to enter the Sri Lankan market. Commerce and Industry Minister Rishard Bathiudeen, who’s ministry is vested with powers to negotiate FTAs, recently said that such an agreement could boost bilateral trade to US$ 1 billion. Sri Lanka exported US$ 93 million worth of goods to Bangladesh in 2015, growing from US$ 90 million in 2014,comprising 0.9 percent of total exports, while Sri Lanka imported US$ 38 million from Bangladesh in 2015, up from US$ 26 million in 2014, making up 0.2 percent of total imports.(CW)