Sri Lanka’s economy and trade with Pakistan

Saad Khattak

SRI Lanka has historically remained a low income country. It’s poor economic conditions can be attributed to a variety of multi dimensional factors.

According to Asian Development Bank Report 2017, two factors glaringly contributed towards Sri Lanka’s perpetual dismal performance since its independence.

One, successive administrations turned away from private sector led outward oriented development strategies in favour of state led inward looking policies which continued till 1977 when the country embarked on an economic liberalization.

Second, the ethnic Tamil conflict that began in early 80s and continued till 2009 cut the Northern Province and large part of Eastern Province roughly around one third of total land mass of Sri Lanka and 12% of population from national economy.

Besides, the rest of the country was also seriously impacted for three decades due to rebel attacks all over the country.

The three decades of imposed ethnic Tamil insurgency took a heavy toll of its economy whereby the country remained embroiled in its war of survival thus the economic priorities remained on a back burner for a long time.

A small island country, with very limited natural potential hence its greater dependability on imports especially from neighbouring India with its inherent strings and political cost.

With the global priorities moving away from geo politics to geo economics in the recent past coupled with greater connectivity facilitation, thanks to the technological and infrastructural development, nation’s policies and priorities have been focused on the economic development of respective countries and people.

Regions got mutually integrated for collective benefits positively impacting on the people’s living standards. The example of European Union can prove the point.

South Asia however, could not be lucky in this regard.
Despite being the most populous and resourced region, it remains least integrated due Indian political and territorial issues with almost all her neighbours mainly Pakistan over Kashmir.

Her hegemonic policies aimed at dominating her smaller neighbours have remained a major stumbling factor towards regional integration.

Resultantly, regional organization like SAARC is at a standstill and countries under compulsion have resorted to bilateral trade engagement deprived of the advantages of regional integration, connectivity and inclusivity.

With the introduction of Belt and Road Initiative (BRI) by China to the region, the economic options of poor regional countries like Sri Lanka have enhanced manifold.

Where on one hand China’s financial support with softer conditionalities have provided alternative options for economic development, it also in the process released them from the blackmailing and strangulating policies of India and the West.

Pakistan and Sri Lanka signed its Free Trade Agreement in June 2005. With PSLFTA, trade between the two countries jumped up from $ 212 millions in 2005 to $ 400 millions in 2017.

Pakistan’s major exports to Sri Lanka includes cement, textile products, pharmaceutical products, rice, sugar and vegetables products etc whereas, Sri Lanka mainly exports to Pakistan items like betel leaves, coconut products, tea, rubber products corrugated sheets etc.

According to PSLFTA, Pakistan gave concession to Sri Lanka on 206 items, while Sri Lanka granted concession to Pakistan on 102 items.

The negative list stood in favour of Sri Lanka with 56% and Pakistan at 44%. A steady increase has been witnessed over years in our bilateral trade with the balance remaining in Pakistan’s favour.

Despite the gradual increase in our bilateral trade, the achieved mark is much below our mutual capacities which is over a billion dollar a year.

Challenges like lethargic bureaucratic responses, long processes in registration of companies and custom clearance matters, imposition of unilateral taxes and levies outside the purview of PSLFTA, poor marketing of mutual products hence less interest of private sectors, poor payment and almost nonexistent arbitration modalities and a general lack of political will at both ends due to multifarious reasons are some of the demotivating factors keeping our bilateral trade much below our potential and capacity.

It would be in the fitness of things that exploiting the available mutual good will, the leadership of the two countries take a comprehensive review of the PSLFTA focusing on the hiccups (based on almost 18 years of bilateral experience) and other related issues encouraging both public and private sectors to fully exploit our potential.

There is also a dire need to expand the relationship to services like construction, textile processing, productivity, information technology and other non traditional sectors like surgical instruments, electric products, leather products, dates and cane sugar etc.

Potential investors from private sectors need to be facilitated for undertaking Joint Ventures in areas of common interests.

A tremendous untapped potential exist in the field of Tourism which need to be exploited to the benefit of both countries. Increasing frequency of single country exhibitions with greater regularity is need of the time.

Coupled with efficient marketing strategies and skills, we need to ensure greater reach, targeting the expansion of the base of our mutual trade to achieve the desired targets.

Tourism Between Pakistan And Sri Lanka
Tourism is the backbone of Sri Lanka’s economy. It can be equally a great contributor to Pakistan’s economy too. Despite the potential, the two country’s bilateral tourism is at its lowest.

Over successive years, no one in the corridors of power seemed to be pushed about exploiting our this vital potential.

Many reasons can be attributed to this gross negligence and failure, for we are very good at crafting excuses for our failures.

It, however, pains more when we have such a vast bilateral potential backed up by tremendous good will cutting across the entire strata of our societies.

The one plausible and genuine reason that can be ascribed for our collective failure to exploit this vital area has been the internal security situation that persisted within our two countries for over three decades, undoubtedly accentuated by our common neighbour.

The India pressure on the Island country to refrain from going too deep with Pakistan shall remain a constant factor irrespective of the area we broach with hence should be considered an excuse. Let’s first have a look at the potential that exist in our countries for tourists of all shades.

Pakistan is a country gifted by Allah with a variety of terrain spanning from snow clad mountains of the North, Blue Water beaches of Balochistan and Sind, mesmerizing desert of South Punjab and Sind, the lush green plains of Punjab, Sind and KhayberPakhtoonkhwa.

Having four seasons with a variety of terrain a tourist from any part of the world has multiple options in terms of area and time to pick from round the year.

Those interested in history and archaeology have loads of attractions well guarded and well kept sites of previous civili-zations dating back to thousands of years.

The remains of MeharGarh in Balochistan, MohejoDaro in Sind, Harapa in Punjab and foundational remains of Gandhara civilization in the entire country are only few to mention.

The marvels of Mughal and Sikh architecture/aesthetics further enriches our glorious possessions awaiting to be explored and enjoyed by tourists of all shades from all around.

Sri Lanka on the other hand, despite being a small country has much more to offer than its size and population.

The most ancient country on the surface of earth claiming to possess Adam’s Peak, a mountain where Christians, Muslims and Jews believe that Prophet Adam was descended on earth when expelled from Heaven.

Lush green at every sight, possessing beau-tiful beaches all around with variety of hospitality arrangements from 5 star to 1 star Hotels offering attraction for tourists of all shades of resources.

The historical and archaeological possessions of the country at display in Anuradhapura, Sigiriya, Polonnaruwa, Kandy and Galle are marvels of its own kind displaying its well kept civilizational heritage.

On top of everything else, the two countries are blessed with a population that is exceptionally hospitable to foreign visitors and guests, known world over, making the experience unforgettable and unique.

Sri Lanka is one of the few Buddhist majority countries in the world. Its majority people being practicing Buddhists take pride in their heritage around the world.

Unfortunately having remained under the negative influence of its big neighbour, the majority of its people were deliberately denied the opportunity to visit the equally sacred Buddhist relics and heritage in Pakistan.

The environment and time has changed whereby many Sri Lankan citizens are now inquiring and anxious to visit their holy sites in Pakistan.

The diversity of terrain makes Pakistan even more attractive to those Sri Lankans who wish to enjoy live snowfalls and pine covered mountains of the North and Azad Kashmir.

Given the richness of potential, the two countries need to initiate measures on war footing. One, both countries need to tangibly move beyond the Memorandum of Understanding signed during the visit of our Prime Minister to Sri Lanka in February 2021.

Two, the much talked about Buddhist Trail in Pakistan need to be given greater attention and wider publicity across the world homing on countries having Buddhist population.

The Pakistan High Commission at Colombo has recently prepared a state of the art Documentary covering the Buddhist heritage in Pakistan which is likely to be inaugurated by Sri Lankan Prime Minister anytime soon.

It will be a great boost to religious tourism from Sri Lanka in particular and world Buddhist population in general.

Three, a formalized and more frequent interaction between the well reputed tour operators need to be sponsored and facilitated by the two governments.

Attractive packages for people of all shades of society considering the diverse interests and capacities need to be prepared and marketed through social media platforms and websites like Booking.Com etc.

Four, attractive travelling and lodging packages should be mutually worked out by Sri Lankan Airlines and hotel industries of our two countries to make these affordable for tourists with diverse financial capacities.

Five, to begin with the respective tourism ministries of the two countries should undertake mutually facilitating trips for Buddhist clerics, journalists, tour operators and members of academia.

This will serve as catalyst for subsequent movement of our citizens in greater numbers. Six, Pakistan need to review its infrastructural and logistic facilities around Buddhist sites in the country to make these sites more easily approachable and comfortable.

In this regard the possibility of foreign investment from rich Buddhist countries and Buddhist private sector should be an attractive option needing to be explored.

Given the extraordinary rich and diverse potential of the two countries, its time that our leadership give it the desired attention and focus.

With both countries now internally much peaceful, the two need to join hands to present themselves an attractive tourist destination, not only for our own people but for tourists from across the world.


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