FTA with Sri Lanka to double bilateral trade
Daily Times, Lahore
FTA with Sri Lanka to double bilateral trade
By Imran Ayub
29 April 2005
KARACHI: As free trade agreement between Pakistan and Sri Lanka is set to be effective from June 1st exporters believe the development would prove a boon to increase the trade figures by 100 percent and major imports from the Island are expected to cost 50 percent lesser.
Exporters of major commodities to Sri Lanka like rice see the rise in export figures by 100 percent by the end of 2005-06 as the FTA allows duty free import of Pakistani basmati and Irri-6 varieties.
“Immediately after the FTA implementation we would send 5,000 metric tones basmati duty free to Sri Lanka,” said Najaf Hussain Shah, chairman Rice Exporters Association of Pakistan.
“This would attract $3.25 million extra, which is other than regular export orders we are executing. This would become a regular feature from August or September and ultimately increase overall export figures.”
He said with the FTA in place from June Sri Lankan government would not charge import duty on half million tonnes Pakistani rice normally exported to the Asian country.
The two countries signed free trade pact in February and was ratified by Pakistan on April 12. Pakistan, which exported $97 million goods to Sri Lanka during 2003-04, stands at positive side of trade balance between the two countries.
Sri Lanka, which has been main supplier of edible item to Pakistan, enjoyed $48 million export to Pakistan by the end of 2003-04. Importers of major commodities from Sri Lanka are eyeing to double the orders after June, which would cost them almost half of the previous days.
“Normally we import 3 million kilogram tea from Sri Lanka,” said Muhammad Altaf Borra, chairman Pakistan Tea Association. “The FTA with Sri Lanka would remove 10 percent import duty and 15 percent sales tax on its products and it would encourage importers to place more and big orders.”
He said though the African products were taking over the Sri Lankan brands, it was expected the import figures from Sri Lanka would touch 6 million kilogram mark by the next fiscal.
Pakistan, which imported 118 million kilogram tea every year mostly from African countries, spent $187.63 million during 2003-04 as a largest single buyer of Kenyan blend.
Apart from edible items, business leaders predict the Asian island as one of the major suppliers of raw materials for different industry and potential importer of Pakistani textile products.
“There is a big potential for textile industry,” said Khalid Firoz Arfeen, president Karachi Chamber of Commerce and Industry. “And same is the case for the Sri Lankan industry as it has scope to supply us value-added products.”
He said export figures from consignments being sent to Sri Lanka would go double by the end of next fiscal and the FTA would provide opportunity to the exporters to explore market of other than traditional products in Sri Lanka.
The two countries being members of the seven-nation South Asian Association for Regional Cooperation (SAARC), also agreed to pursue a free-trade arrangement in the region starting in 2006 that would cover one-fifth of the world’s population.
“We have not focussed regional trade yet,” said Mr Arfeen. “It is really an unfortunate but it is better late than never as the SAARC FTA is due to be effective in 2006.”
