Another $ 2 b from Lanka’s second largest global financier

The ADB, Sri Lanka’s second biggest international financier after China, is readying to go beyond its well-known infrastructure and skills building portfolio in Sri Lanka. ADB now wants to finance Sri Lanka’s trade facilitation upgrade in a very considerable way – by committing almost 20% of its global trade facilitation budget solely to Sri Lanka.  

“By the end of 2011, the ADB had assisted Sri Lanka’s industry with more than $ 243 million and for trade, $ 555 million from 2008. Furthermore, ADB’s assistance scheme using our banking sector is a model to be adopted in our industries. We thank the ADB for their valuable partnership support in Sri Lanka’s new growth phase, not only for infrastructure and industry sectors but even for trade facilitation,” said Rishad Bathiudeen, Minister of Industry and Commerce. 

Bathiudeen revealed this after his meeting with Rita O’Sullivan, Country Director of the Asian Development Bank (ADB) Sri Lanka Resident Mission (SLRM) on 30 October. The meeting took place on the sidelines of the inaugural Asia Pacific Trade Facilitation Forum 2012 (APTFF) held on 30 October at Galadari Hotel, Colombo. 

The first ever APTFF forum in Colombo to be held was based on the theme ‘Enhancing public-private collaboration for trade facilitation, paperless trade and cross-border connectivity.’ 

The event, organised by the Ministry of Industry and Commerce and co-hosted by the Ceylon Chamber of Commerce (CCC), United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) and the Asian Development Bank (ADB), saw delegates not only from Asia and the Pacific but even from Africa (Kenya), Central Asia (Tajikistan) and the Caribbean (Republic of Trinidad and Tobago).

According to the Department of External Resources of Sri Lanka, the ADB was the second largest development partner to Sri Lanka after China from 2005-2010 and the projected leading foreign financier for Sri Lanka’s knowledge society sector for 2011-2014 (except 2013) with a total $ 109 million. The ADB is Sri Lanka’s second biggest foreign loan financier after China and is the fourth foreign grants financier at $ 43 million. 

“Our current portfolio in Sri Lanka totals at $ 2.5 billion and our Sri Lanka portfolio for 2012 alone is almost $ 400 million,” revealed O’Sullivan. “The outlay for ADB’s country partnership strategy with Sri Lanka in the next four years is $ 1.2 to $ 2 billion.” As for Sri Lanka’s industry and trade sectors, $ 243.15 million has been extended by the ADB as of 2011 December. 

Speaking of ADBs plans in Sri Lanka’s trade facilitation, O’Sullivan said: “We are not just looking at SAARC but South – South and even further.  Events like today’s APTFF forum are very important for Sri Lanka to lift its game and profile further in its trade, new markets and product diversification. 

In fact, the whole intraregional trade in this region is an emerging new thematic area that ADB is supporting. This is why we are working so hard at forums like these and schemes such as TFP Revolving Credit Facility.” 

Elaborating on the need for Sri Lanka’s export market diversification, O’Sullivan stated, “Sri Lanka’s traditional export destinations are the US and EU. Therefore now is the (right) time for Sri Lanka to develop intra-regional trade and markets. 

“This form of trade is highly beneficial for Sri Lanka’s export revenues also because of logistic point of views-in that these trades involve lesser transaction costs, and strong market potentials so close to home.” 

O’Sullivan also hinted that the ADB is looking at going up to 19-20% of its future support quantum for Sri Lanka’s trade facilitation efforts under TFP Revolving Credit Facility. Under this, ADB provides pre-and post-export financing through local banks across 112 confirming Banks in 66 countries. 

Data shown by O’Sullivan showed that 19% of the country’s total TFP commitment for challenging countries is for Sri Lanka and since ADB started TFP support to Sri Lanka, $ 555.6 million in trade for 1,435 transactions have taken place. 

The five issuing banks in Sri Lanka in TFP are the Bank of Ceylon, DFCC, Vardhana Bank, National Development Bank, Nations Trust Bank and People’s Bank while the three confirming banks in Sri Lanka are Citibank (Colombo Branch), Deutsche Bank (Colombo Branch) and ICICI Bank (Sri Lanka Branch).