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Saturday, 5 September 2015 00:00 - - {{hitsCtrl.values.hits}}
By Shiran Illanperuma
In an effort to boost bilateral trade between Sri Lanka and Pakistan, business representatives this week called for strong engagement between the two countries to iron out concerns including foreign land ownership and cess posed on rubber exports.
Sri Lanka Pakistan Business Council President Rohitha Thilakaratne noted during a discussion with Pakistani delegates that imports from Pakistan to Sri Lanka fell year-on-year by $ 100 million to $ 279 million in 2014. Sri Lankan exports also stagnated at $ 74 million.
Delegates from both sides expressed dismay over current trade levels between the two South Asian allies. The decade-long Free Trade Agreement (FTA) between the two countries is responsible for 70% of trade.
“Both countries have the potential to reach $ 1 billion in trade within the next two years,” insisted Pakistan High Commissioner Major General R. Syed Shakeel Hussein.
Despite the FTA being implemented in 2005, Pakistani delegates expressed anxiety over continuing investment barriers in the form of land ownership regulation.
Sri Lankans may seek approval from the Home Department to own land in Pakistan. However, Pakistanis are restricted to a 99-year lease on land for investments over $ 1 million dollars, according to Sri Lanka’s existing law.
Responding to concerns, Board of Investment (BOI) Chairman Upul Jayasuriya responded by voicing his dedication to move towards “equal status” for foreign investors and their domestic counterparts.
Citing the UK’s liberal ownership laws as a model he stated that “even Buckingham Palace can be purchased by a foreigner if it is for sale” and vowed to lobby the new Government for reforms that would allow more equitable investment opportunities.
Pakistani delegates involved in footwear production, also raised concerns over cesses attached to rubber exports. Pakistan’s growing footwear industry primarily deals in leather and canvas but as investors seek to expand into rubber, Sri Lanka – the world’s 6th largest producer of raw rubber – is ideally placed to benefit.
Pakistani businessmen pointed out local cesses pushed rubber prices beyond the acceptable range but Sri Lankan delegates insisted the cess was necessary to protect the welfare of rubber plantation workers.
Sri Lankan delegates criticised overreliance on traditional agricultural products and raw materials, which form the core of trade between Sri Lanka and Pakistan.
Sri Lanka’s most imported item from Pakistan is cotton while its largest export is betel leaf. Sri Lankan stakeholders called for the diversification of the basket of products offered by both sides and encouraged investors to move into high-tech and service industries in the future.
Pakistan continues to be one of Sri Lanka’s most significant trade partners, particularly in the SAARC region. Pakistan is the island nation’s second largest SAARC partner, 27th export destination and 17th import destination.
