Pakistan, Sri Lanka trade can be enhanced beyond US$2.7 billion: Study
ISLAMABAD: Trade between Pakistan and Sri Lanka can be enhanced beyond US$ 2.7 billion by realizing the full potential and developing partnerships in investment and industrial development.
This was revealed in a study carried out by SAARC Chamber of Commerce and Industry.
The study “Realizing full Potential of Pakistan Sri Lanka Free Trade Agreement” was co conducted by SAARC Chamber, said a press release.
It said that there was existing a huge potential for Pakistan and Sri Lanka to develop partnerships in trade, investment and industrial development within various sectors and areas of mutual interest.
These areas including textiles, construction materials, agro processing, and pharmaceuticals industry.
Both countries also have signed a free trade agreement titled “Pakistan Sri Lanka Free Trade Agreement (PSFTA)” to benefit from the trade potential between the two countries.
The Free Trade Agreement (FTA) between Pakistan and Sri Lanka was signed in August 2002 and came into effect in July 2005. The terms of the FTA were comprehensive and granted 100% immediate concession to Pakistan and Sri Lanka’s major export products.
Since the inception of PSFTA, trade between the two countries has shown an upward trend.
The value of overall trade has increased from US$ 212 million in 2005 to around US$ 460 million in 2018.
However, the study reveals a considerable trade potential remained unutilized during the whole period.
The study chalks out the specifics of this potential and suggests ways to remove obstructions to the full realization of trade between the two countries.
In 2018, Pakistan’s exports to Sri Lanka reached to US$ 357 million while Sri Lanka’s exports to Pakistan reached at around US$105 million leading to a trade surplus of US$ 252 million in Pakistan’s favor.
But the Pakistan share of its exports in Sri Lanka’s total imports actually fell and slightly increased in the year 2018. This is because Pakistan’s share of exports in the Sri Lankan goods market remains very small compared to other countries in Asia for example India.
Just for comparison, Indian exports to Sri Lanka contributed 20 percent share in Sri Lanka’s total imports. This implies that India has been able to better capitalize on its Free trade agreement (FTA) with Sri Lanka than Pakistan does with respect to the Pakistan Sri Lanka Free Trade Agreement.
The study finds out that the current trade between both countries is not entirely encouraging, but both the countries are the markets for each other’s primary products. – APP