News
FTA with Thailand: Need for SL to diversify trade portfolio stressed
By Rathindra Kuruwita
Over 50 percent of Sri Lankan exports to Thailand are gems, and Sri Lanka doesn’t face any trade barriers when exporting precious stones, Subhashini Abeysinghe, says Research Director at Verité Research.
Commenting on the recent free trade agreement between the two nations, she said in a recent television interview that Thailand imported around 300 billion U.S Dollars worth of goods each year, and Sri Lanka’s exports there amounted to about 100 million dollars.
“Thailand is one of the top sources for manufacturing and exporting jewellery. On the other hand, while Sri Lanka has a lot of gems, we are not a country that exports jewellery. We face no trade barrier in exporting gems to Thailand because they are an essential part of manufacturing jewellery,” she said.
Abeysinghe said the purpose of a free trade agreement (FTA) was to remove barriers to trade. She said that 30 percent of the types of goods Thailand already exports were not subjected to any tariffs.
“This means about 3,000 goods Thailand imports are already not taxed. These goods amount to 56 percent of total imports to Thailand. So, we already have duty-free access to over 150 billion dollars in the market, but we export miniscule amounts,” she said.
Abeysinghe said Sri Lanka had not been able to attract FDIs in manufacturing export-oriented products. Sri Lankan policymakers believed that the country would be able to attract such FDIs, if investors saw that Sri Lanka could export goods to many destinations without tariffs.
There was speculation that once the FTA with Thailand was signed, Sri Lanka would be able to attract Thai tourists, especially Buddhist tourists, she said, adding that Sri Lanka had the potential to develop Buddhist tourism.
“However, Thai tourists already have access to on-arrival visa facilities. Given that, I am not sure whether we can attract Thai tourists through an FTA. We can make things easier for tourists by changing the laws and regulations in the country. We don’t need an FTA for that,” she said.
Abeysinghe said Sri Lanka had an FTA with Singapore, a country that already had very low trade barriers. However, Thailand had trade barriers. For example, Sri Lankan garments face a 25 percent tariff when they enter the Thai market, she said.
She said in all trade agreements there was a “negative list,” a list of items that were not subjected to tariffs. Here, both Sri Lanka and Thailand have not relaxed duty on about 15 percent of imports.
“When we look at the FTA with Thailand, both sides have relaxed about 50 percent of the items that are traded. This is also divided into two categories, i.e., goods that are already not subjected to trade barriers and newly relaxed items. As we said earlier, already 30 percent of our exports are not subjected to barriers in Thailand. So, Thailand has only relaxed trade barriers on 20 percent of our exports. On the other hand, only 18 percent of Thai exports are bereft of trade barriers in Sri Lanka now. Here, we must contrast this agreement with the FTAs with India and Pakistan. We speak only about customs duties in the FTAs with India and Pakistan. However, with regard to FTAs with both Singapore and Thailand, we speak about all import duties,” Abysinghe said.
There is a 20 percent customs duty when one imports goods to Sri Lanka. Moreover, there is also a 10 percent Ports and Airports Levy (PAL) and sometimes a 40 percent cess. Thus, the total tax is about 70 percent, she said.
“So, we have agreed to remove all 70 percent, not only customs duties,” she said.
When one looked at the FTA with Thailand, one could say Sri Lanka can export 5,000 items without any barriers, Abeysinghe said, adding that people tended to confuse product coverage and trade coverage.
“There are a lot of items here, but Sri Lanka produced very little. When we look at our export profile, 100 goods account for 80 percent of our exports. We have to see how many of these 100 items have been allowed into Thailand. When we look at the FTA, Thais have lifted barriers only on about 25 percent of those goods,” she said.
Abeysinghe said Thailand produced a large array of goods, and about 49 percent of their trade was covered by the FTA. The problem here was that, compared to Thailand, Sri Lanka did not produce diverse products at a competitive rate, she said.
“This is our Achilles’ heel. I am not sure whether the signing of an FTA will be a solution for this,” he said.
Abeysinghe said Sri Lanka was still heavily dependent on Western markets for its exports and relied on a few items like garments, tea, coconut and rubber.
“The fact that we have not been able to shift to Asian markets and most of our major exports are agricultural goods is a problem. ASEAN countries, on the other hand, are linked to global supply chains. Unlike them, electronics, machinery and components make up less than five percent of our exports. Thais import a lot of such goods. But they hardly import any garments. There is a big mismatch here,” she said.
(AFP ) Millions of Sri Lankans enjoyed a government-ordered extra day off on Wednesday as the island nation battles an energy crisis triggered by the Middle East war.
Rail and bus stations were largely deserted as most state institutions, schools and universities shifted to a four-day working week.
“I am really enjoying the mid-week break because it is a fully paid holiday,” said housing ministry official Prarthana Perera, 40.
Her office, like many government departments in Battaramulla — the capital’s main administrative hub — was closed.
Banks operated on shorter hours, while many private firms introduced work-from-home arrangements, industry bodies said, urging members to help curb energy use.
Sri Lanka has already raised fuel prices by a third since the United States and Israel began bombing Iran, triggering retaliatory attacks that have disrupted global energy supplies.
About half of Sri Lanka’s electricity is generated by coal and diesel.
The cabinet has set a target of cutting electricity consumption by 25 percent, ordering street lamps switched off and asking civil servants to use table fans instead of power-hungry air conditioners.
Shipping executive Varuna Perera welcomed the day off but was uncertain of its impact.
“It will not be effective in the long term,” Perera said. “But the government will have a breather for a couple of weeks, to save some energy.”
Environmental lawyer Ravindranath Dabare was more sceptical, arguing the move would have limited impact as those needing government services would have to travel on other days.
“We can’t close hospitals… the doctors and health officials can’t work from home,” Dabare said.
The influential Chamber of Commerce said it had urged members to follow government guidelines or adopt remote work where possible, if
“business continuity can be effectively maintained”.
And Sri Lanka’s leading technology firm WSO2 made working from home mandatory for its 500 employees on Tuesdays and Thursdays.
“This is our way of contributing to the national cause,” WSO2 spokeswoman Zaithoon Bin-Ahamed told AFP.
Media Minister Nalinda Jayatissa said the government had yet to assess the impact of the energy-saving measures, but expected broad compliance.
Sri Lanka has been running coal and diesel power plants at full capacity to meet electricity demand.
President Anura Kumara Dissanayake urged electric vehicle owners not to charge their cars overnight, as they would add a surge to an already strained grid.
He asked motorists instead to plug in during the day, when excess solar power is available.
Officials said the country’s diesel stocks are sufficient to last until mid-May, while petrol could last a week longer.
The government is seeking oil supplies from Russia and hopes to tap Iran for crude oil, Jayatissa said.
Political commentator Kusal Perera said the crisis also presented scope to boost productivity across the state sector.
“They must use this opportunity to have a national dialogue on improving productivity,” he told AFP. “We have to address the inefficiency in the public sector.”
By Amal JAYASINGHE
Sri Lanka is set to experience continued hot weather conditions until May, the Department of Meteorology has warned.
Additional Director General of Meteorology Ajith Wijemanna said the current heatwave is expected to ease only slightly once the southwest monsoon sets in toward the latter part of May.
Wijemanna explained that the island is currently in the first inter-monsoon period, characterised by low wind speeds and shifting wind directions, which contribute to rising temperatures. Reduced cloud cover and the sun’s direct position over the country are causing increased heating of land and sea, generating heat waves and warmer atmospheric conditions.
He cautioned that the hottest period of the day will be between 11:00 a.m. and 4:00 p.m., urging the public to limit outdoor activities during these hours.
Authorities also advised drinking plenty of water, wearing light-colored clothing, and avoiding prolonged exposure to direct sunlight, particularly for children and the elderly.The Meteorology Department further noted that rainfall may remain limited in the coming months, with drier conditions possible due to climate variability.
The Pathfinder Foundation launched a proposal for a National Security Strategy for Sri Lanka—2026, emphasising the urgent need for a comprehensive and state-led national security framework.
The proposed strategy contends that an effective National Security Strategy (NSS) must be based on a robust National Security Policy, which provides the long-term framework for protecting the country’s sovereignty, stability, and development in an increasingly uncertain global environment. The Pathfinder Foundation’s initiative, developed through consultations with academics, retired military officers, legal experts, and policy specialists, seeks to stimulate national discussion and support the formulation of an official state policy. The launch event was attended by those involved in preparing this proposal, heads of local think tanks, and media representatives.
Chairman of the Pathfinder Foundation, Amb. (Retd.) Bernard Goonetilleke, in his presentation of the report, emphasised that many major and middle powers, including the United States, China, the Russian Federation, the United Kingdom, Germany, Sweden, and Japan, have developed formal national security strategies. He pointed out that several South Asian and Southeast Asian countries, including India, Pakistan, Bangladesh, Nepal, Malaysia, Thailand, and Singapore, also rely on NSS, whereas Sri Lanka still lacks a single, officially adopted National Security Policy (NSP) or a National Security Strategy to guide long-term strategic planning.
The report highlights key strategic priorities across several sectors, including good governance, internal security, cybersecurity, energy and food security, health security, human capital development, and environmental protection. It also employs the internationally recognised DIME framework (Diplomacy, Information, Military, and Economy) to guide the coordinated use of national power in advancing Sri Lanka’s interests. Among its main institutional recommendations are establishing a fully legislated National Security Council, creating a National Security Secretariat, and officially appointing a National Security Advisor to coordinate policy and implementation across the government.
The full text of the report is available https://pathfinderfoundation.org/publications, and your comments a/ welcome via pm@pathfinderfoundation.org
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