Sri Lanka, China FTA to vastly benefit country

The proposed Sri Lanka China Free Trade agreement will bring nemours economical benefits to Sri Lanka, Chinese Ambassador to Sri Lanka Qi Zhenhong said yesterday.

He said that firstly it will increase trade from Sri Lanka and also help to find a ‘new market’ for Sri Lankan export oriented products. “In addition it will also bring in additional Chinese investments to Sri Lanka.”

The talks in this regard are now being conducted for six months. Countries with lesser economic potential (to Sri Lanka) like Cambodia and Laos too have signed and implemented FTA’s with China and are now reaping huge economic benefits,” the Ambassador said answering a question raised by Daily News Business.

He said currently the China Sri Lanka bilateral trade is in favor of China. In November 2021 China exported USD 507 million and imported USD 66.2 million from Sri Lanka. “A FTA will also help to breach this huge gap.”

China already has signed 19 FTA’s with several countries.

The Ambassador said that the Sri Lanka China Rice pack is over 70 years old and since then both countries are having close and cordial relations across all sectors and China would not take any decision towards hindering this relationship and they do not have any hidden agenda.

“We are genuinely keen to see Sri Lanka prospering in all sectors and will keep on helping the island nation to reach a higher position.”

China’s financial assistance since the Outbreak of COVID-19 is USD 2.8 billion and this includes USD 1 billion term financing facility provided by the China Development Bank (CDB) to Sri Lankan Finance Ministry to support Sri Lanka fighting COVID-19 and reviving the economy. In addition USD 500 million was provided in March 2020 and a further USD 500 million on April 2021, (with maturity period of 10 years and a grace period of three years) to assist Sri Lanka’s economic recovery. The interest cost is highly competitive and favorable and linked to 6 month USD LIBOR.

In addition to similar leading facilities China offered USD 1.5 billion bilateral currency SWAP agreement as well. This was between the People’s Bank of China and the Central Bank in March 2021, which highly stabilized the forex level of Sri Lanka. New requests of USD 2.5 billion (USD 1 billion financing facility and USD 1.5 billion buyer’s credit) were raised by the Sri Lankan government from the Chinese government recently. China is currently studying the request. China is also one of the biggest investors of mega development projects that includes Colombo Port City highways and power plant projects. Answering another question by Daily News Business he said that Sri Lanka would be one of the first countries that will benefit when China once again opens its doors for tourism.