In May 2022, the Sri Lanka – Singapore Free Trade Agreement (SLSFTA) marked four years since coming into force – an FTA that was a landmark one for Sri Lanka in many respects. It was the country’s first bilateral free trade agreement (FTA) in over a decade, the first FTA with an ASEAN country, and the first ‘comprehensive FTA’ in the country’s history, which meant that it went beyond goods, to include services, investment, and economic and technology cooperation. It was widely seen as a signal to the world that the country was keen to move to a new era in international trade and investment, and a signal to South-East Asia of its keenness to forge closer ties with a region that Sri Lanka has hitherto had little trade integration with. A reference by the then Minister of Development Strategies and International Trade at a business forum for Singaporean investors shortly after the agreement was signed, of the SLSFTA potentially helping Sri Lanka be part of the ‘Regional Comprehensive Economic Partnership (RCEP) in the future, makes this paper especially relevant in the current context. A key benefit touted of the SLSFTA is to leverage the ‘trade-investment nexus’, by attracting Singaporean investors to invest in services and manufacturing and forging new joint-venture opportunities for Sri Lankan companies. Some investment interest was seen immediately following the signing of the agreement. Yet, as this paper discusses, domestic policy and economic conditions held further progress back. This Working Paper reviews bilateral trade performance, explains some of the key domestic economic policy contexts during and after the FTA was signed, discusses some of the key issues that emerged, and takes an initial look at prospects. Research for the paper was drawn not only from published grey material but also from extensive primary interviews with key informants. Insights shared in this paper would be of particular relevance now, following the bilateral meeting between the Sri Lankan President and the Singaporean Prime Minister (on the sidelines of the former’s visit to Japan), during which the two leaders recommitted to benefiting from the SLSFTA and advancing its implementation. This Working Paper is produced under the ‘Trade and Economic Competitiveness’ thematic pillar of CSF, and is co-authored by Anushka Wijesinha (Co-founder, CSF) and Janaka Wijayasiri (Visiting Fellow, CSF).
To download and read the paper, visit – CSF Working Paper No. 2 – SL Singapore FTA_Aug 2022