The 4th Trade Policy Review of Sri Lanka (1 and 3 November 2016)
Statement by the Republic of Korea Thank you, Madam Chair.
I would like to join the previous speakers in extending a warm welcome to the delegation of Sri Lank for its fourth trade policy review, and especially thank Minister of Industry and Commerce, H.E. Mr. Rishad Bathiudeen for his comprehensive presentation. My special thanks go as well to Ambassador Dr. Stephen Karau (of Kenya) for his thought-provoking contribution as a discussant and to the Secretariat for its detailed and informative report.
Korea and Sri Lanka have a long history of bilateral economic relationship.
The bilateral trade reached 362 million US dollars in 2015. Korean companies and business people have been the leading foreign investors in Sri Lanka. Although the FDI by Korea to Sri Lanka has been somewhat decreased recently, Korea hopes that its economic partnership with Sri Lanka will continue to grow and develop in the future.
Madam Chair, turning to Sri Lankan economy’s overall performance, I wish to note that, as the Secretariat Report mentioned, it has been successfully overcome the global crisis and has kept growing. After the financial crisis, Sri Lanka demonstrated its economic resilience, with an average annual growth rate in real GDP of 6% during the review period.
Inflation has been also well controlled, thereby declining from 7.5% in 2012 to less than 1% in 2015.
On the other hand, as the Secretariat Report also says, the role played by trade has been reduced in the economy, as trade in goods and non-factor
services declined from the equivalent of about 55% of GDP in 2011 to 49%
in 2015. While Korea would like to appreciate Sri Lanka for trying not to resort to protectionist measures and for remaining unchanged in general, despite harsh circumstances surrounding the Sri Lankan economy, at the same time, we would like to request the Sri Lankan Government to take more open policies in regard with trade. Its MFN tariff rates are still high, particularly in the agricultural sector, which is 24%. There is room for growth in services trade. In addition, we believe that the diversification of expert sectors and the simplification and elimination of additional levies and charges on a variety of export and import products would substantially contribute to the growth of trade in Sri Lanka.
Madam Chair,
After the resolution of the internal conflict, Sri Lanka has become more attractive to foreign investors. The Government also recognizes the importance of FDI. However, FDI levels remain relatively low, and in 2015, FDI inflows declined and stood at about 2% of GDP, which is below the Government's target of 3% of GDP. Korea would like to request Sri Lanka to create a better investment environment, by eliminating or modifying potentially investment-restrict policies and legal measures, including land ownership restrictions.
Another thing Korea is concerned about is, as many of the previous speakers pointed out, the chronic fiscal deficits experienced by Sri Lanka.
Since it is closely related to its trade policy and performance in general, Korea is very concerned about it. In this regards, we re-submitted the same questions on Sri Lanka’s fiscal policy, which were raised by Korea in 2010.
In this regards, I very much appreciate Sri Lanka’s response to Korea's advanced written questions, including the one, related to fiscal deficit, and we will carefully review the response later.
Madam Chair,
It is also our hope that Sri Lanka will continue to actively participate in helping strengthen the WTO multilateral trading system, guided by its rehabilitation programs as Minister Rishad Bathiudeen mentioned in his opening remarks, as well as the long-term strategic blueprint, the 2010
"Mahinda Chinthana – Vision for the Future" which include many key elements for economic growth and trade promotion. With this, I would like to conclude by expressing my sincere appreciation to the Sri Lankan delegation for its hard work and wish Sri Lanka every success in its fourth TPR. Thank you.
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