Sri Lanka Offers Pakistan an Exclusive Industrial Zone

23rd August 2009, Aug 23, www.lankabusinessonline.com

Sri Lanka has offered an industrial zone exclusively for Pakistan in a bid to promote inward investment from South Asian and Middle East regions, a media report said.

The Sunday Times newspaper quoted visiting chief of a regional business chamber, Tariq Sayeed as saying the offer had been made by Sri Lanka's industrial development minister Kumara Welgama.

Sayeed, head the SAARC Chamber of Commerce and Industry, a body set up after the formation of the South Asian Association of Regional Corporation, which is made up of Afghanistan, Bangladesh, Bhutan, India, Nepal, Pakistan, Maldives and Sri Lanka.

The offer comes soon after a Chinese company was handed over an exclusive industrial estate by the island's investment promotion agency.

The SAARC organization had been trying to promote regional trade which had been blocked by high tariff and non-tariff barriers after gaining independence from Britain.

Along with other Asian nations the South Asia suffered 'foreign exchange shortages' after sterling currency boards were broken and money printing central banks were set up.

This led to exchange controls, trade controls, import licensing and other restrictions on the freedoms of the billions of people in the region.

Many inefficient local business lobbies which produced poor quality goods, managed to corner captive domestic markets and sell overpriced goods to a population already made poor by high inflation by incompetent central banks.

Sayeed was quoted as saying that he will promote Pakistani firms to set up joint ventures in Sri Lanka and promote trade and investment links using the benefits of a South Asian Free Trade Arrangement (SAFTA).

Multilateral trade liberalization has however been slow in South Asia.

India has led trade liberalization in recent years, striking bi-lateral deals such as the Indo Lanka Free Trade Agreement. At one time Sri Lanka was a leader in economic liberalization but India and Maldives are now ahead.

Attempts to expand the deal into a Comprehensive Economic Partnership Agreement covering services have been stalled by rising protectionist power of some businesses that have strong political connections in Sri Lanka.

The Sunday Times said Sayeed wanted to remove non-tariff barriers to trade and liberalize trade in services to achieve intra-regional trade of 20 billion US dollars by 2010.