Sri Lanka and Pakistan: Let a thousand flowers bloom

At SAARC's 1985 inaugural summit in Dhaka, Bangladesh, Sri Lanka's then President J. R. Jayewardene said: "We are setting this ship afloat today. There may be mutiny on board, I hope not. The sea may be stormy but the ship must sail on and enter the ports of poverty, hunger, unemployment, malnutrition, disease and seek to bring comfort to those who need it." Today, nearly two decades later, these immortal words have come to haunt the denizens of the People's Republic of Bangladesh, the Kingdom of Bhutan, the Republic of India, the Republic of Maldives, the Kingdom of Nepal, the Islamic Republic of Pakistan and the Democratic Socialist Republic of Sri Lanka. The advent of the era of globalization and the enforcement of WTO conditionalities would entail the re-profiling of each country's internal agenda, as they would have to consider the prioritization of their commitments.

The SAARC countries have fully not realized their goals, and this is evident from the overpowering mistrust, belligerency, and rabble-rousing, that has been the norm not only among each other but also in the countries themselves. This has ensued into a hostile environment that has made all projections go haywire. The SAARC countries had also decided to establish the SAARC Preferential Trading Arrangement (SAPTA) to promote and sustain mutual trade and the economic cooperation among themselves through exchanging concessions in accordance with this Agreement. However, trade and economic cooperation has also suffered due to the chest-thumping attitude among some countries.

Sri Lanka and India took the giant step forward and inked a historical Free Trade Agreement on December 28, 1998 in New Delhi. The benefits to the businessmen of both the countries are stupendous. According to the Sri Lankan Board of Investment, four Business Models reflect the benefits of FTA:
• Model 1: A cheaper source of raw materials and machinery, with lower costs of production for domestic manufacturers.
• Model 2: Indian manufacturers can now source intermediate goods manufactured and exported from Sri Lanka under the FTA previously imported from third countries with high tariffs.
• Model 3: Preferential tariffs will enable new and existing industries to enter the Indian market and diversify their product lines.
• Model 4: Indian export-oriented companies can locate their manufacturing facilities in Sri Lanka and export back to India and international markets.

Model 4 can be of immense benefit to Pakistan because Sri Lanka has superior logistic infrastructure facilities and boasts of one of the most liberalized economic environments in Asia. The Pakistan-Sri Lanka Free Trade Agreement has been under negotiation for some time now. The Sri Lankan Commerce Minister, Mr. Ravi Karunanayake, and the erstwhile Pakistan Commerce Minister, Abdul Razak Dawood, spearheaded it. It is hoped that the two countries would sign the FTA in February 2003.

On Tuesday, July 23, 2002 the SITE ASSOCIATION OF INDUSTRY and the FREE TRADE ZONE ASSOCIATION OF SRI LANKA signed a historical Memorandum of Understanding at the Sindh Governor House in Karachi. The Sindh Governor, Mr. Muhammadmian Soomro, and the visiting Sri Lankan Minister of Commerce & Consumer Affairs, Mr. Ravi Karunanayake, signed as witnesses. The Chairman of SITE, Dr. Arshad A. Vohra, and the Sri Lankan Consul General, Mr. P. D. Fernando, inked the agreement on behalf of the two organizations. The salient features of the MOU are that both the organizations desire to become reciprocal partners and to extend all support, cooperation, and assistance to each other for the overall benefit of both the countries. They agree to join hands to attain the following:


• Image building to dispel negative perceptions.
• Safeguard investments and bilateral activities among members of both organizations.
• Attraction of investment and trade opportunities.
• Intensive efforts to remove bureaucratic bottlenecks and inconsistent governmental policies.
• Lobby for a mutually beneficial Free Trade Agreement between both the countries.
• Organize and maintain a database to identify and promote products and services.
• Provide information on pool of human resources available in each organization.
• Influence the initiation of Investment Protection, Taxation, and other Treaties.
• Prepare and maintain information on markets, cultural, religious, and national factors.
• Initiate measures to enhance mutual trust, patience, and transparency.
• Promote joint promotions, marketing, and ventures.

At that ceremony, the Consul General announced that Pakistan has been invited to INTRAD 2002 exhibition organized by the National Chamber of Commerce & Industry from September 04 and also to the Investors Forum being held during that time. He said that a twenty-member delegation would be invited. I was asked to lead this delegation of industrialists and businessmen.

During the trip, our Sri Lankan friends treated us like royalty. We had detailed discussions and exchange of views with Ministers and senior officials on varied subject matters, especially bilateralism. We first met Prof. G. L. Peiris, the Minister of Enterprise Development, Industrial Policy, and Investment Promotion in his office where we were given a detailed briefing by him and by Mr. Arjunna Mahendran, Chairman/Director General, Board of Investment of Sri Lanka, Mr. L. S. Geoffrey Tillekeratne, Director General of Export Development Board, Ms. T. M. L. R. Tudugala, Director Marketing, Mr. Chalana Amerasinghe, Asst. Director Marketing, and Ms. Amala Heengama, Assistant Manager, EDB. We then had a very informative and useful interaction with Mr. Ravi Karunanayake, Minister of Commerce and Consumer Affairs who was able assisted by Mr. Harsha Wickramasinghe, Secretary, Ms. Manel De Silva, Acting Director, Department of Commerce, Mr. Dinal Wijemanne, Director, Investments and Projects, Ms. Tushara Abeyewickreme, Manager, Projects, Planning, and Implementation, and Mr. Jumar Preena, Director, Media and Marketing Communications.

The opening ceremony of INTRAD 2002 was graced by the presence of FIVE Ministers, i.e., Minister of Power and Energy, Mr. Deshabandu Karu Jayasuriya (the Chief Guest, who is also a Past President of NCCSL), Minister of Enterprise Development, Industrial Policy, and Investment Promotion, Prof. G. L. Peiris, Minister of Commerce and Consumer Affairs, Mr. Ravi Karunanayake, Minister of Foreign Affairs, Mr. Tyronne Fernando, and Minister of Western Region, Mr. J. Muhammad. The presence of five Ministers was a manifestation of the importance of government-private sector partnership. Mr. Ravi Karunanayake said that it is time to internationalize the thinking process of the business communities of SAARC so that the present low share of SAARC countries in the global trade is transformed into a more prominent presence in the world market. He said that Sri Lanka is definitely on the move and it will become the "showcase of the region and the window of South Asia".

The Sri Lankans also arranged for us to have a detailed presentation on the FTA with India where we also discussed the FTA with Pakistan. They also organized exhaustive one-to-one meetings with Sri Lankan businessmen. The delegation also got an opportunity to meet Minister of Foreign Affairs, Mr. Tyronne Fernando. We were also delighted when Mr. Ravi Karunanayake agreed to postpone his other engagements in order to host and witness the MOU signing agreement between Kalsoft, a premier Pakistany software company and five Sri Lankan IT companies. This gesture also showed the seriousness of the government in promoting IT in the country. Ms. Manel de Silva, Acting Director General, Department of Commerce, and I, as leader of the Pakistany Delegation, signed as witnesses. These partnerships would generate nearly US $ 95-100 million within three years.

In my view, there is a lot of goodwill for Pakistan and this was evident from the tremendous reception we received every where and the interaction we had with many persons, in the government, in the business community, and in the various places we visited. President Pervez Musharraf has a very favorable rating among the Sri Lankans and his visit to Sri Lanka further reinforced these sentiments. There is a lot of appreciation for Pakistan's principled stand against terrorism since Sri Lankan themselves have suffered the consequences of an insurgent movement in their nation for decades. The enthusiasm and exuberance showed by Sri Lankan businessmen in pursuing their objectives of exports is commendable and would surely propel them up in the legion of global players. This gushing feeling is missing in Pakistan's new exporters. Pak-Lanka bilateral trade has just crossed the US$ 100 million mark. There is a huge potential for enhancing the figures. The FTA conditionalities should be molded in such a way that it facilitates both countries in a mutually benefit mode. Sri Lankan tea should be allowed duty-free, since this would ensure that legal and documented tea is imported and that the government would get GST and advance Income Tax. Right now, a lot of Kenyan tea is smuggled into Pakistan from the eastern borders and the government is losing millions in revenue.

One area that needs special consideration, and is of prime concern nowadays, is the facility of air travel between Sri Lanka and Pakistan. The Pakistany government has a principled policy of discouraging Pakistan International Airlines to fly over India and thus PIA flights to Colombo are presently not allowed. Air Lanka has also ceased its service to our country. It has become a difficult venture to first fly to the Gulf countries and then board a connecting flight to Colombo. Since the FTA would certainly increase the movement of industrialists and businessmen, the non-operational mode of PIA and Air Lanka would have an obviously negative effect. I even wrote a letter to the Chairman of Sri Lankan Airlines to reconsider their policy and commence even two flights a week for the benefit of both the countries. I also vociferously took up this issue with all Ministers, with government officials, and even with the Pakistany High Commissioner. This issue must be resolved on immediate basis.

Sri Lanka and Pakistan are two important nations in this region and have a formidable relationship that is based on mutual trust and confidence. This closeness is reflected in many levels such as, bilateral trade, joint diplomatic initiatives, friendly competitive sports, and citizen-to-citizen camaraderie. The time-tested friendship is periodically reinforced by the visits of the Heads of State and Government, by exchange of delegations, and by a commonality of views at several international fora. The Sri Lankan government is complimented for the consistency in economic policies, for transparency in government dealings, and for endeavoring to bring about peace and tranquility in the region. It is a fact that good governance and a determined sense of direction are imperative for the well-being and prosperity of the denizens of SAARC nations. Sri Lanka and Pakistan businessmen must take the lead so that in the SAARC countries a thousand flowers can bloom . . . . . soon.

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January 25, 2003