Sri Lanka is strategically located at the cross roads of both east and west sea routes and serves as the point of entry to South Asia.  Serving as a regional trade hub, Sri Lanka offers an open economy, superior logistics, a resilient work force and ground braking market access through Free Trade Agreements (FTA) with both India and Pakistan.

Infrastructure development, technological improvement, human capital development and research and development have been the fundamental forces of productivity improvement of the country.  In the year 2006, in Sri Lankan economy, the agriculture sector has grown by 4.7 per cent contributing 11.1 per cent to the overall growth while the industry sector grew by 7.2 per cent contributing to 27 per cent to the overall growth.  Contribution from the services sector has been the highest at 62.6 per cent as the sector grew by 8.3 per cent during the year.  The country’s per capita income reached to US Dollars 1,355 in 2006 from US$ 1,1197 in 2005.

Free Trade Agreement (FTA) with India

The FTA with India signed in December 1998 allows duty free imports from either country on all items except those agreed by both countries, in addition to items in the negative list. Items eligible for the tariff reduction under the FTA should have a minimum of 35% value addition in the exporting country.

Since signing the FTA, trade between India and Sri Lanka has expanded. From a Sri Lankan perspective, trade has increased by 400% since the implementation of the FTA.

With India’s economic prosperity, investments from India to Sri Lanka have grown. This is evident in the several high value investments that have recently come in to Sri Lanka to take advantage of the duty concessions under the FTA.

Encouraged by the success of the FTA, both countries decided to embark upon a more Comprehensive Economic Partnership Agreement (CEPA) in 2003.  The CEPA negotiations commenced in May 2005. The agreement is expected to be concluded shortly.

 Investment Protection

The Constitution of Sri Lanka enshrines the protection of foreign investments.  Additionally, the Sri Lankan Government has Investment Promotion and Protection Agreements with many countries. Under these agreements, an investor not satisfied with the compensation paid by the government can lodge a claim with the International Court for the Settlement of Investment Disputes (ICSID) and the Government of Sri Lanka is bound to pay the amount determined by the ICSID appointed tribunal. Sri Lanka is also a signatory to the Multilateral Investment Guarantee Agreement (MIGA).

Human Capital

Sri Lanka has a high literacy rate of 91%, a trainable workforce with a good command of the English language and a large pool of engineers produced by the University of Moratuwa and the University of Peradeniya; accountants produced by the Institute of Chartered Accountants of Sri Lanka, the Sri Lanka Division of CIMA UK and the Sri Lanka Branch of ACCA UK; and business and IT graduates from several local and foreign universities.
View India – Sri Lanka Free Trade Agreement

Sri Lanka – Vietnam Trade Relations

Bilateral trade relations between Sri Lanka and Vietnam continue to register a steady growth specially following the opening of Vietnamese economy and the Vietnamese admission into World Trade Organization (WTO) in November 2006.

Potential for further expansion of trade, investments and tourism between the two countries are growing and the business community of both countries should make use of these opportunities.  Vietnam tariff structure is currently under review and more liberalized tariff in accordance with WTO regulations are expected.  

Sri Lanka currently exports to Vietnam diamond, dyed and crocheted fabrics, natural rubber and non-cellular rubber, tea, textile materials, knitted and crocheted synthetic fabrics, apparels and clothing accessories etc.  Imports from Vietnam are processed agricultural products, reception apparatus for television, tractors, and agricultural machineries, cotton, marbles, man made staple fibers, glazed ceramic flags, paving, and wall tiles, Acyclic hydrocarbons, active yeasts, man made filaments, herbicides, anti sprouting products, natural rubber etc.  The two-way trade between Sri Lanka and Vietnam at present remains US$ 40 million and the potential for increase remains untapped.

There are opportunities for Sri Lanka business community for the promotion of intermediate goods for industries such as construction, hospitality, plantation and garments etc.  Sri Lanka could also offer consultancy/professional services in the fields of engineering, architecture, construction, hotel management and business management.  Export market for consumable products such as Confectionery, Tea and other beverages including herbal drinks, Cosmetics, Rubber products and Gem and jewellery etc. are also growing as a result of the rising purchasing power among the 83 million Vietnamese population due to the fast economic growth.  Currently Sri Lanka enjoys favourable import duties for Sri Lankan products as Vietnam extends MFN status to Sri Lanka.  Possibilities of these opportunities have to be explored by the Sri Lankan business community.

Several Sri Lankan companies have invested in the different fields of the Vietnam economy including coconut-processing industry, tea, diamond cutting, shipping, garments etc.

This Embassy in coordination with the trade authorities as well as the business chambers in Sri Lanka and Vietnam is facilitating the business activities of prospective businessmen from both countries by arranging business meetings, providing trade and investment related information, participation at trade exhibitions.