Bilateral trade between the United Kingdom and Sri Lanka

Posted in Speeches, Sri Lanka on Dec 11, 2014

Lord Sheikh to ask Her Majesty’s Government what plans they have to encourage more bilateral trade between the United Kingdom and Sri Lanka. My Lords, I am grateful for the opportunity to bring this important subject before your Lordships’ House. I have been a friend of Sri Lanka for several years and have visited the country on two recent occasions. I have met and spoken to several Sri Lankan government Ministers in London as well as in Sri Lanka, including the President, Mr Mahinda Rajapaksa. I have previously raised issues relating to Sri Lanka in your Lordships’ House. I am a vice-chairman of the All-Party Group on Sri Lanka, and I have supported the Conservative Friends of Sri Lanka. I have also enjoyed a highly successful relationship with the Sri Lankan high commission here in London, in particular with the former high commissioner, Dr Chris Nonis, who has been an outstanding representative of his country. He elevated the stature of Sri Lanka in the United Kingdom. The observations I have made throughout this time have reinforced my view that Sri Lanka is, and should be, regarded as one of our most important bilateral trading partners. Trading links between the UK and Sri Lanka date back to colonial times. We introduced commercial plantations to Sri Lanka—first coffee, then tea and rubber. Over the years the Sri Lankan export product base has diversified significantly, most notably with articles of apparel and clothing accessories. The UK has increasingly imported a wide variety of items, including electrical equipment, bicycles, jewellery, ceramics and toys. In return, we export to Sri Lanka items such as iron and steel, machinery, paper, beverages, plastics and pharmaceutical products. Both our political and economic ties have worn extremely well over the past 200 years. Today, Sri Lanka is a major emerging economy in south Asia. It is a market of over 20 million people, but its geographical location means that it can in fact reach a market of over 1.6 billion people. It also serves as a logistical trading and shipment hub for the region. Over the past decade Sri Lanka’s gross domestic product has grown at an overall rate of 6.4%. It grew by an astonishing 7.2% in 2013. Sri Lanka now has one of the fastest growing economies in the region and is expected to grow by 7.5% this year. The Sri Lankan stock market is on target to finish among the top 10 performing stock markets in the world this year. It now has a GDP per capita of $3,200, and the Sri Lankan Government aim to increase this to $4,000 per capita by 2016. In short, Sri Lanka undoubtedly holds massive potential for UK investors. We must acknowledge that for nearly three decades Sri Lanka was torn apart by a civil war. Thankfully, that came to an end in 2009. The country has since made significant progress, including meeting many international obligations and engaging with the United Nations on post-conflict matters. A commission was established to strengthen the process of reconciliation and the Sri Lankan Government are currently implementing its recommendations. I have been assured that the Government are committed to the realisation of all human rights to prevent further conflict. I believe that now is the time for any Tamil diaspora which left the country to be encouraged to return and be resettled so that it may once again contribute to the well-being of the country. Sri Lanka’s future is undoubtedly looking bright. Fortunately, we already have a foothold in the country. We are already one of the top five investors in Sri Lanka. The bilateral trade between the two countries has increased by 70% since the turn of the millennium, and we are its number one EU trading partner. In 2013, UK exports to Sri Lanka were valued at £167 million. It should be noted that the balance of trade has risen significantly in favour of Si Lanka in recent years. In the longer term, we must look to address this imbalance. I would be grateful if my noble friend the Minister could clarify what action is being taken to achieve this. As important as the volume of trade between the UK and Sri Lanka is the strategic significance of the type of trade. We are one of Sri Lanka’s closest business partners for higher education and professional training as well as for partnerships in the technology sector. These are vital skills that will help Sri Lanka to build and strengthen its economy in the long term and anchor the UK as a key partner in trading. There are already more than 100 British companies with operations in Sri Lanka that cross a wide range of sectors. These include HSBC, GlaxoSmithKline and Rolls-Royce. When I visited Sri Lanka, I was able to visit the Brandix factory near Colombo, which makes garments for Marks & Spencer. I found the operations to be very eco-friendly, with excellent working conditions which were commended by all. I have spoken on this point previously in your Lordships’ House. Sri Lanka also has many of its own home-grown success stories. During my trip, I also visited Millennium Information Technologies, a fast growing Sri Lankan company which was acquired by the London Stock Exchange Group in 2009. Its systems power several stock exchanges and depositories around the world. Aside from our historical ties and the strong Sri Lankan economy and business base, there are many other reasons for us to promote and further bilateral trade. English is widely spoken across the country, providing many western countries with an easy means of communication with potential workers. The literacy rate in Sri Lanka now stands at about 92%. The commercial law of Sri Lanka is based primarily on the principles of English commercial law and English statutes, offering many companies a legal framework with which they are already familiar. Sri Lanka is the highest rated country in south Asia in the World Bank’s rankings for ease of doing business. Sri Lanka also has free trade agreements in place with India, Bangladesh and Pakistan. These can reduce import tariffs for some goods into those countries and thus help build the Sri Lankan economy further and allow British products to make their way through the supply chain. Another key consideration is infrastructure. Following the end of the civil war, Sri Lanka is seeing a rapid and wide spread of infrastructure development. Connectivity is being vastly improved through several major road projects linking urban and rural communities. The Government are also improving and upgrading urban infrastructure facilities and basic services in towns and cities. However, further modernisation is needed and the opportunities for British businesses are vast. The Sri Lankan Government have launched a major infrastructure initiative, entitled Five Hub Programme, which will provide opportunities for us to be involved. There is also an increasing demand for greater expansion in the leisure and tourism sector, including hotels and retail. This is and will continue to be a key growth area for British investors. Another key area for further investment is education. The Sri Lankan workforce lacks critical job-specific skills, which could serve to undermine both private sector growth and public infrastructure development in the future. We must expand even further our role in providing and investing in higher education and skills training, helping the Sri Lankan workforce to fill the skills gap and become more responsive to the needs of the global market. In particular, I believe we could do more to build university-to-university contacts and become involved in creating colleges of excellence. There are also calls for greater facilitation of business visas for Sri Lankan entrepreneurs to travel to the UK. I hope that our Government will undertake to look at this. I ask my noble friend the Minister whether that can be considered. Finally, I commend UK Trade & Investment’s recent trade mission to Sri Lanka, which I understand included representatives of 21 British companies. I look forward to learning more about its findings and hope to see more of these delegations in the future. The future potential for Sri Lanka is huge, but it will be reached only through continued and expanded bilateral trade with countries such as ours

§


  • You Avatar
    Lord Sheikh is a Conservative Peer, businessman, academic and philanthropist. This is his website.

  • Recent Activity

  • Browse by Category