Boost for SL-Pakistan trade ties

President Mahinda Rajapaksa's landmark visit to Pakistan will no doubt benefit both countries. Pakistan and Sri Lanka have always had excellent relations, diplomatic, economic and cultural, regardless of the parties in power in both countries.

Economic relations between the two South Asian countries have reached a new level after the operationalisation of the Free Trade Agreement last year. In fact, this was the first-ever FTA signed by Pakistan, though Sri Lanka blazed a trail by signing the FTA with India eight years ago. This has assumed even more significance in the backdrop of the implementation of the South Asian Free Trade Agreement.

The President's visit was a further impetus to the FTA and trade ties between the two countries. Pakistan-Sri Lanka trade volumes currently stand at US$ 200 million, which should drastically increase with the full implementation of the FTA.

President Rajapaksa met the Pakistani business community on a number of occasions during his three-day visit and briefed them on the investment opportunities in Sri Lanka. More than 70 Pakistani companies have already invested in Sri Lanka.

As the President aptly said, the time is ripe to invest in Sri Lanka with the country achieving an economic growth rate of 6.3 per cent in the last quarter of 2005. It is on course to achieve the projected target of 8 per cent.

One of the most significant events of the visit was Sri Lanka's pledge to extend a US$ 10 million credit facility to the Pakistani business community to purchase Sri Lankan goods. Such a credit facility has been extended to another country for the first time by Sri Lanka. This will be an impetus to Sri Lankan exporters.

The setting up of a Joint Business Council comprising representatives from the business chambers of both countries is another significant development. Even though politicians on both sides can give guidance, only the business community has an intimate knowledge of complex business issues. Their active participation is essential to improve business ties.

President Rajapaksa's brief visit to the Lums University in Lahore can also be seen as an important step, as this University specialises in business and management sciences. More opportunities for Sri Lankan students at Lums will help mould a future business community more attuned to the SAARC trade issues.

Both Pakistan and Sri Lanka should look at the wider SAARC picture. Intra-regional cooperation in the form of SAFTA, which will be fully operational in a decade, will help boost individual SAARC economies. One can only imagine the immense possibilities that would accompany a full-scale free trade deal across the eight countries.

Pakistan and Sri Lanka and indeed the whole of SAARC, must also look at enhanced people to people contact, mainly through tourism. Pakistan has a number of venerated Buddhist sites which can be promoted among Lankan Buddhist pilgrims. Similarly, Sri Lanka can promote its natural and cultural attractions among the affluent Pakistanis. Both countries must use their excellent ties as a launchpad for a wholly integrated and seamless SAARC where goods and passengers can move freely.