High Commission of Sri Lanka in India

Hon. Ministers & Representatives of the BIMSTEC Member States,

Secretary General of BIMSTEC

President and Director General of Confederation of Indian Industry

Distinguished delegates,

Good morning,

Permit me at the outset, to congratulate the Government of India and the Confederation of Indian Industry (CII) for organizing this timely initiative of bringing us BIMSTEC members together for the Business Summit 2024.I convey the regrets of my Minister’s inability to be present due to work commitments back home.

Ladies and Gentlemen,

The topic before us today, why the early operationalization of the BIMSTEC Free Trade Agreement will inject fresh momentum to economic integration within the BIMSTEC region, is extremely apt for consideration at this juncture together with its other relevant aspects, in achieving the objectives of regional cooperation of our mandated geographical area.    

Asia's rich history and diverse cultures have long been interconnected through trade, diplomacy and shared heritage. Our ancient maritime routes are testament to the longstanding bonds that unite us together. Sri Lanka, strategically located in the Indian Ocean, has been a significant part of these historical exchanges with BIMSTEC Member States, contributing to and benefiting from, the flow of goods, experiences, skills and cultures.

However, despite the geographical contiguity of the member states of BIMSTEC, it remains one of the least integrated regions. While the volume of intra-regional trade in comparison is insignificant at present, there is enormous scope for enhancing economic relations between the member countries.

The regional trade among BIMSTEC countries has increased from USD 4.8 billion to USD 35.96 billion from the year 2000 to 2022 respectively. Over the years, the interdependence on regional trade has increased, but the optimal trade and investment potential of the region is yet to be harnessed.

Sri Lanka is committed to working with BIMSTEC member states to enhance trade relations, investment opportunities and economic integration. By leveraging each nation's strengths and resources, we can collectively achieve sustainable growth and development in our region. Therefore, the establishment of a BIMSTEC Free Trade Agreement will undoubtedly pave the way for a more prosperous and resilient BIMSTEC area.

Even though the Bangkok Declaration of 1997 through which BIMSTEC was established, identified that one of the Grouping’s major objectives is to create an enabling environment for rapid economic development in the region, it has been unable to finalise the Free Trade Agreement. The related Framework Agreement which was signed in 2004, is one of the first legal instruments, covering the areas of tariff liberalization and elimination of non-tariff barriers, trade in services, trade and investment, and trade facilitation. Since the establishment of the Trade Negotiation Committee in the same year, it has consistently met to negotiate these areas, with the support by the Working Groups on Rules of Origin, Services, Investment, Customs Cooperation and Trade Facilitation, and Legal Experts.

Over the past 20 rounds of negotiations, much progress has been made in these sectors. While all member states have sensitivities and concerns spanning these areas, Sri Lanka is pleased to note that the negotiations have consistently engaged in a much-needed spirit of cooperation and compromise, working towards the common goal of establishing this Free Trade Area in our region.

As of today, 21 meetings of the TNCs (Trade Negotiating Committees) under BIMSTEC FTA have been held. BIMSTEC faces a combination of technical, political, and economic hurdles in its FTA negotiations. While the commitment by the member countries for an early conclusion remains intact, more sustained efforts are needed to overcome some of the obstacles to unlock the full potential of this important regional trading block.

It is now time that member states begin to think out of the box and focus more concertedly on the issues of contention, with a view to arriving at solutions. Believe directing attention on specific components of the envisaged vision framework could facilitate overcoming the challenges. In this context prioritizing areas such as trade facilitation and mutual assistance on customs matters seem to have positively contributed towards a way forward to finalizing this Arrangement.

It may be recalled that at the second BIMSTEC Foreign Ministers retreat held in July this year, specially emphasized the need for greater cooperation in trade and investment and urged the TNC and Working Group to move towards the early conclusion of the BIMSTEC FTA and expedite the finalization of the four constituent Agreements. The convening of some working group meetings shortly on Customs cooperation, Trade Facilitation and Rules of Origin could lead to some finality on the related issues.

The establishment of such a cooperative mechanism in the area of trade and investment in this dynamic regional bloc will create many opportunities for mutual benefit, economic growth and regional development, with the objective of improving the standard of living for all our peoples.

 In the meanwhile, BIMSTEC member states should seek to build on such existing trade agreements or conclude bilateral FTAs within the region in order to expand market access. With such initiatives, we can ensure business in the BIMSTEC region to flourish in a more interconnected environment. Sri Lanka is seeking to do just this, having recently concluded a FTA with Thailand which will be implemented in January 2025, ongoing negotiations with India on an Economic & Technology Cooperation Agreement (ETCA) and progressing with Bangladesh for a PTA to culminate in a FTA.

Ladies and Gentlemen,

When it comes to Trade and Investment, the private sector is key. It is in this context that the BIMSTEC Business and Economic Fora were established to seek a better engagement with the private sector. It is in this context that this Summit is important and the Confederation of Indian Industry has set forth a laudable initiative by organising this Summit which would serve this objective.

Therefore, the support of the private sector in expediting the conclusion of a comprehensive BIMSTEC FTA is undoubtedly essential, to expand trade and investment among the member states. After all, Governments take the cue from the private sector in finalizing such economic cooperation arrangements. Therefore, it is time for the private sectors of the BIMSTEC to undertake a more proactive and constructive role in ensuring the early conclusion of the FTA which will augur well for the region and beyond.

Ladies and Gentlemen,

Just as much as an FTA would forge greater economic cooperation, connectivity is an absolute prerequisite for effective regional market access. The basic premise of an efficient regional as well as global market, is the smooth flow of goods, services, technology and people across borders. The BIMSTEC Masterplan on Transport connectivity funded by the ADB will enable the region to be better connected and better integrated.

Equally important is the institutional and procedural aspects of connectivity related to rules and governance structures that regulate such cross-border movement. There is a higher impetus on how the member countries can work towards greater air transport connectivity, short-sea shipping time, trilateral highway linkages already in existence between Bangladesh, India, Myanmar and Thailand. More importantly, railway connectivity can redesign and reconfigure transportation in the region and have a major impact on member states in connecting to supply chains within the region. There is also a need for greater private sector participation in connectivity projects. Sri Lanka being the only Island nation in BIMSTEC is well connected by both sea and air routes.

Ladies and Gentlemen,

Another critical aspect is energy connectivity which is instrumental in accelerating economic growth in the BIMSTEC region. It has been recognised that linkages between energy endowment and economic development have led governments to develop ambitious strategies to escalate electricity access to the remotest parts of the region.

The region has significant potential of untapped energy resources, especially environment-friendly hydropower, and biomass which is available in all the countries. Such resources can be coupled with cross-border integration of the electricity systems to enhance energy connectivity in the region. BIMSTEC is lagging behind other regions in sharing energy. Regional cooperation under the BIMSTEC framework would be helpful in sharing energy between the surplus areas and the deficit areas which could be examined.

Ladies and Gentlemen,

The BIMSTEC region has demonstrated economic growth in the last decade. Regardless of this phenomenon the region and each of the countries suffer from the sub-optimal utilisation of resources and insufficient investments in related sectors. This would be another aspect that the private sector could consider spearheading.

I wish the BIMSTEC Business Summit all success.

Thank You.