Over two months after inking a Memorandum of Understanding (MoU) with its immediate neighbour India on cooperation in economic projects, Sri Lanka has now turned its attention on Bangladesh. Following his first State visit to Bangladesh after being elected in 2015, Lankan President Maithripala Sirisena by signing fourteen MoUs in diverse sectors last week, has unleashed the immense wide-ranging potential hitherto unexplored with this country which has progressed rapidly in the past 15 years.
The actualizing as well as success of Bangladesh’s FTA with Sri Lanka that is expected to be signed by end of this year, will depend not only on the two governments but also on the follow up by entities such as the chambers of commerce of the two countries.
It is hoped that President Sirisena’s address at a high-level business and economic forum in Dhaka on 15 July 2017 organized by Metropolitan Chamber of Commerce and Industry (MCCI) and Bangladesh Investment Development Authority (BIDA) would not just go the way of abandoned enthusiasm (as in the case of SAARC and the rhetoric and pledges heard at many such events).
The crux of the economic discussion facilitated by the MCCI and the BIDA during the visit of President Sirisena was to make the bilateral trade between the two nations rise by a threefold within the next few years. Current trade is far below potential although the Bangladesh-Sri Lanka joint working group was formed in 2013 to increase trade and several high-level visits undertaken by Sri Lanka to Bangladesh.
According to the statistics provided by the Bangladesh High Commission in Sri Lanka, upto April 2017, bilateral trade was only around US$ 79.8 million where Bangladesh’s exports to Sri Lanka amounted to US$ 36.6 million, and imports from it totalled upto US$ 42.3 million.
Meanwhile economists and trade analysts point out that the Lankan President being accompanied by a 73-member delegation including 40 representatives of Sri Lanka’s business sector could be seen as a harbinger in getting the private sectors of the two countries to play a decisive role in propelling trade ties. Tariff reduction is one of the expectations in order to make trade between the two sides flourish.
In the joint statement released Saturday following the conclusions of the three-day discussions between President Sirisena, Prime Minister of Bangladesh Sheikh Hasina and her country’s representatives, collaboration was emphasised in sectors such as high-end apparel and textiles, information technology and related knowledge industry, agriculture, infrastructure development, construction, pharmaceuticals as well as shipping, banking, education and energy.
Specific note should be made on the potential of collaboration with Bangladesh’s pharmaceutical sector, one of the most developed high-tech sectors which had made record progress after the promulgation of the Drug Control Ordinance 1982 in Bangladesh. An active collaboration to facilitate regular import of medicines from Bangladesh, a current leader in pharmaceutical exports would mean that Sri Lankans could get drugs at far more economical prices than from western countries. Currently Bangladesh exports medicines to over 100 countries, including USA, Germany, France, UK, Canada, Italy, Netherlands and Denmark.
Thus, noting the potential of mutually beneficial collaboration in this sector, Bangladesh had requested President Maithripala Sirisena to initiate the simplification of the registration process for Bangladeshi pharmaceuticals.
Meanwhile in the wake of Sri Lanka’s alarming increase of natural disasters that has cost hundreds lives, the offer by Bangladesh to share her knowledge, expertise and experience in disaster mitigation will be a major service. Bangladesh, a heavily disaster-prone country, is one of the world’s best success stories in preventing what was about twenty years ago death and mayhem due to regular floods and cyclones. Today it has a systematic and consistent top-down disaster preparedness system that functions throughout the country to avoid large scale loss of human lives. As a result, what used to be hundreds of casualties are reduced to a handful as in the case of the last cyclonic storm termed Mora that hit Bangladesh in June after wrecking havoc in Sri Lanka end May, impacting 15 districts and killing over two hundred in flash-floods and mudslides.
Overall, the bilateral potential of Bangladesh is based largely on tangible and non-controversial areas. However, one aspect the Lankan government will have to facilitate with care would be the request by Bangladesh to allow an equal flow of labour between the two countries, reciprocating Bangladesh allowing large numbers of Lankans to be employed in that country. Given the hue and cry raised by Sri Lankans over the envisaged Economic and Technology Cooperation Agreement (ETCA) with India because of fears of an influx of Indian labour into the country in the IT sector, there would need to be proper mechanism in place to allow but monitor an exchange of labour.
During the discussions between President Maithripala Sirisena and Prime Minister Sheikh Hasina, the two leaders had acknowledged the sizable presence of Sri Lankan workers and professionals in Bangladesh across manufacturing and service sectors making it one of the largest such presence of Sri Lankan professionals in the region. With this understanding, they had agreed to work towards facilitating movement for the citizens of both countries in a more mutually beneficial manner. Given Sri Lanka’s acute shortage of labour in sectors such as construction, the manpower Bangladesh has in this sector would be a crucial factor.
Bangladesh High Commissioner in Sri Lanka, Riaz Hamidullah in earlier comments featured in South Asian Monitor, pointed out the potential for Sri Lanka to use Bangladeshi labour in sectors such as construction, maintaining that Sri Lanka could opt for specific time bound contracts for short term migration of industrial labour.
With regard to the MoU on shipping it is important to note that a Secretary-level MoU on shipping had already been signed in Dhaka on October 2006 between Dhaka and Colombo.
Currently around 90 percent of Bangladesh’s shipping of exports and imports is routed through Singapore Port and Kelang Port in Malaysia. The container feeder services by shipping lines are overwhelmingly dominated by private shipping companies in Bangladesh, points out Zillul Hye Razi, an analyst on international trade who had served as Trade Advisor for the EU Delegation to Bangladesh for more than two decades.
“About 80% shipping business in Bangladesh is run by the European and other foreign shipping lines. The two public shipping lines of Bangladesh and Sri Lanka expect to survive by carrying crude oil, coal and fertilizers while the bulk of the business is in the area of textile and clothing for both the countries,” observes Razi.
Thus, an increase in trade and the inclusion of the private sector in discussions on how to spur significant local shipping industries would be needed if a bilateral agreement on shipping is to make sense. Raaju Radha, a Sri Lankan veteran in the shipping Industry is a staunch critic of the lack of effort by Sri Lanka to support the springing up of locally owned shipping companies.
Radha feels that if the Sri Lankan government is serious about building solid links through its shipping and maritime industry, that it should get recommendations by local experts in the field about starting and supporting local shipping firms and thereby actively encouraging sea routes with neighbouring countries.
“We have to ask why Dhaka routes its external shipping through ports such as Singapore and Malaysia,” queries Radha. He points out that Singapore and Malaysia are drawing in business while Sri Lanka has been lethargic. A case in point is that Maersk Shipping Line, the largest shipping company in the world which used Colombo port previously, now uses Kelang for its mother vessels.
In this background experts point out that proactive and long-term vision based action is a must if both sides want to progress to using other seaports of the two countries such as Mongla and Chittagong and upcoming Payra in Bangladesh and Trincomalee, Hambantota and Kankasanthurai in Sri Lanka. Trincomalee is a natural port sadly unutilized for political reasons while the Hambantota port built at a great cost with ultra modern facilities, assisted by Chinese loans, is still not capitalized upon and which is largely only used by India to export cars made in factories in Chennai to other countries. The Rajapaksa government had made it compulsory for car importers to bring their vehicles into the island only through Hambantota port and this is the main business of the port. The Kankasanthurai harbor in Sri Lanka’s formerly war affected North is virtually abandoned.
If Sri Lanka strategizes and maximizes incentives of using the Colombo by Bangladesh and promotes its other ports as well, MoUs such as those signed last week would be operational.
Importantly, what should be kept in mind is that these MoUs are not legally binding and remains as only a wish list unless concretely followed up upon, points out Zillul Hye Razi, noting that all high-level official visits to and from Bangladesh in recent years are associated with double digit MoUs.
Considering that both the countries are members of SAFTA, APTA and BIMSTEC with varied trade regimes and with Sri Lanka being classified as a developing country and Bangladesh a LDC, any FTA between the two countries must be beneficial to Bangladesh within SAFTA as an advantage, he states.
“Total two-way trade between Bangladesh and Sri Lanka is much less than what Bangladesh earns from selling just T-shirts to the EU,” he points out, adding that it is surprising that Sri Lanka’s export to Bangladesh is composed of cotton (around 26%) and synthetic yarn (around 13%) when these items are not the traditional domestic production of Sri Lanka.
Commenting on the MoU on standards by Bangladesh Standards and Testing Institution (BSTI) and Sri Lanka Standards Institution (SLSI), Razi notes that it will be interesting to see if this will bypass SAARC-level Standards Agreement being negotiated. “This MoU will definitely have a positive impact for Bangladesh exports to Sri Lanka with regard to pharmaceuticals and light engineering products like electric accumulators,” he states.
With regard to the MoU on ICT between the two countries the enforcement of IPR laws will be essential to boost this sector.
Meanwhile, among the Bangladeshi examples to follow would be the de-mystification of technology where it is used for practical purposes from areas ranging from rural development, teacher training and disaster preparedness.
With regard to the MoU signed last Friday between Professor Abdul Mannan, Chairman, University Grants Commission of Bangladesh and Mr. Mohan Lal Grero, State Minister of Higher Education in Sri Lanka for collaboration between the University Grants Commissions of Bangladesh and Sri Lanka, a senior Sri Lankan academic opined that this would be one of the steps towards greater internationalization of the Lankan education sector.
Maintaining proactive ties with universities in the SAARC region is in the best interest of Sri Lanka, opines Dr. Mahim Mendis, Senior Lecturer in Social Studies and former Dean of the Faculty of Humanities and Social Sciences of the Open University of Sri Lanka (OUSL).
“It is a great service to us if more students can be given scholarships by Bangladesh in areas such as medicine as there is much disgruntlement in this field in Sri Lanka, with too many youth possessing eligibility to enter such faculties,” Dr. Mendis adds.
Under the signed memorandum with Bangladesh both the governments shall encourage establishment, implementation and development of joint degrees as well as diploma programs at graduation, post-graduation and doctoral research levels between the Universities, according to details of the MoU published in the website of the University Grants Commission of Bangladesh.
Meanwhile, the MoU to foster comprehensive cooperation in agriculture between the two countries will pave the way for Sri Lanka to learn how Bangladesh has made itself self sufficient in food production, including rice. Food production in Bangladesh has gone up from 10 million tons in 1972-73 to 39 million tons in 2015-16, thereby overcoming the challenges of decreasing arable land, climate change and natural disasters. Bangladesh’s know-how of cultivating rice using climate adaptation methods would be of particular importance to Sri Lanka.
Finally, as a sum up of the goal of working out wide-scale cooperation with Bangladesh, what would need to be reiterated would be catch words ‘progress’ and ‘action,’ because MoUs are not binding legal entities but those which create a framework for implementation. Hence it is upto the two countries, Sri Lanka in particular, to ensure that the visit by President Sirisena and his 73-member delegation to Bangladesh is more than a wish list expressed by a string of MoUs.