By Chathuri Dissanayake

Companies such as Ceylon Biscuits Ltd, DSI, and Master Divers have run into trouble when they invested in the Indian economy. Picture shows a biscuit factory

Sri Lanka’s business community is divided over Comprehensive Economic Partnership Agreement (CEPA) which was to have been signed between Sri Lanka and India, during the recent SAARC Summit in Colombo but was called off after protests and concerns raised by leading industrialists and politicians.
The agreement, still in the stage of a framework, has not been made available for scrutiny from industrialists or political leaders, other than those in the government. Many of the business leaders expressed concern over the secrecy with which the government is handling the entire issue.

Secrecy and transparency in the contents of the proposed CEPA is the biggest problem.
“We are told that it is going to be beneficial, but we have not been told what the exact benefits are. As business people who will be affected by such an agreement we should be told what is in the agreement,” said the Managing Director of the Multichemi Group, Samantha Kumarasinghe.

Many have questioned the need for such an agreement to be signed when the business sector of the country is still struggling with the lapses in the existing Free Trade Agreement (FTA). The business leaders argue that the ground level is more suitable for an agreement of economic co-operation such as the one India has signed with Singapore but not a Partnership Agreement.

Further, business leaders are concerned that in the case such an agreement is to be signed by the two governments whether proper regularity frame-work would be followed by governments in allowing professionals to enter the local market. Despite the Commerce Department’s firm stand that the FTA has been a success story for Sri Lanka, according to many industrialists in the country it has not brought the country the desired benefits and results.

“Companies such as Ceylon Biscuits Ltd, DSI, and Master Divers have run into trouble when they invested in the Indian economy. There is a lot of bureaucracy involved and there are a lot of non tariff barriers against entering the Indian economy,” said Mr Kumarasinghe.

According to many in the business sector the government should first sort out the problems the local investors are facing in the implementation of the FTA.

“The FTA signed with India made a mockery of free trade when many illegal and unethical manufacturers took advantage of the loopholes. There was gross violation of factory safety, labour, BOI agreements and other statutory requirements in such deployment of foreign labour giving false information when some of the manufacturers set up here. This is exactly what happened in the cases of Vanaspathy and Bakery Shortening and with the Nickel sludge. Without an efficient monitoring system which is able to iron out such violations one cannot successfully enforce a FTA. CEPA is just an extension of the FTA.

And if the trade in services is brought into it without finding solutions to the flouting of the FTA, we will be ruining not only our industrial and trade sector but the entire economy,” said the Managing Director of Samson Rajarata Tiles, Dr Bandula Perera who had previously served in the Board of Investment of Sri Lanka.

Industrialists also question whether Sri Lanka will actually benefit from entering into such an agreement as CEPA. Concerns over whether Sri Lankans would get the opportunity to work in India is one reason for much of the opposition levelled against the agreement.

“There are serious doubts created in our minds whether Sri Lanka would receive benefits from the exchange of personnel. Top managers from India are too expensive and may not use this opportunity. That would leave the door open for mediocre level people to venture out for greener pastures. The big question is whether Sri Lankans will be selected from thousands of Indian applicants to work in India. The level of unemployment in India is very high and Sri Lankans may not be selected over many local applicants by Indian corporates,” said Chairman of Ceylon Biscuits, Mineka Wickramasingha
Further, fears of the local economy being flooded with Indian professionals were raised by many of the leading industrialists who showed concern on the issue.

“India has a population of one billion, compared to Sri Lanka’s 20 million. The movement of professionals between Sri Lanka and India would be one sided and needs no imagination to know the disaster that would happen here. Already the Indian influx to managerial posts is evident in the country. The construction industry has already protested, the advertising and travel trade are further examples,” said Mr Wickramasingha.

According to the Vice President of the Organisation of Professional Associations (OPA), Tudor Munasinghe who was also in agreement with Dr. Perera, CEPA, if implemented right will give Sri Lankan professionals a chance to explore the much larger economy.However he was concerned about the varying nature of standards of professionals in India. “There should be reciprocity and a mechanism where proper standards are followed. If an Indian professional is to work here they should possess a qualification that is recognised by the relevant local regularity body. Further they should register with the relevant professional body here for the period that the individual is to work in the country. More over no Indian should be allowed practice without collaboration with a local company or professional,” he said.

Meanwhile the Director General of the Commerce Department Gomi Senadira said that the country will be able to reap many benefits from the signing of this agreement which can be considered as an extension to the FTA.

“There is already Indian labour in our country who have come outside the CEPA agreement such as Indian doctors. What will happen now is the access will be limited in areas and proper regulations will be there. The market will not be opened in an uncontrolled manner, it will be controlled,” he said.

Mr Senadira also said that concerns regarding Indian professionals swamping the market are misplaced as the agreement will carry proper regulatory frame-work to prevent such occurrences. “People are concerned about the effects of the adverse trade balance between the two countries which is a valid point. But we will take steps to secure a balance market access for the country,” said Mr Senadira.
Answering complaints about the failure of the FTA he said that the obstacles that the business community has faced are non tariff barriers that are outside of the FTA.