ETCA is essential for Sri Lanka but transparency in draft process also necessary
There was consensus at a high-profile panel discussion this week on the need to implement the Indo-Lanka Economic and Technology Cooperation Agreement (ETCA), which has stirred controversy in recent times similar to its earlier, proposed version, CEPA (Coprehensive Economic Partnership Agreement) which has been abandoned. There was general consensus too that the draft should be made public. Naomal Gunawardena, Partner at Nithya Partners, speaking at a panel discussion on ‘Megapolis -Transforming the Lankan landscape at the Capital Market Conference’ on Tuesday, said that the ETCA should be implemented. He said that as ETCA would liberalise trade in services; it’ll help professionals.
Adding onto this discussion, another panellist, Reyaz Mihular – KPMG Managing Partner, pointed out that Sri Lanka has nearly 950, 000 three wheeler drivers and this is an unproductive workforce for Sri Lanka. India is Sri Lanka’s largest as well as the most balanced trading partner.
Overall bilateral trade between the two countries exceeded US$ 4.5 billion in 2014 with India being the largest source of imports to Sri Lanka and the third largest destination for Sri Lankan exports. It is among the first five largest investors in Sri Lanka and bulk of the Sri Lankan FDI overseas is located in India.
He said the youth think that owning a three wheeler is a product achievement but it’s not so. They need to be encouraged to look for better skilled jobs and ditch the non productive labour, he said. Rohantha Athukorale, Chairman Export Development Board joined the discussion noting that integration in trade in South Asia is the lowest at 5.2 per cent compared to the other regions. He said that due to the FTA, Sri Lanka sends 84 per cent of its exports to India. He added that the ECTA document has to be made public in order to be transparent. Mr. Mihular also agreed, querying as to why only the Government Medical Officers Association (GMOA) is making an issue about the ETCA and why the ICT and maritime sectors are silent on this.
Commenting on the Megapolis project, Surath Wickramasinghe Associates Chairman said that it should be aggressively marketed internationally and President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe need to ‘take’ it overseas when they do go on country visits.
But Mr. Gunewardene said the government may find it difficult to implement some of the proposals of the Megapolis. “However if the previous government was there I am sure they could have implemented some of the projects that are on the cards in the Megapolis plan.” He also said that Sri Lanka has to create innovative new jobs for the youth similar to Singapore which has mobile BPO Law Desks for India targeting big law firms. “This is very successful and is a model that could be adopted in Sri Lanka.”
According to CSE Chairman Vajira Kulathilake, another panellist, Colombo Stock Exchange’s (CSE) daily average turnover equity and equity market capitalisation to GDP for 2015 was Rs.1.06 billion and Rs.2.9 trillion, respectively. He said the CSE in terms of corporate debt had raised the largest volume of capital at Rs. 81 billion in 2015. “On the other hand corporate debt has been recorded as Rs. 4.5 billion for 2015,” he said noting that the key factors CSE concentrate on to achieve better performance are by having an improved approach to risk management, new products, attracting new listings and attracting investors along with governance.
Mr. Kulathilake said that risk management is backed by adapting to schemes such as the Broker Back Office (BBO), Introduction of Central Counter Party institution (CCP) and Capital Adequacy Ratio (CAR) that are slated to facilitate seamless trading, clearing and settlement of securities. He said one of the new products introduced into the CSE is a Real Estate Investment Trust (REIT). “Rental REITs which is invested in income generating real estate properties and development REITs are invested for development of constructions.” He said that new listings are encouraged in to the CSE to further enhance its performance by facilitating issuer relations, SOE listings. He said that SME Board, Dollar Denominated Board and BOI Board will be introduced.