We were the largest investor in Sri Lanka in the ‘90s. Korean investors now say that Sri Lanka is advantageous for re-entry, said Jong Moon Choi, Korean Ambassador to Sri Lanka recently.
Choi made these comments when he called on Minister Rishad Bathiudeen at the Ministry of Industry and Commerce, Colombo 3.
Almost 21,000 Sri Lankans are now employed in Korea, remitting $ 300-400 million back home annually. According to the Department of Commerce, total trade between Sri Lanka and South Korea stood at $ 366.7 mn in 2012, increased by 44% in 2004-2012 period.
The value of exports from Sri Lanka to South Korea was $ 44mn in 2012 leading to an unfavourable trade balance of $ 278 mn. Sri Lanka’s exports that totaled $ 18.4 mn in 2004, rose to $ 30.9mn in 2010 and in Y2012, hit $ 44.1mn, thereby recording 139% rise from the 2004 volumes.
Apparel has emerged as the dominant export item from Sri Lanka, taking 30% of total export share to South Korea while “raw bristle fibre of coconut (coir), gloves, mittens & mitts, Furniture, lamps & fittings, and Activated carbon natural rubber” are some other major export items.
In 2012, the value of imports stood at $ 322 mn. Motor cars and vehicles have surpassed Iron/steel as the largest import item from S.Korea in the same year showing a considerable increase during the last five years (rising by 86% in 2012 from 2008’s $ 5.67 mn). Sri Lanka and South Korea are also members of the Asia Pacific Trade Agreement (APTA-formerly the Bangkok Agreement), and Lanka’s trade with S. Korea under APTA grew by 46% in 2010 in comparison to 2007. In fact, in 2010, one fifth of total exports to Korea exited Sri Lanka under APTA.
As for investments, the total Korean investment (FDI) during the 1990’s stood around $ 55mn. In 2011, Korean FDIs to Sri Lanka under BOI was at $ 2.8 mn. At present there are 116 Korean projects/companies in operation in Sri Lanka under the purview of BOI law sections 17 and 16. The Sri Lanka-South Korea Bilateral Investment Treaty came into force in July 1980.
“Sri Lanka’s improved stability, low labour costs, investor friendly rules, regulations and incentives are motivating factors for S. Korean investors who are keen in highway construction and solar energy projects here, among others” said Choi. Choi added “There is a high demand and potential for Sri Lankan fruits in Korea-chief amongst them are pineapple, papaya and durian. And also coconuts. We are very keen to import more and more such fruits from Sri Lanka which we believe to be very good. Currently we import them from South East Asia but Sri Lankan fruits are of much better taste and quality. Demand for Ceylon Tea is rising among the Koreans who otherwise import more than $ one bn Coffee annually.”
“We thank the Korean government for increasing Overseas Development Assistance (ODA) on the 2010 request of Basil Rajapaksa Minister of Economic Development. We also encourage Korean investors to enter agro farming and agro modernization in Sri Lanka where we see ample scope. Specially, Korean investors can enter Lanka’s fruits and vegetable cultivation aimed at the demanding Korean market,” Minister Bathiudeen added.