SL to sign FTA with China before CHOGM

K.Haputantri · 1 SL to sign FTA with China before CHOGM Tue Sep 17, 2013 2:39 pm

K.Haputantri

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SL to sign FTA with China before CHOGM
Tuesday, 17 September 2013 11:41
Daily Mirror E paper

The government said today it is optimistic of signing a Free Trade Agreement (FTA) with China before November 2013.

Investment Promotions Minster Lakshman Yapa Abeywardena speaking at a Board of Investment (BOI) press conference today said that the government expects to sign the agreement before the commencement of the Commonwealth Heads of Government Meeting (CHOGM) to be held in Colombo, in November this year.(Dilina Kulathunga)

Roboticfx · 2 Re: SL to sign FTA with China before CHOGM Tue Sep 17, 2013 10:15 pm

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This will likely to be another "indu-lanka' contract which would be totally beneficial for China, not considerable advantage to us because, there is no any major product exported to China from Sri Lanka while importing thousand of things from China to Sri Lanka.

This contract will remove tariff 100% between two countries. So, imports from china will become strong and our rupee will be depressed more than present.

It may reason to reduce the cost of constructions which have been financed by debt provided by China. But importing expenses will exceed that cost savings easily.

rainmaker · 3 Re: SL to sign FTA with China before CHOGM Wed Sep 18, 2013 4:16 pm

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Now what does India think about CEPA????

Chinese exports can easily move via SL

wiki · 4 Re: SL to sign FTA with China before CHOGM Wed Sep 18, 2013 4:34 pm

wiki

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Good move.. now everything is completed Very Happy

.. Hope they will not grill us

celtic tiger · 5 Re: SL to sign FTA with China before CHOGM Wed Sep 18, 2013 5:20 pm

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When you talk about advantages and disadvantages of FTA with China,you need to consider what sri lanka wants to be in next 5-10 years time.
If SL wants to get HUB states in south east Asia -this is a very good move.

Roboticfx · 6 Re: SL to sign FTA with China before CHOGM Wed Sep 18, 2013 6:47 pm

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celtic tiger wrote:When you talk about advantages and disadvantages of FTA with China,you need to consider what sri lanka wants to be in next 5-10 years time.
If SL wants to get HUB states in south east Asia -this is a very good move.

I can also feel the objective of current construction and developing programs. However, do you know that most of major projects have been capitalized by Chineese debt, which would to be paid over several decades and as a bad it will give China an extreme power to put fingers into our country affairs. This contract will give more support to it. I got to know that Chineese currency unit is going to be permitted by CBSL to be used in import-export trade. I think you will be able to imagine the future value of our rupee.

Most of capital provided by China are not cheap, as they charge high interest.
I don't tell that we should not use foreign debt to invest but there should be a good management.

My views are in Economics and not in Politics.

Arena · 7 Re: SL to sign FTA with China before CHOGM Wed Sep 18, 2013 7:33 pm

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So what is the alternative you people have who says this is not good.

This is a good move.

Good for me since i try to export Ceylon black tea to them and we are 75% done with the agreement.

All most all the machines, Other hardware products are imported from chin. For an example Row materials for Plastic manufacturing, garments and so on. All of these are tax exempted if we are BOI approved but how about the taxes imposed by Chinese gov ?

Did Martuthi, Bajaj got tax exemptions due to Indu-Lanka..

This is a good move and all the nations waiting to make an agreement with China.

Roboticfx · 8 Re: SL to sign FTA with China before CHOGM Wed Sep 18, 2013 10:20 pm

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Dear Arena,

Yes, I agree with your view 100% and wish you the success for your business. This agreement will increase your profit definitely and it will be a great positive incentive for you as well as for similar local export industries. Smile

I was talking about the total influence on our balance of payment by this contract. Here is the flow.
1. We export few things to China but import so many goods (China is the second. First is India)
2. Cutting off tariffs will increase export revenue as you mentioned, and import expenses will increase too more than that.
3. It may reason to widen the current due in BOP.
4. Rupee will be depreciated more.
5. Import expenses will be increased.
6. It will reason to a "Cost Push Inflation", specially increase of oil prices.

Solutions:
1. Increase exports(specially to China) and introduce new products to world market. It is much better to target "high priced" goods.
2. Develop substitute products locally against selected imports.
3. Increase taxes on imports.
4. Import capital goods widely from China instead consumer goods.

Please correct me if I'm wrong. I always ready to assume any comment, fact or argument made by anybody. Smile

Best Regards!