Sri Lanka could get more manufacturing investment as economic tensions between the US and China grow, and companies try to re-organanize supply chains, a Singapore based trade economist said.
"We’re increasingly going to see relocation of fragments of production into territories where they can escape tariff increases," Amitendu Palit, a senior research fellow at the National University of Singapore's Institute of South Asian Studies said in Colombo.He was speaking at a roundtable discussion on trade organized by the Lakshman Kadiragamar Institute, a Colombo based think tank, and Asia Foundation.
The US and China have already slapped each other with tariffs on goods worth billions of dollars.
US President Donald Trump has started to raise taxes based on a false doctrine that trade (or current account) deficits are caused by imports, rather than government deficit spending or domestic private investment financed from abroad.Trump has threatened tariffs on more Chinese products.
A Sri Lanka Apparel Exporters Association official said several buyers in the US and Europe have already approached Sri Lanka to relocate their supply chains.
Sri Lanka has had to turn away many of the prospective buyers due to a lack of installed manufacturing capacity, constraints in the labour market and local political uncertainty.