Lanka-Bangla relations - from trading partnership to free flow of investment

Srimal Fernando and Mizly Nizar | Published: June 29, 2018 21:37:58 | Updated: June 30, 2018 21:37:21


Forty-five years after the establishment of formal diplomatic ties between Bangladesh and Sri Lanka, both the South Asian neighbours have undergone remarkable changes in their foreign policies. They have immense scope to deepen and flourish this multifaceted close friendship. The diplomatic relations  between  Bangladesh and Sri Lanka have grown  from  strength  to strength over this period,  built  on the  pillars of political, economic,  cultural,  educational and defence cooperation.

Like all other South Asian nations, there are many opinions regarding the foreign policy-cum-strategy pursued by Bangladesh.  Nevertheless, it is still worth mentioning the famous phrase "Friendship towards all, malice towards none" by the founding father of Bangladesh Sheikh Mujibur Rahman, which has shaped the foreign policy of the country since its independence in 1971. From then on, the nation pursued a consistently strong policy under various leaders based on the principles of Non-Aligned Movement (NAM). One can also argue that Bangladesh's first President Sheikh Mujibur Rahman should be credited for proposing the idea of regional cooperation in South Asia, which eventually materialised institutionally in 1985 as the South Asian Association for Regional Cooperation (SAARC).

Among the eight SAARC nations, Bangladesh is important for Sri Lanka as a bilateral partner. Regular high-level visits in both directions serve to cement and expand bilateral relations that are mutually beneficial in all spheres. In July 2017, Sri Lankan President Maithripala Sirisena paid a state visit to Bangladesh, which took place in the context of strengthening and broadening bilateral relations through greater trade and investment cooperation between the two countries. During this visit, the Sri Lankan President and his counterpart Prime Minister Sheikh Hasina welcomed the signing of the memorandum of understanding (MoU) on economic partnership between the two countries, which they believed "Should pave way for conclusion of the Free Trade Agreement (FTA)". There  is no  doubt  that  the  visit   would further  expand  the ties  that exist  between the two nations.

The two South Asian nations are also signatories to the regional trade agreement, namely the South Asian Free Trade Agreement (SAFTA), giving Bangladesh and Sri Lanka preferential market access to over 1.6 billion people. Building on the great traditional friendship between the two nations, they are also able to work closely through the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) for unleashing more cooperation. Economic cooperation between Bangladesh and Sri Lanka is an exceptional example of the growing relationship, as shown by the increase in bilateral trade figures. During 2013-2017, total trade between the two countries had surged by 55 per cent to US$ 166 million.

Sri Lankanairlines. As indicated by recent figures, 45 Sri Lankan firms have invested approximately US$ 300 million in various sectors of Bangladesh, while six Bangladeshi firms have invested US$ 20 million in Sri Lanka. Most of the Sri Lankan investment in Bangladesh has been in the apparel sector, while the largest Bangladeshi investment in Sri Lanka is in pharmaceuticals. Sri Lanka's largest textile manufacturing companies such as Brandix Casualwear, MAS Holdings and Hirdaramani have set up state-of-the-art branches in Bangladesh. In addition to cooperation in the apparel sector, both countries need to further enhance and accelerate closer cooperation in the health and pharmaceutical sector. While Sri Lanka's total import of medical and pharmaceutical products for the year 2017 was US$ 520 million, Bangladesh's share in this sector was only around US$ 35 million. Sri Lanka can explore collaboration with various Bangladeshi institutes and key companies to advance the island nation's pharmaceutical industry through further investments in its domestic market.

In recognition of the need for closer ties for intra-regional passenger travel, the national carrier Sri Lankan Airlines operates regular direct flights between Colombo and Dhaka. It offers better connectivity while providing affordable and cost-effective travels for the 200,000 Bangladeshi   workers living in neighbouring Maldives, as well as for the 25,000 Sri Lankan expatriates living in Bangladesh. 

In addition to air connectivity, both the countries are exploring the possibility of enhancing maritime connectivity to boost their economies. The Chattogram Port in Bangladesh and the ports of Colombo and Hambantota in Sri Lanka are located nearly 1,515 nautical miles apart from each other. Robust connectivity and linkages between these ports would facilitate shipping, tourism and investments between the two countries. Bangladesh's Commerce Minister Tofail Ahmed had stated that signing the FTA between the two countries would allow Bangladesh to use the Colombo port and thereby save three days for the local importers and exporters.

Education and sports are the other areas of collaboration between the two nations. Bangladesh is host to around five hundred Sri Lankan students studying in its medical and dental colleges. And there are about two hundred Bangladeshi Buddhist monks studying in the monastic colleges (Pirivenas) of Sri Lanka. The other important aspect that brings Bangladeshi and Sri Lankan people together is cricket. Over the years, both the nations have produced world class Cricketers. Those who contributed towards the Cricketing success of Bangladesh in the international arena included the Sri Lanka-born Australian cricketer Dav Whatmore (as the coach from 2003 to 2007) and Chandika Hathurusingha as head coach during 2014 to 2017. They played a key role in the development agenda of Bangladesh's national Cricket team.

Over the course of the last forty-five years, the economic, political and cultural partnerships between Sri Lanka and Bangladesh have strengthened their traditionally friendly relations in order to make them significant players in the South Asia region. Although trade between the two countries has grown in terms of numbers, this does not imply that smaller South Asian countries are now prepared to engage in more trade and investment among themselves irrespective of regional politics. With the rise of Asia, the partnership between Sri Lanka and Bangladesh can be taken to a new height through application of a new model, which in turn can be emulated by their South Asian neighbours for enhanced economic growth leading to faster economic development in the region.

Srimal Fernando is a research scholar at Jindal School of International Affairs, India and an Editor of Diplomatic Society for South Africa.  Mizly Nizar   is a Foreign Policy Analyst and a  former visiting lecturer at The Bandaranaike Centre for International Studies (BCIS) and the Open University of Sri Lanka (OUSL).

srimal2003@gmail.com

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