By: Staff Writer
February 02, Colombo (LNW): Sri Lanka is set to fast-track the long-pending Free Trade Agreement (FTA) with Singapore, ensuring consistency in trade policy, according to Deputy Finance Minister Harshana Suriyapperuma. Speaking at a recent Committee on Public Finance (COPF) meeting, he confirmed the government’s commitment to fully implementing the agreement, which had faced multiple delays since its signing in 2018.
The Sri Lanka-Singapore Free Trade Agreement (SLSFTA) was signed at the ministerial level on January 23, 2018, and came into effect on May 1, 2018.
Covering a broad range of economic activities—including trade in goods and services, investments, intellectual property rights, telecommunications, e-commerce, trade facilitation, government procurement, and economic cooperation—the agreement aims to foster stronger trade relations between the two nations.
Initially, the FTA faced opposition and was temporarily suspended in October 2018 by former President Maithripala Sirisena due to concerns about inadequate consultation with key government agencies.
However, the current administration has reaffirmed its dedication to activating the agreement, which includes a phased elimination of tariffs on 80% of tariff lines over a 15-year period.
To facilitate the agreement’s implementation, a Gazette Notification (No. 2377/39) was presented to Parliament on January 7, 2025, under the Ports and Airports Development Levy (PAL) Act. This amendment, effective from March 29, 2024, reduces PAL from 10% to 6% on several imported goods from Singapore.
The tax reduction applies to items such as certain types of cement, apples, infant foods (excluding milk-based products approved by health
authorities), medicines, surgical instruments, and bathroom fittings. Additionally, import duties on goods like electrical equipment, polythene, and aluminum products were revised under the FTA, while items outside the agreement remain subject to previous tax rates.
A key aspect of the SLSFTA is its aim to establish a stable and predictable business environment for Singaporean investors while providing Sri Lanka with expanded trade and economic opportunities. The agreement mandates a gradual reduction of import duties and para-tariffs over five to six years.
In line with this, the Sri Lankan government has already lowered import duties on two categories of goods, aligning with the FTA’s tariff liberalization roadmap, impacting multiple taxes such as Customs Import Duty (CID), CESS tax, and PAL.
Despite initial resistance, COPF members eventually endorsed the PAL reduction, with Chairman Harsha de Silva underscoring the significance of fostering a free trade relationship with Singapore. He emphasized that the agreement aligns with Sri Lanka’s broader economic objectives and long-term growth strategy.
The implementation of the FTA had been delayed due to various factors, including the 2018 constitutional crisis, which led to its suspension by then-President Sirisena over concerns about insufficient consultation with key financial and port authorities.
However, officials reassured COPF that the revised order activating the agreement, which was approved by the Cabinet in 2018, now provides a well-defined framework for tariff reductions.
With its renewed focus on trade liberalization, Sri Lanka views the Singapore FTA as a crucial step toward fostering economic growth and strengthening international trade partnerships. The agreement marks a significant policy milestone, positioning Sri Lanka for enhanced global commerce and investment opportunities.
