South Korea has agreed to set up a special investment zone in Sri Lanka and provide enhanced dollar assistance from its EXIM Bank and greater development assistance from KOICA, as the island nation continues to struggle with low levels of foreign exchange.
According to Sri Lanka’s Foreign Affairs Ministry, the response from South Korea was positive with the Republic of Korea Foreign Affairs Minister Chung Eui-Yong agreeing to the request put forward by Foreign Affairs Minister G.L. Peiris.
However serious risk is the inability to monitor and control bureaucracy and corruption of the investment zone, economic experts said.
This had been the reason for the downfall of such zones in several countries, where the selection of businesses was not very transparent.
The experience is that where corruption has been rampant, many good companies have decided to keep away from investing in the IZs.
There are the immediate challenges of acquiring such lands and often in the excitement of announcing the establishment of IZs, these are downplayed or left for later causing significant delays in implementation and increased costs.
In the fresh round of discussions held in Seoul by the two ministers on Friday 08, the areas of trade and investment, political cooperation, defense initiatives, tourism and labour issues took the centre stage.
Prof. Peiris paid tribute to the multi-faceted relationship, which had developed between the two countries during their 44-year relationship and its present robust character.
In addition to seeking assistance, the ministers reviewed what was acknowledged as the “very beneficial impact of South Korean development programmes” in Sri Lanka, especially in the fields of water management, waste disposal and secondary education.
Eui-yong said that to increase the commitment to Sri Lanka, his ministry will engage with the private sector to consider greater assistance, especially in the fields of computer technology, electronics and pharmaceutical products.
In return, Sri Lanka will set up a special investment zone for South Korea, which will be the revival of an initiative that was embarked upon previously.
The balance of trade between the two countries is significantly in South Korea’s favour. Exports into South Korea are approximately US $ 71 million, while imports into Sri Lanka are at the threshold of about US $ 192 million.
Furthermore, the ministers agreed on exploring “practical ways” of overcoming some of the significant trade barriers, including customs levies on value-added products such as flavoured teas.
The Foreign Minister of Sri Lanka reiterated his country’s interest in receiving two naval craft from South Korea.
With regard to tourism, it was noted that about 12, 500 tourists visited Sri Lanka from that country before the onset of COVID 19.
Given that Sri Lankan Airlines operates a direct flight between Colombo and Seoul; Minister Chung agreed to work towards expanding the number of tourists visiting Sri Lanka from his country and also stimulating greater South Korean investment into the hospitality sector.
Minister Peiris expressed appreciation of the generous assistance received from Korea for combating the COVID-19 virus in Sri Lanka.
ApproximatelyUS$ 300,000 worth of equipment has already been received, with commitments of further assistance.
The Sri Lankan Minister requested Kotean cooperation in accelerating the vaccination of 22,000 Sri Lankans working in that country.