Sri Lanka and Singapore have enjoyed diplomatic and trade relations for a long time, which were strengthened by the signing of the Sri Lanka-Singapore Free Trade Agreement (SLSFTA) in 2018.

“The agreement was signed on 23 January 2018 but came into effect on 1 May 2018,” stated the Vice President of the Sri Lanka-Singapore Business Council of the Ceylon Chamber of Commerce Nirupa Peiris, on a recent edition of LMD’s weekly digital TV programme.

She added: “Since then, we have enjoyed an exchange of programmes with a wealth of knowledge coming towards Sri Lanka – and evolving trade missions from Sri Lanka to Singapore.”

“This agreement was signed to facilitate trade and investments between the two nations with key provisions to enhance economic cooperation,” she explained.

Peiris continued: “It eliminates 80 percent of all tariff lines, implementing this reduction over a period of up to 15 years. And it includes measures to protect Singaporean investors and their investments, reinforcing bilateral investment security and economic ties.”

Singapore was the 22nd largest export destination for Sri Lanka in 2023. Sri Lanka’s exports to Singapore amounted to US$ 117 million in 2023 while imports from the city-state exceeded 863 million dollars, making it the fourth largest source of imports for Sri Lanka, she revealed.

The main products exported to Singapore included mineral fuels and oils, tea, coffee, cereals, essential oils, articles of apparel, and fish and shellfish. Import items to Sri Lanka included natural and cultured pearls, chemical products, nuclear reactors and organic chemicals to name a few.

“Singapore is one of Sri Lanka’s key trade partners, alongside India, China, the UAE and Malaysia,” Peiris noted, adding that “Singapore’s role in supplying petroleum products and supporting trade routes is important for Sri Lanka’s energy security and economic activities.”

But there are several challenges that Sri Lanka must overcome to reap the optimum benefits from the relationship.

“Sri Lanka faces logistical challenges that impact import efficiency including tax structures that increase costs and clearance delays at airports due to security checks,” she asserted, adding that “these factors, compounded by infrastructure issues like road congestion and fuel shortages, can affect trade operations with partners including Singapore.”

Peiris believes that pursuing measures to improve Sri Lanka’s infrastructure is crucial: “Upgrading transport networks – such as ports, roads and airports – is essential to facilitate the smooth movement of goods and reduce trade delays.”

“Investments in energy infrastructure with a focus on renewable and reliable energy sources are also crucial,” she said.

Customs clearance is another aspect to streamline: “Adopting digital solutions and enhancing supply chain visibility is necessary, as well as modernising customs procedures by incorporating advanced technology. Implementing advanced tracking and management systems will enable better planning and quicker responses to disruptions.”

“Imports are critical to the sustainability of key sectors in Sri Lanka such as energy and manufacturing, which depend on essential goods like refined petroleum and textiles,” Peiris said.

She elaborated: “If we leverage trade agreements with technologically advanced nations like Singapore, it can lead to technological progress and increased trade dynamism.”

“By negotiating clauses that include technology sharing and capacity building, Sri Lanka can boost the productivity and competitiveness of its local industries. Such agreements promote knowledge transfers, allowing local enterprises to adopt innovative practices and modern technologies,” she observed.

In summing up, she said: “I encourage the Sri Lankan government to strengthen the ties we have with Singapore and also look at digitalisation to smoothen operations so that we’ll be able reap the massive potential that is out there.”