Sri Lanka aims USD 700 Million worth of Foreign trade with Russia

According to Foreign Minister Dinesh Gunawardena, Sri Lanka aims to increase bilateral trade with Russia to USD 700 million and to continue policies set by the previous administration. "Sri Lanka and Russia are keen to expand bilateral economic engagement further and to increase bilateral trade to meet the target volume of USD 700 million," Gunawardena said at a joint press conference with Russian Foreign Minister Sergey Lavrov. 

"Our discussions centered on the continuation of the political dialogue and the promotion of bilateral economic and technical cooperation within the Intergovernmental Commission on Commerce, Economic, Scientific and Technical Cooperation between Russia and Sri Lanka," Gunawardena said. Lavrov said that Russia wants more cooperation with local markets to support the development of the infrastructure.

"We know that Sri Lanka is keen to get our support in the areas of hydrocarbon exploration and tourism infrastructure construction. We need to establish more direct contact with the [ Sri Lankan ] business community for these to take shape," Lavrov said.

Gunawardena said joint ventures between Sri Lanka and Russia would be encouraged and given priority for rubber products, coconuts products, spices, herbal drinks, ceramics, fish and gems, and jewelry. Sri Lanka and Russia have agreed to cooperate in the areas of agriculture, food, fisheries, water management, education, trade, finance, tourism, protection and defense, renewable energy, and science and technology.

Russia is the 15th largest export market in Sri Lanka and the 24th largest import source. Sri Lanka had exported 185 million US dollars or 1.6 percent of the total to Russia, most of which were from tea, according to official data.  Sri Lanka imported from Russia 204 million dollars or 0.9% of total imports in 2018 as per the Export Development Board.

OSL Take: The move to target USD 700 million worth of trade would undoubtedly further expand Sri Lanka’s trade opportunities with other countries. Sri Lanka already has FTAs with several key global markets and is engaged in successful business ventures with these nations.

The latest FTA that was signed by Sri Lanka was with Singapore, and discussions have already commenced on the launching of four mega projects in Sri Lanka under the agreement. Hence, foreign businesses/investors looking at doing business with Asian markets would look at setting up bases in Sri Lanka to carry out their operations. Sri Lanka also enjoys trade concessions from the US and the EU.

Further, the discussion about diversifying Sri Lankan exports to Russia, such as Tea, would result in the expansion of the Tea export market for local products in Russia.   This strategy would also provide the opportunity for foreign companies interested in doing business with Russia to use Sri Lanka as the home for their operation. Hence, With this latest potential to Sri Lanka’s portfolio of existing and pending Free Trade Agreements, it is clear that Global investors looking to hedge their investments on the potential upside of any commercial enterprise which requires a substantial market should look no further than exploring the opportunity presented by Sri Lanka.

VBS/AT/20200302/Z_TB1