Levy imposed on various goods imported under the Sri Lanka-Singapore Free Trade Agreement (FTA) reduced

  The Sri Lankan government has initiated measures to reduce the Ports and Airports Development Levy (PAL) imposed on various goods imported...

 

The Sri Lankan government has initiated measures to reduce the Ports and Airports Development Levy (PAL) imposed on various goods imported under the Sri Lanka-Singapore Free Trade Agreement (FTA). Previously set at 10%, the PAL rate has now been lowered to 6%, effective from March 29, as announced by the Ministry of Finance.

This reduction in PAL impacts several categories of imported goods, including specific types of cement, a variety of fruits such as apples, and certain infant foods that have received approval

from the Director General of Health Services. Additionally, various other items imported under the Sri Lanka-Singapore FTA will also benefit from these reduced

levies.

In addition to revising the PAL rates, the government has also undertaken efforts to review and adjust the taxes applied to a range of products. This includes medicines, surgical instruments, electrical appliances, bathroom fixtures, polythene and plastic products, as well as aluminum and wooden items that are imported under the relevant FTA terms.

It's important to note that the PAL rates specified in the official gazette notifications, including No. 2312/67 dated December 31, 2022, No. 2326/2 dated April 03, 2023, No. 2345/50 dated September 21, 2023, and No. 2364/37 dated December 31, 2023, will remain unchanged for the importation of goods not covered by the Sri Lanka-Singapore Free Trade Agreement.

This adjustment in import levies aims to promote trade facilitation, reduce the cost of imported goods for consumers, and enhance the competitiveness of Sri Lanka's trade under the FTA with Singapore.

 

Sri Lanka-Singapore Free Trade Agreement (SLSFTA)

The Sri Lanka-Singapore Free Trade Agreement (SLSFTA), signed in 2018, aims to liberalize trade between the two nations. This report explores the key features of the agreement, its potential benefits for both countries and some considerations for its implementation.

Background

Sri Lanka signed the SLSFTA with Singapore on January 23rd, 2018, and it came into effect on May 1st, 2018. The agreement represents Sri Lanka's sixth FTA and the first since 2005 [Sri Lanka–Singapore Free Trade Agreement - LKI].

Key Features of the SLSFTA

• Tariff Elimination: The agreement progressively eliminates tariffs on 80% of all goods traded between the two countries over a period of up to 15 years [Sri Lanka – Singapore Free Trade Agreement (SLSFTA) - Enterprise Singapore]. This facilitates increased market access for businesses in both nations.
• Trade Facilitation: The SLSFTA promotes measures to streamline customs procedures, such as the requirement for Sri Lanka to maintain a single-window customs system, leading to faster trade flows [Sri Lanka–Singapore Free Trade Agreement - LKI].
• Services and Investment: The agreement also liberalizes trade in services and protects Singaporean investments in Sri Lanka, fostering cooperation in various sectors [Singapore-Sri Lanka Free Trade Agreement (SSLFTA) - Department of Commerce].

Potential Benefits

• Increased Trade: The SLSFTA is expected to boost bilateral trade volumes by eliminating tariffs and simplifying trade procedures. This can benefit both Sri Lankan exporters and Singaporean businesses.
• Foreign Direct Investment (FDI): The agreement's investment protection provisions may attract greater FDI from Singapore into Sri Lanka, potentially leading to job creation and economic growth.
• Knowledge Transfer: Increased trade and investment flows can facilitate knowledge transfer and technological advancements in Sri Lanka.

Considerations

• Rules of Origin: The agreement's Rules of Origin (ROO) determine which goods qualify for tariff benefits. Sri Lankan businesses may need to adapt their production processes to meet these requirements [Insights and Findings on the Sri Lanka - Singapore Free Trade Agreement - Ceylon Chamber of Commerce].
• Impact on Domestic Industries: While the FTA benefits some sectors, it's crucial to assess potential negative impacts on Sri Lanka's domestic industries exposed to increased competition.

Conclusion

The SLSFTA presents a significant opportunity for Sri Lanka and Singapore to strengthen their economic ties. By effectively implementing the agreement and addressing potential challenges, both countries can reap the benefits of increased trade, investment, and knowledge sharing.

References

• Ceylon Chamber of Commerce. Insights and Findings on the Sri Lanka - Singapore Free Trade Agreement [Insights and Findings on the Sri Lanka - Singapore Free Trade Agreement - Ceylon Chamber of Commerce]. Retrieved from https://www.themorning.lk/articles/TlgfnkHd4uvtaDppXJLd
• Department of Commerce. Singapore-Sri Lanka Free Trade Agreement (SSLFTA) [Singapore-Sri Lanka Free Trade Agreement (SSLFTA) - Department of Commerce]. Retrieved from https://doc.gov.lk/index.php?lang=en
• Enterprise Singapore. Sri Lanka – Singapore Free Trade Agreement (SLSFTA) [Sri Lanka – Singapore Free Trade Agreement (SLSFTA) - Enterprise Singapore]. Retrieved from https://www.enterprisesg.gov.sg/resources/blog/blog/everything-you-need-to-know-about-the-sri-lanka---singapore-fta
• LKI. Sri Lanka–Singapore Free Trade Agreement [Sri Lanka–Singapore Free Trade Agreement - LKI]. Retrieved from https://lki.lk/wp-content/uploads/2018/09/LKI_Explainer_-Sri-Lanka_and_Singapore_-Free_Trade_Agreement_Divya_Hundlani.pdf