Colombo vows to join RCEP but needs to overcome its debt restructuring first
Membership in regional free trade agreements will generate new momentum for Sri Lanka to reinvigorate its economy through additional market access, experts have said.
Sri Lanka will join the Regional Comprehensive Economic Partnership, or RCEP, and enter free trade agreements with Association of Southeast Asian Nations members after debt restructuring is complete, the President's Media Division said in a statement on Thursday.
According to the statement, President Ranil Wickremesinghe, who took part in events to celebrate ASEAN Day in Colombo, expressed his support for ASEAN's vision for the Asia-Pacific region.
Wickremesinghe said Sri Lanka will work closely with ASEAN nations in the coming years.
"At this most critical time toward a new era of economic development, joining RCEP is a logical move for Sri Lanka. The opening of Sri Lanka will allow it to tap on global financial and investment capitals," Lawrence Loh, director of the National University of Singapore's Centre for Governance and Sustainability, told China Daily.
"On a more strategic level, it is sensible for Sri Lanka to strengthen ties in the region, particularly countries in East Asia and Southeast Asia."
Rajiv Biswas, Asia-Pacific chief economist from S&P Global Market Intelligence, said Sri Lanka joining the RCEP will give Sri Lanka improved market access to 15 Asia-Pacific economies, becoming part of the world's largest free trade area that accounts for 30 percent of the world's GDP.
Joining the RCEP will also improve the competitiveness of Sri Lanka to attract foreign direct investment inflows, he added. One important advantage of the RCEP is its favorable rules of origin treatment, which provide cumulative benefits that will help to build manufacturing supply chains within the RCEP region across different countries. This will help to attract foreign direct investment flows for a wide range of manufacturing and infrastructure projects into RCEP member nations.
However, Biswas pointed out that joining the RCEP will also create challenges for Sri Lanka to pursue further economic reforms as there will be greater competition from other RCEP member economies.