Features
How Indonesia’s geostrategic location can make it a leader for improving regional maritime security
An engaging presence
By CAPT. ROHAN JOSEPH
/SRI LANKA NAVY (Carried in the latest issue of US military journal Indo-Pacific Defence FORUM)
During the past decade, world attention turned toward the Indo-Pacific region as never before. The safety of sea lines of communication (SLOCs) that span this region is of paramount importance to the U.S. to ensure a free and open maritime domain in the Indo-Pacific. Maritime complexities require a comprehensive approach to security concerns. U.S. presence in the region is critical for preserving strategic U.S. maritime interests globally.
The U.S. faces many challenges in ensuring free and open seas in the Indo-Pacific. Considering the vast area as well as competition in the region, the U.S. needs the cooperation of other nations to achieve its objective. A partnership with Indonesia provides a great connecting node for the U.S. to link with the rest of the region because of Indonesia’s strategic strengths. To realize the U.S. Indo- Pacific strategy’s objectives, active presence and engagement through forging partnerships remain vital. In this endeavor, strategic strengths displayed by Indonesia offer the much- needed access required by the U.S. to address maritime security concerns in the Indo-Pacific.
As the Indo-Pacific’s relevance evolves, maritime security issues need to be addressed to ensure the free flow of commerce and freedom of navigation. Today, the Indo-Pacific has become a place for power competition. Apart from nontraditional threats, competition and rivalry need to be carefully handled to ensure that the region does not succumb to security issues that could negatively impact maritime trade.
At the 2017 Asia-Pacific Economic Cooperation summit in Vietnam, U.S. President Donald Trump drew a connection between the U.S. economy and national security when he announced, “The U.S. has been reminded time and time again in recent years that economic security is not merely related to national security. Economic security is national security. It is vital to our national strength.”
At the 2018 Shangri-La Dialogue, then-U.S. Secretary of Defense Jim Mattis highlighted the requirement for Indo-Pacific countries to come together in shaping the future of the region and highlighted the maritime space, among other aspects. “The maritime commons are a global good, and the sea lanes of communication are the arteries of economic vitality for all. … Through our security cooperation, we are building closer relationships between our militaries and our economies,” Mattis said.
Based on these stated U.S. interests, maritime security in the Indo-Pacific becomes a strategic concern for the U.S. This analysis examines how the U.S. can increase presence and engagement in the Indo-Pacific by expanding the already established U.S.-Indonesian partnership that relies on the geographical centrality of Indonesia in connecting the Indo-Pacific. It also addresses the U.S.’s maritime focus on Indonesia and the acceptance of Indonesia by regional players as a strategic partner.
With this backdrop, it’s also important to highlight Indonesia’s challenges in countering maritime security issues and achieving its own maritime vision, as well as how Indonesia and regional partners respond to external influences with U.S. participation.
DIPLOMATIC RELATIONS
U.S.-Indonesia relations have progressed since their establishment of diplomatic ties in 1949. In the intervening seven decades, bilateral relations have fluctuated, but a series of reforms implemented since 1998made Indonesia politically stable and paved the way for increased U.S. interaction. During a visit to Indonesia in March 2006, then-U.S. Secretary of State Condoleezza Rice highlighted the term “strategic partnership,” indicating the willingness of the U.S. to partner with Indonesia to promote Indo-Pacific stability. In November 2009, then-U.S. President Barack Obama and then- Indonesian President Susilo Bambang Yudhoyono inaugurated the comprehensive partnership between the two countries. This partnership focused on improving cooperation and the advancement of strategic discussions on bilateral, regional and global issues, including security.
Based on strengthening ties, the U.S. government expanded the 2010 comprehensive partnership to a broader strategic partnership in 2015. The U.S. declaration of Indonesia as a strategic partner speaks to the importance placed on Indonesia and on the region. “The U.S.-Indonesia strategic partnership is critical to the national interests of both nations and will grow more so in the years to come,” then-U.S. Indo-Pacific Command (USINDOPACOM) Commander Adm. Harry B. Harris said at the U.S.-Indonesia Society and American Chamber of Commerce in August 2017.
His statement also highlighted USINDOPACOM’s broader expectations in engaging the region through expanded strategic cooperation. The U.S.-Indonesia military relations progressed despite certain setbacks at various stages. The 9/11 attacks added a new episode to the Washington-Jakarta relations. The global war on terrorism, led by the U.S., adjusted policy priorities toward Southeast Asian nations. As a direct result, Washington-Jakarta defense relations have grown since 9/11. Perhaps most importantly, the position Indonesia holds in the Muslim world and its experience in dealing with terrorism made Indonesia a significant partner in the war.
“We probably engage with the Indonesian military more than any other nation anywhere in terms of mil-to-mil engagements,” Mattis said during his visit to Indonesia in January 2018. Mattis also emphasized the need for maritime cooperation in the unique maritime environment that Indonesia holds by connecting the Indian and Pacific oceans. The Indonesian military continues to engage in various training missions with other regional partners and the U.S., such as USINDOPACOM’s Cooperation Afloat Readiness and Training. Close to 170 bilateral military-to-military exercises are held annually between the two countries.
GATEWAY TO THE INDO-PACIFIC
Indonesia is strategically located at the center of the global maritime domain and is a pivotal state in Southeast Asia. Its geographical centrality and proximity to one of the most important maritime trade highways connecting the Indian and Pacific oceans makes Indonesia the undisputed gateway to the Indo-Pacific. Growing maritime trade through the Malacca Strait has made this waterway one of the most strategically important chokepoints with access to the South China Sea. About U.S. $5.3 trillion worth of trade passes annually through the sea, which includes U.S. $1.2 trillion in trade with the U.S. An estimated 50,000 to 60,000 ships transit the Malacca Strait annually. Because regional and global economies heavily depend on the Malacca Strait, its safety and security, as well as the continuity of SLOCs, have become an important strategic consideration. Therefore, the responsibility for ensuring access to the strait falls largely on Indonesia.
Piracy in the strait has decreased due to greater regional efforts. A minor attack in 2018 became the first recorded piracy attack since December 2015. Capitalizing on its location, Indonesia has been instrumental in leading cooperative anti-piracy efforts in the strait.
Indonesia’s geographical position offers many advantages in addressing maritime security concerns in the region. Indonesia’s active role in the formative stages and the successive progression of the Association of Southeast Asian Nations (ASEAN) since its founding in 1967, has been closely tied with the country’s foreign policy. In 2018, Indonesia’s Foreign Ministry declared the Indo-Pacific Cooperative Mechanism of the Southeast Asian countries highlighting three key aspects: respect for international norms and finding solutions through dialogue; addressing key security challenges; and creating economic hubs in the Indian and South Pacific oceans.
STRATEGIC PARTNERSHIP
Indonesian foreign policy is centered on ASEAN, where its de facto leadership status provides a strong position to cooperate with members and other regional players, including the U.S. The success of the U.S. Indo-Pacific strategy will depend on ASEAN’s centrality. Furthermore, partners in the region and beyond will be essential in achieving Indonesia’s global maritime objectives.
Indonesia’s foreign policy enables active engagement with partners and explains why Indonesia is one of the front members of the nonaligned movement. This foreign policy stance has been a strength in establishing strong ties with countries such as Australia, India and Japan while maintaining close cooperation with global partners. The Australian government’s Foreign Policy White Paper of 2017, for example, emphasized the importance of strengthening relations with Indonesia in areas such as economy and defense. Strategic developments in the Indo-Pacific, including the rise of the People’s Republic of China (PRC), make it imperative for Australia to strengthen bilateral relations with Indonesia.
The “ASEAN Outlook on the Indo-Pacific,” released in 2019, demonstrates ASEAN’s strong commitment to preserve the international rules-based order. The Australian policy documents also indicate the importance of adhering to international norms, transparency and inclusiveness. In South Asia, Indonesia’s ties with India have progressed over the years, and Jakarta has identified that the regional dynamics require both countries to coordinate closely to become maritime powers and to address external influences. Economic dynamics and maritime potential are two main areas, among others, that India expects to improve by engaging with Indonesia. During a 2019 meeting, the countries’ foreign ministers pledged to triple bilateral trade by 2025 to U.S. $50 billion. Engineering, pharmaceuticals, biotechnology, auto industry, information technology services, palm oil, coal and natural resources are some of the leading fields offering cooperation opportunities that could benefit both countries.
Policy experts consider strategic initiatives such as Act East; Asia-Africa Growth Corridor; Free, Open Inclusive Indo-Pacific; and Security and Growth for All in the Region to be pillars that support India’s wider Indo-Pacific strategic objectives. The shared vision of the India-Indonesia maritime cooperation that launched in 2018 highlights the importance of ensuring maritime security in the Indo- Pacific to achieve strategy and policy goals of both countries. India needs a neutral partner in the Indo-Pacific that could offer a sound base to launch such strategic initiatives. Partnering with Indonesia would be a major step in that direction and also offers India a strategic edge for its economic potential and ambitions to become a global maritime power.
LINKING TO NORTH ASIA
Indonesia-Japan ties have grown over the years since the establishment of diplomatic relations in 1958. The 1977 Fukuda Doctrine brought several changes to economic relations. Japan has also recognized the importance of engaging with ASEAN, where Indonesia is a key player.
The two countries pledged to accelerate discussions over the General Review Indonesia-Japan Economic Partnership Agreement (GRIJEPA) in 2019. As an emerging Southeast Asian economic entity, Indonesia shares strong economic relations with Japan.
Although India pulled out of the Regional Comprehensive Economic Partnership (RCEP), 14 countries, including Japan and China, agreed to it in 2019.
The RCEP has the potential to become the world’s largest trade agreement. Both the GRIJEPA and RCEP provide excellent opportunities for Japan to work closely with Indonesia. Japan, an ally of the U.S., needs to have a strategic maritime partner with the potential to provide a sound footing that is essential when solving complicated issues in the Indo-Pacific. Like Australia, Japan will find the Indonesian partnership important when addressing issues that require cooperation and coordination among neutral yet like-minded partners.
Even though Japan’s Indo-Pacific strategy has a broader view spanning from the East African coast to the West Coast of the U.S., Japan needs a strategic node that could offer options to gain access to the Indian Ocean.
Elsewhere in North Asia, Indonesia has strengthened ties with South Korea through the Indonesia-Korea Comprehensive Economic Partnership Agreement (IKCEPA). Through IKCEPA — which was finalized in
November 2019 — the countries plan to boost two-way trade to more than U.S. $30 billion by 2022 with the removal of tariff barriers, according to Reuters.
“The global economy has been facing rising uncertainty from the rising tide of protectionism in the
last few years,” said Yoo Myung-Hee, South Korea’s trade minister, according to Reuters. “Korea, as one of the largest beneficiaries of free trade, and Indonesia, as leader of ASEAN, are signaling to the world our true support for free, open and rules-based trade in this very challenging time.”
SOUTHEAST ASIA’S IMPORTANCE
Even a small maritime nation like Sri Lanka could benefit from enhancing the already established relations with Indonesia. Sri Lanka-Indonesia relations date to the fifth century marked by the arrival of Hinduism and Buddhism. Since the establishment of diplomatic ties in 1952, Sri Lanka and Indonesia have gradually expanded relations. During Indonesian President Joko Widodo’s visit to Sri Lanka in 2018, leaders of the two countries agreed to expand cooperation on trade, economy and capacity building.
South Asia lacks a strong regional organization that has the potential to drive the entire region toward reaping Indian Ocean benefits. Sri Lanka and Indonesia are members of the Indian Ocean Rim Association, which could benefit Sri Lanka by working closely with Indonesia.
Enhancing maritime cooperation with Indonesia will bring unprecedented results for a small island nation like Sri Lanka. Sri Lanka’s geostrategic location in the Indian Ocean and the interest shown by some of the leading players in establishing strategic partnerships centered on the maritime domain makes Sri Lanka an ideal partner for Indonesia and vice versa.
Likewise, partnering with Indonesia remains important for the U.S. Establishing a stronger strategic partnership with Indonesia will demonstrate the strength of the U.S. commitment to any doubters in the region. Indonesian neutrality is a key strength that could benefit the U.S. Indonesia’s access to the Indian and Pacific oceans offers the U.S. an Indian Ocean link through ASEAN. Ensuring freedom of navigation, adherence to a rules-based international order, and the security of the maritime trade and energy SLOCs should top the list of Washington policymakers. As the U.S. and China vie for influence in the Indo-Pacific, the U.S. will work harder to find a strong launching pad that supports U.S. strategic initiatives in the region. The Indonesian neutrality offers a greater opportunity for the U.S. to do just that.
RECOMMENDATIONS
The U.S. should consider areas, such as extra regional pressure and Indonesia’s maritime challenges, as it continues to engage on maritime concerns in the Indo- Pacific. Many countries in the region believe that the U.S. is attempting to dominate the region through its strategy. Its unique geographical centrality in the Indo- Pacific, access to major SLOCs, economic potential, existing strong U.S. relations, prominent position in ASEAN, acceptance by regional partners and ties with the PRC make Indonesia a decisive strategic partner for the U.S. in the Indo-Pacific when addressing maritime security concerns and in implementing the U.S. Indo- Pacific strategy. In this regard, consider the following recommendations: Strategic Partnerships: Complex maritime affairs influence regional/global players to form strong partnerships. A strong position held by Indonesia in the ASEAN provides a unique platform to forge strategic partnerships with a number of countries. The establishment of multilateral strategic alliances centering on Indonesia will allow the U.S. to diplomatically counter the PRC.
Strategic Presence: To address maritime security concerns, strategic presence in the Indo-Pacific is a prerequisite. Failure to do so will grant an opportunity for others to fill the vacuum. Expansion of the
USINDOPACOM area of responsibility demarcation toward the East African coast could enhance the U.S. presence in the entire Indian Ocean.
Strategic Engagement: Strategic partnership and presence building centering on Indonesia will assist the U.S. to better engage with regional partners. Engagement should focus on diplomatic, informational, military and economic aspects. USINDOPACOM should play a leading role in all four elements using a collaborative approach through its partnership with Indonesia.
by Dr Gotabhya Ranasinghe
Senior Consultant Cardiologist
National Hospital Sri Lanka
When we sought a meeting with Hon Dr. Ramesh Pathirana, Minister of Health, he graciously cleared his busy schedule to accommodate us. Renowned for his attentive listening and deep understanding, Minister Pathirana is dedicated to advancing the health sector. His openness and transparency exemplify the qualities of an exemplary politician and minister.
Dr. Palitha Mahipala, the current Health Secretary, demonstrates both commendable enthusiasm and unwavering support. This combination of attributes makes him a highly compatible colleague for the esteemed Minister of Health.
Our discussion centered on a project that has been in the works for the past 30 years, one that no other minister had managed to advance.
Minister Pathirana, however, recognized the project’s significance and its potential to revolutionize care for heart patients.
The project involves the construction of a state-of-the-art facility at the premises of the National Hospital Colombo. The project’s location within the premises of the National Hospital underscores its importance and relevance to the healthcare infrastructure of the nation.
This facility will include a cardiology building and a tertiary care center, equipped with the latest technology to handle and treat all types of heart-related conditions and surgeries.
Securing funding was a major milestone for this initiative. Minister Pathirana successfully obtained approval for a $40 billion loan from the Asian Development Bank. With the funding in place, the foundation stone is scheduled to be laid in September this year, and construction will begin in January 2025.
This project guarantees a consistent and uninterrupted supply of stents and related medications for heart patients. As a result, patients will have timely access to essential medical supplies during their treatment and recovery. By securing these critical resources, the project aims to enhance patient outcomes, minimize treatment delays, and maintain the highest standards of cardiac care.
Upon its fruition, this monumental building will serve as a beacon of hope and healing, symbolizing the unwavering dedication to improving patient outcomes and fostering a healthier society.We anticipate a future marked by significant progress and positive outcomes in Sri Lanka’s cardiovascular treatment landscape within the foreseeable timeframe.
by Fr. Emmanuel Fernando, OMI
Jesuit Fr. Aloysius Pieris (affectionately called Fr. Aloy) celebrated his 90th birthday on April 9, 2024 and I, as the editor of our Oblate Journal, THE MISSIONARY OBLATE had gone to press by that time. Immediately I decided to publish an article, appreciating the untiring selfless services he continues to offer for inter-Faith dialogue, the renewal of the Catholic Church, his concern for the poor and the suffering Sri Lankan masses and to me, the present writer.
It was in 1988, when I was appointed Director of the Oblate Scholastics at Ampitiya by the then Oblate Provincial Fr. Anselm Silva, that I came to know Fr. Aloy more closely. Knowing well his expertise in matters spiritual, theological, Indological and pastoral, and with the collaborative spirit of my companion-formators, our Oblate Scholastics were sent to Tulana, the Research and Encounter Centre, Kelaniya, of which he is the Founder-Director, for ‘exposure-programmes’ on matters spiritual, biblical, theological and pastoral. Some of these dimensions according to my view and that of my companion-formators, were not available at the National Seminary, Ampitiya.
Ever since that time, our Oblate formators/ accompaniers at the Oblate Scholasticate, Ampitiya , have continued to send our Oblate Scholastics to Tulana Centre for deepening their insights and convictions regarding matters needed to serve the people in today’s context. Fr. Aloy also had tried very enthusiastically with the Oblate team headed by Frs. Oswald Firth and Clement Waidyasekara to begin a Theologate, directed by the Religious Congregations in Sri Lanka, for the contextual formation/ accompaniment of their members. It should very well be a desired goal of the Leaders / Provincials of the Religious Congregations.
Besides being a formator/accompanier at the Oblate Scholasticate, I was entrusted also with the task of editing and publishing our Oblate journal, ‘The Missionary Oblate’. To maintain the quality of the journal I continue to depend on Fr. Aloy for his thought-provoking and stimulating articles on Biblical Spirituality, Biblical Theology and Ecclesiology. I am very grateful to him for his generous assistance. Of late, his writings on renewal of the Church, initiated by Pope St. John XX111 and continued by Pope Francis through the Synodal path, published in our Oblate journal, enable our readers to focus their attention also on the needed renewal in the Catholic Church in Sri Lanka. Fr. Aloy appreciated very much the Synodal path adopted by the Jesuit Pope Francis for the renewal of the Church, rooted very much on prayerful discernment. In my Religious and presbyteral life, Fr.Aloy continues to be my spiritual animator / guide and ongoing formator / acccompanier.
Fr. Aloysius Pieris, BA Hons (Lond), LPh (SHC, India), STL (PFT, Naples), PhD (SLU/VC), ThD (Tilburg), D.Ltt (KU), has been one of the eminent Asian theologians well recognized internationally and one who has lectured and held visiting chairs in many universities both in the West and in the East. Many members of Religious Congregations from Asian countries have benefited from his lectures and guidance in the East Asian Pastoral Institute (EAPI) in Manila, Philippines. He had been a Theologian consulted by the Federation of Asian Bishops’ Conferences for many years. During his professorship at the Gregorian University in Rome, he was called to be a member of a special group of advisers on other religions consulted by Pope Paul VI.
Fr. Aloy is the author of more than 30 books and well over 500 Research Papers. Some of his books and articles have been translated and published in several countries. Among those books, one can find the following: 1) The Genesis of an Asian Theology of Liberation (An Autobiographical Excursus on the Art of Theologising in Asia, 2) An Asian Theology of Liberation, 3) Providential Timeliness of Vatican 11 (a long-overdue halt to a scandalous millennium, 4) Give Vatican 11 a chance, 5) Leadership in the Church, 6) Relishing our faith in working for justice (Themes for study and discussion), 7) A Message meant mainly, not exclusively for Jesuits (Background information necessary for helping Francis renew the Church), 8) Lent in Lanka (Reflections and Resolutions, 9) Love meets wisdom (A Christian Experience of Buddhism, 10) Fire and Water 11) God’s Reign for God’s poor, 12) Our Unhiddden Agenda (How we Jesuits work, pray and form our men). He is also the Editor of two journals, Vagdevi, Journal of Religious Reflection and Dialogue, New Series.
Fr. Aloy has a BA in Pali and Sanskrit from the University of London and a Ph.D in Buddhist Philosophy from the University of Sri Lankan, Vidyodaya Campus. On Nov. 23, 2019, he was awarded the prestigious honorary Doctorate of Literature (D.Litt) by the Chancellor of the University of Kelaniya, the Most Venerable Welamitiyawe Dharmakirthi Sri Kusala Dhamma Thera.
Fr. Aloy continues to be a promoter of Gospel values and virtues. Justice as a constitutive dimension of love and social concern for the downtrodden masses are very much noted in his life and work. He had very much appreciated the commitment of the late Fr. Joseph (Joe) Fernando, the National Director of the Social and Economic Centre (SEDEC) for the poor.
In Sri Lanka, a few religious Congregations – the Good Shepherd Sisters, the Christian Brothers, the Marist Brothers and the Oblates – have invited him to animate their members especially during their Provincial Congresses, Chapters and International Conferences. The mainline Christian Churches also have sought his advice and followed his seminars. I, for one, regret very much, that the Sri Lankan authorities of the Catholic Church –today’s Hierarchy—- have not sought Fr.
Aloy’s expertise for the renewal of the Catholic Church in Sri Lanka and thus have not benefited from the immense store of wisdom and insight that he can offer to our local Church while the Sri Lankan bishops who governed the Catholic church in the immediate aftermath of the Second Vatican Council (Edmund Fernando OMI, Anthony de Saram, Leo Nanayakkara OSB, Frank Marcus Fernando, Paul Perera,) visited him and consulted him on many matters. Among the Tamil Bishops, Bishop Rayappu Joseph was keeping close contact with him and Bishop J. Deogupillai hosted him and his team visiting him after the horrible Black July massacre of Tamils.
Sri Lanka-Singapore Free Trade Agreement
By Gomi Senadhira
senadhiragomi@gmail.com
“You might tell fairy tales, but the progress of a country cannot be achieved through such narratives. A country cannot be developed by making false promises. The country moved backward because of the electoral promises made by political parties throughout time. We have witnessed that the ultimate result of this is the country becoming bankrupt. Unfortunately, many segments of the population have not come to realize this yet.” – President Ranil Wickremesinghe, 2024 Budget speech
Any Sri Lankan would agree with the above words of President Wickremesinghe on the false promises our politicians and officials make and the fairy tales they narrate which bankrupted this country. So, to understand this, let’s look at one such fairy tale with lots of false promises; Ranil Wickremesinghe’s greatest achievement in the area of international trade and investment promotion during the Yahapalana period, Sri Lanka-Singapore Free Trade Agreement (SLSFTA).
It is appropriate and timely to do it now as Finance Minister Wickremesinghe has just presented to parliament a bill on the National Policy on Economic Transformation which includes the establishment of an Office for International Trade and the Sri Lanka Institute of Economics and International Trade.
Was SLSFTA a “Cleverly negotiated Free Trade Agreement” as stated by the (former) Minister of Development Strategies and International Trade Malik Samarawickrama during the Parliamentary Debate on the SLSFTA in July 2018, or a colossal blunder covered up with lies, false promises, and fairy tales? After SLSFTA was signed there were a number of fairy tales published on this agreement by the Ministry of Development Strategies and International, Institute of Policy Studies, and others.
However, for this article, I would like to limit my comments to the speech by Minister Samarawickrama during the Parliamentary Debate, and the two most important areas in the agreement which were covered up with lies, fairy tales, and false promises, namely: revenue loss for Sri Lanka and Investment from Singapore. On the other important area, “Waste products dumping” I do not want to comment here as I have written extensively on the issue.
1. The revenue loss
During the Parliamentary Debate in July 2018, Minister Samarawickrama stated “…. let me reiterate that this FTA with Singapore has been very cleverly negotiated by us…. The liberalisation programme under this FTA has been carefully designed to have the least impact on domestic industry and revenue collection. We have included all revenue sensitive items in the negative list of items which will not be subject to removal of tariff. Therefore, 97.8% revenue from Customs duty is protected. Our tariff liberalisation will take place over a period of 12-15 years! In fact, the revenue earned through tariffs on goods imported from Singapore last year was Rs. 35 billion.
The revenue loss for over the next 15 years due to the FTA is only Rs. 733 million– which when annualised, on average, is just Rs. 51 million. That is just 0.14% per year! So anyone who claims the Singapore FTA causes revenue loss to the Government cannot do basic arithmetic! Mr. Speaker, in conclusion, I call on my fellow members of this House – don’t mislead the public with baseless criticism that is not grounded in facts. Don’t look at petty politics and use these issues for your own political survival.”
I was surprised to read the minister’s speech because an article published in January 2018 in “The Straits Times“, based on information released by the Singaporean Negotiators stated, “…. With the FTA, tariff savings for Singapore exports are estimated to hit $10 million annually“.
As the annual tariff savings (that is the revenue loss for Sri Lanka) calculated by the Singaporean Negotiators, Singaporean $ 10 million (Sri Lankan rupees 1,200 million in 2018) was way above the rupees’ 733 million revenue loss for 15 years estimated by the Sri Lankan negotiators, it was clear to any observer that one of the parties to the agreement had not done the basic arithmetic!
Six years later, according to a report published by “The Morning” newspaper, speaking at the Committee on Public Finance (COPF) on 7th May 2024, Mr Samarawickrama’s chief trade negotiator K.J. Weerasinghehad had admitted “…. that forecasted revenue loss for the Government of Sri Lanka through the Singapore FTA is Rs. 450 million in 2023 and Rs. 1.3 billion in 2024.”
If these numbers are correct, as tariff liberalisation under the SLSFTA has just started, we will pass Rs 2 billion very soon. Then, the question is how Sri Lanka’s trade negotiators made such a colossal blunder. Didn’t they do their basic arithmetic? If they didn’t know how to do basic arithmetic they should have at least done their basic readings. For example, the headline of the article published in The Straits Times in January 2018 was “Singapore, Sri Lanka sign FTA, annual savings of $10m expected”.
Anyway, as Sri Lanka’s chief negotiator reiterated at the COPF meeting that “…. since 99% of the tariffs in Singapore have zero rates of duty, Sri Lanka has agreed on 80% tariff liberalisation over a period of 15 years while expecting Singapore investments to address the imbalance in trade,” let’s turn towards investment.
Investment from Singapore
In July 2018, speaking during the Parliamentary Debate on the FTA this is what Minister Malik Samarawickrama stated on investment from Singapore, “Already, thanks to this FTA, in just the past two-and-a-half months since the agreement came into effect we have received a proposal from Singapore for investment amounting to $ 14.8 billion in an oil refinery for export of petroleum products. In addition, we have proposals for a steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million), sugar refinery ($ 200 million). This adds up to more than $ 16.05 billion in the pipeline on these projects alone.
And all of these projects will create thousands of more jobs for our people. In principle approval has already been granted by the BOI and the investors are awaiting the release of land the environmental approvals to commence the project.
I request the Opposition and those with vested interests to change their narrow-minded thinking and join us to develop our country. We must always look at what is best for the whole community, not just the few who may oppose. We owe it to our people to courageously take decisions that will change their lives for the better.”
According to the media report I quoted earlier, speaking at the Committee on Public Finance (COPF) Chief Negotiator Weerasinghe has admitted that Sri Lanka was not happy with overall Singapore investments that have come in the past few years in return for the trade liberalisation under the Singapore-Sri Lanka Free Trade Agreement. He has added that between 2021 and 2023 the total investment from Singapore had been around $162 million!
What happened to those projects worth $16 billion negotiated, thanks to the SLSFTA, in just the two-and-a-half months after the agreement came into effect and approved by the BOI? I do not know about the steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million) and sugar refinery ($ 200 million).
However, story of the multibillion-dollar investment in the Petroleum Refinery unfolded in a manner that would qualify it as the best fairy tale with false promises presented by our politicians and the officials, prior to 2019 elections.
Though many Sri Lankans got to know, through the media which repeatedly highlighted a plethora of issues surrounding the project and the questionable credentials of the Singaporean investor, the construction work on the Mirrijiwela Oil Refinery along with the cement factory began on the24th of March 2019 with a bang and Minister Ranil Wickremesinghe and his ministers along with the foreign and local dignitaries laid the foundation stones.
That was few months before the 2019 Presidential elections. Inaugurating the construction work Prime Minister Ranil Wickremesinghe said the projects will create thousands of job opportunities in the area and surrounding districts.
The oil refinery, which was to be built over 200 acres of land, with the capacity to refine 200,000 barrels of crude oil per day, was to generate US$7 billion of exports and create 1,500 direct and 3,000 indirect jobs. The construction of the refinery was to be completed in 44 months. Four years later, in August 2023 the Cabinet of Ministers approved the proposal presented by President Ranil Wickremesinghe to cancel the agreement with the investors of the refinery as the project has not been implemented! Can they explain to the country how much money was wasted to produce that fairy tale?
It is obvious that the President, ministers, and officials had made huge blunders and had deliberately misled the public and the parliament on the revenue loss and potential investment from SLSFTA with fairy tales and false promises.
As the president himself said, a country cannot be developed by making false promises or with fairy tales and these false promises and fairy tales had bankrupted the country. “Unfortunately, many segments of the population have not come to realize this yet”.
(The writer, a specialist and an activist on trade and development issues . )
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