In response to an approach made by the Malaysian Government, Sri Lanka is scheduled to commence a feasibility study in early November to explore the possibility of entering a free trade agreement (FTA) with Malaysia. If the findings of this study prove to be positive and negotiations produce a mutually beneficial agreement, the two nations could sign an FTA before the end of 2020, according to the Ministry of Development Strategies and International Trade (MoDSIT) and the Department of Commerce (DoC). An official from the Ministry told The Sunday Morning Business that the Ministry floated the tender to finalise an independent research body from 3-24 June and is currently in the process of evaluating the bids and finalising which research body would conduct the feasibility study. The study will be carried out for a period of six to seven months in five phases, and stakeholder comments will be obtained parallel to this process. The study will focus on providing an analysis on the extent to which the proposed agreement is in line with national policies and interests. In addition to this, attention will also be paid towards the identification of service sectors which can be liberalised under the proposed agreement, recognition of a modality for investment, and a macro-level analysis of the impact of the proposed agreement. During the first phase, an inception report has to be prepared within 14 days after contract signing. Subsequently, the first draft report, second draft report, final draft report, and final report have to be compiled within 120 days, 150 days, 180 days, and 210 days after contract signing, respectively. Following the compilation of the final report, it will be submitted to the Cabinet of Ministers for their information. Thereafter, the Ministry will decide on whether to sign the agreement. Malaysia expressed its initial interest to go for a FTA with Sri Lanka. During the Second Session of the Joint Commission in Malaysia in October 2013 in Kuala Lumpur, both sides agreed, in principle, to explore the future possibility of an FTA which would boost bilateral trade further. In order to strengthen and enhance bilateral trade and economic relations, the Scooping Paper on Economic Partnership was received from Malaysia on 17 November 2016. Sri Lanka had sent the letter to Malaysia on 29 January 2018 mentioning the concurrence to hold a joint feasibility study in order to determine the possibility of starting FTA negotiations. Accordingly, the feasibility study is set to be started by next month. According to the MoDSIT, bilateral trade between Sri Lanka and Malaysia is continuously growing so far, but trade flows have been persistently asymmetric and there is a trade deficit towards Sri Lanka. In 2018, Sri Lanka’s exports to Malaysia were just 0.3% of its total exports, while Malaysia was the sixth largest importer of Sri Lanka as their imports accounted 3.6% of overall imports. The total trade value in 2018 was $ 833 million. To truly maximise the benefits of the bilateral trade relationship, Sri Lankan producers need to significantly increase the quantity and value of exports to Malaysia, according to the Ministry. Sri Lanka’s main exports to Malaysia include natural rubber and rubber-based products, bran, sharps and other residues of milling, precious stones and semi-precious stones, tea, bath preparations, shaving or aftershave preparations, deodorants, fish, articles of jewellery, food preparations, unmanufactured tobacco, machinery parts, articles of apparel and clothing accessories, rubber gloves, coconut fibre, vegetables, brooms and brushes, aluminium plates, sheets, and strips, and natural sands. Malaysia’s exports to Sri Lanka include petroleum, palm oil, cement, aluminium, mews print, wood products, electrical items, cement linkers, polymers of ethylene, vegetable fats, chemicals, urea, plastic articles, iron and steel articles, and paper. According to the DoC of Sri Lanka, bilateral trade between Sri Lanka and Malaysia in the five-year period between 2013 and 2017 increased by 20%.