Business

Sri Lanka could become Asia’s Switzerland for large economies: KPMG India head

By Charindra Chandrasena

Sri Lanka has the potential to become the Switzerland of Asia, where the world’s major economies work together to power Asian and global economic growth, according to KPMG India Chairman and CEO Arun M. Kumar.

“Asia and the world will have a better future when the large economies work together, being sensitive to each other’s interests. What would it take for Sri Lanka to be that Switzerland of Asia where the major countries work together?”

He made these remarks while delivering the Keynote Address at the Sri Lanka Economic Summit 2018 which kicked off yesterday.

Switzerland has maintained a neutral and non aligned stance for centuries, and is home to many headquarters of international institutions, including the World Trade Organization, International Telecommunication Union (ITU) and the World Intellectual Property Organization.

He stated that Sri Lanka’s location is particularly attractive in the context of the ‘free and open’ Indian Ocean envisioned in the emerging Indo-Pacific view of the world.

“Many countries, notably China, India and Japan, are seeking a greater role in developing Sri Lanka’s strategic location between the energy-rich Middle East, Africa and the Straits of Malacca.  The US too is not far from considering Sri Lanka a strategic bulwark.”

Before heading KPMG, Kumar served as the Assistant Secretary of Commerce for Global Markets and Director General of the US and Foreign Commercial Service in the Obama Administration.

Highlighting Sri Lanka’s economic reliance on China, he advised the government to engage with the rest of the economies in the region, particularly India and East Asian economies.

“Finalizing free trade agreements with many of the major regional powers over the next year or so would be desirable as balancing and enhancing measures. Among these are the Economic and Technology Cooperation Agreement (ETCA) with India and FTAs with other countries. The government’s turn towards broader engagement with East Asia recognizes the country’s pivotal position as a strategic asset to both India and China.”

India and Sri Lanka began official talks on ETCA in 2016, although it is yet to be signed due to opposition within Sri Lanka. The Government signed an FTA with Singapore last year, which has also been met with fierce criticism from certain quarters, leading to President Maithripala Sirisena appointing a special committee to study the FTA.

Kumar also urged the Government to actively participate in regional associations to enhance connectivity with Asian countries.

“Active participation in the South Asia Association for Regional Cooperation (SAARC), the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), and the South Asia Subregional Economic Cooperation program (SASEC) can help build further connectivity with neighboring countries, and the rest of Asia.”

He pointed out that when measured by intraregional trade in goods, capital, and ideas, South Asia is the least integrated region in the world and that Sri Lanka can take the initiative in improving these indicators.

“While South Asia has made significant progress in integrating with the global economy, integration within the region remains limited, primarily due to fears emanating from the varying size of economies.  Sri Lanka can play a lead role in changing this.”

Diplomatic tensions between India and Pakistan, the two largest economies in South Asia, have prevented SAARC from achieving meaningful integration among South Asian nations.