Sri Lanka

Sri Lanka, known as Ceylon up to 1972, located off the southern tip of Indian sub-continent, has historical, geographical, economic and navigational significance in the region. According to some traditions, the humanity started here when the Prophet Adam, the progenitor of humanity descended on Serendib Island (now Sri Lanka). It was known as Lanka, “the resplendent land” in the ancient epic Indian poem of Ramayana. Asian poets, noting the geographical location of the island and lauding its beauty, called it the pearl upon the bow of India. In the days of now-over trouble due to massive political violence, Sri Lanka was called Indian “fallen tear”. Sri Lanka’s democratic tradition is matched by few other developing countries as since its independence in 1948 from British rule, successive governments have been freely elected. Its citizens enjoy a long life expectancy, advanced health standards, and one of the highest literacy rates in the world despite the fact that the country is in the lower middle per capita income range. An island nation in South Asia, Sri Lanka is surrounded by the Indian Ocean, the Gulf of Mannar, the Palk Strait and lies in the vicinity of India and Maldives.

The table below depicts basic facts and economic picture of Iran:


Surface Area

64, 630 Sq. Km


20 million (2009 Estimate)

GDP (purchasing power parity)

US$87.93 billion

US$93.2 billion

US$96.47 billion

GDP - Per Capita (PPP)


GDP - Real Growth Rate


GDP – Composition by Sector

Agriculture: 12.6%; Industry: 29.7%; Services: 57.7% (2009 Est.)

Current Account Balance

$3.986 billion
$291 million

Reserves (FX and Gold)

$2.561 billion
$5.358 billion

Debt - External

$15.15 billion
$17.44 billion

Investment (Gross Fixed)

22.9% of GDP (2009 Est.) 


Revenues: $6.33 billion; Expenditures: $10.42 billion (2009 Est.)

Public Debt

81.4% of GDP
85.8% of GDP

Inflation Rate (Consumer Prices)


Sri Lankan rupees (LKR) per US$

Agriculture Products

Rice, sugarcane, grains, pulses, oilseed, spices, vegetables, fruit, tea, rubber, coconuts, milks, eggs, hides, beef, fish

Major Industries

Industrial Production Growth Rate: 4% excluding oil (2009 Estimate)

Processing of rubber, tea, coconuts, tobacco and other agricultural commodities, telecommunications, insurance, banking, tourism, shipping, clothing, textiles, cement, petroleum refining, information technology services, construction

Electricity (Production)

9.901 billion KWh (2008 Est.)

Electricity (Consumption)

8.417 billion KWh (2008 Est.)

$7.085 billion (2009 est.); $8.111 billion (2008 est.)

Exports - Commodities


Textiles and apparels, tea and spices; diamonds, emeralds, rubies, coconut products, rubber manufactures, fish

Exports - Partners

US 20.59%, UK 12.87%, Italy 5.51%, Germany 5.29%, India 4.54%, Belgium 4.43% (2009)


$9.186 billion (2009 est.); $12.68 billion (2008 est.)

Imports - Commodities


Textile fabrics, mineral products, petroleum, foodstuffs, machinery, and transportation equipment

Imports - Partners

India 20.73%, China 13.45%, Singapore 7.26%, Iran 6.7%, South Korea 5.23% (2009)


Pakistan-Sri Lanka relations

Relations between Pakistan and Sri Lanka are generally warm. In the past, Pakistan assisted the Government of Sri Lanka by supplying military equipment to the Sri Lankan army in the civil war. Pakistan-Sri Lanka relationship also foster on strong mutual Sino-Pakistan and Sino-Sri Lankan relationship, as China maintain strong mutual interest in the economic and military development of Sri Lanka and Pakistan. Both Pakistan and Sri Lanka are also members of SAARC.

Pakistan is the second largest trading partner of Sri Lanka from within South Asia. Sri Lanka was the first country to sign a Free Trade Agreement with Pakistan, which became operational from June 12, 2005. 4,000 items can be imported to Pakistan from Sri Lanka under this FTA. Pakistan and Sri Lanka have also supported each other in the international geo-political scene. The President of Pakistan visited Sri Lanka in 2010 and signed a number of agreements and MOU’s to further the bilateral relations.

Bilateral Trade

The signing of the Free trade Agreement in 2002 and its implementation in 2005 were significant milestones in our bilateral trade. It has further consolidated, enhanced and strengthened bilateral ties. Since then, very encouraging results have been witnessed in our bilateral trade. The total trade turnover which was US dollars 158 million in 2005 has increased to US dollars 252 million in 2009. Target of US$ 1 billion is within reach in the next five years given the special characteristics of the cordial relations, positive economic fundamentals, and keenness at the highest level followed by close proximity between the two countries.

In 2010, Sri Lanka and Pakistan reiterated their mutual commitment to greater bilateral economic cooperation. In this context, both countries agreed to hold the 10th Session of the Joint Economic Commission, which is to be co-Chaired at Ministerial level in the first quarter of 2011 in order to fashion a fuller agenda of bilateral cooperation in various fields. It was furthermore decided that Sri Lanka should receive at the earliest possible an official level delegation from Pakistan, which would in association with its Sri Lanka counterparts discuss and identify the technical arrangements for follow-up on the understandings reached between the two countries. The technical arrangements in turn would facilitate the Joint Commission to agree on and issue the necessary policy directives, for the further expansion of the bilateral economic relationship.

Pakistan & Sri Lanka have identified cement, sugar, dairy production, chemical plants, textiles, tourism, and pharmaceutical as potential areas of mutually beneficial collaborative projects in Sri Lanka.

Pakistan – Sri Lanka Business Forum (PSLBF)

Pakistan – Sri Lanka Business Forum (PSLBF) was launched in 2005 for furtherance and promotion of business, mutual understanding and friendly relations between the industrial and business communities of Pakistan and Sri Lanka. The Ceylon Chamber of Commerce has in principle agreed to be the partners in Sri Lanka and extend all support, cooperation and assistance. The Forum shall be non-political, non-profit and non-partisan.

PSLBF signed a noteworthy MoU with Sri Lankan Pakistan Business Council of the Ceylon Chamber of Commerce. The MOU will give access to both the Governments, as well as the business community of both the countries to establish Air-links by private Airlines and extension of Sri Lankan Airlines operation on Lahore-Colombo route. It will also create investment opportunities for Pakistani investors in setting-up flour-mills, pharmaceutical plants, software houses, hosiery, undertaking mega construction development projects, shipping and cargo handling endeavors, and Trading Houses etc. in Sri Lanka for promotion of bilateral trade.

Free Trade Agreement (FTA)

Free Trade Agreement (FTA) between Pakistan and Sri Lanka is operational from June 12, 2005. Under the Free Trade Agreement, Sri Lanka and Pakistan have agreed to offer preferential market access to each others’ exports by way of granting tariff concessions. Sri Lanka would be able to enjoy duty free market access on 206 products in the Pakistani market including tea, rubber and coconut. Pakistan, in return, would gain duty free access on 102 products in the Sri Lankan market. These products include oranges, basmati rice and some engineering goods.

Government of Pakistan has issued following notifications to enforce Pak-Sri Lanka FTA

  • PSFTA Determination of Origin of Goods, Rules, 2005 (S.R.O.508(1)/2005)
  • PSFTA Issuance and Verification of the Certificate of Origin (Operational Procedure) Rules, 2005 S.R.O.509(1)/2005)
  • PSFTA Designation of EPB as the authority for the issuance of Certificate of Origin S.R.O.510(1)/2005
  • Exemption from customs duty on imports from Sri Lanka notified by CBR, Customs (S.R.O.570(1)/2005)
  • A substantial improvement in bilateral trade is recorded after the implementation of the FTA from 12th June 2005 onward. The value of exported products from Sri Lanka covered under the Agreement, were registered at US $ 26.62 Million in the 2nd half of 2005 compared to US $ 14.8 Million recorded before the implementation, an increase of 80%. Sri Lanka’s exports to Pakistan under the agreement reached US $. 59.30 M in 2006, registering a 43% growth over the 2005.

    SAARC Preferential Trade Agreement/Free Trade Agreement

    Pakistan and Sri Lanka are also signatories of SAARC Preferential Trade Agreement (SAPTA) and SAARC Free Trade Agreement (SAFTA) which envisages the creation of a Preferential Trading Area among the seven member states of the SAARC. The idea of liberalizing trade among SAARC countries was first mooted by Sri Lanka in December 1991. It was agreed that these would be stepping stones to higher levels of trade liberalization and economic co-operation among the SAARC member countries. These allow Pakistani investors waiver on customs duties on various commodities left out in the FTA. Both the countries are signatory to SAFTA, which envisions the custom duty on all products to be zero rated by 2016.

    Joint Venture Opportunities

    There is a huge potential for increased trade in light engineering, fresh fruits and vegetables, processed goods, textiles, cement, pharmaceuticals, and industrial chemicals. The Free Trade Agreement has provisions that can be used to enhance trade. Pakistan is the second largest trading partner of Sri Lanka from South Asia and has a Free Trade Agreement, Bilateral Investments Treaty and Avoidance of Double Taxation Agreement to facilitate the business communities. Recently, an MoU has also been signed between the PFCCI and SLFCCI to facilitate the two business communities.

    Financial and Banking Cooperation

    MCB Pakistan has 5 branches in Sri Lanka facilitating the opening and acceptance of L/Cs between the Pakistan and Sri Lanka. According to the MoU signed between the two countries during the President’s visit to Colombo, it was decided that National Bank of Pakistan will open up its branch in Colombo in 2011. It is expected to further enhance the banking & financial cooperation between both the countries.