--By Upashana Neupane

 

Diplomatic relations betweenNepal and the Democratic Socialist Republic of Sri Lanka established 57 years ago on 1st July 1957. Relations between the two countries are marked by goodwill, mutual understanding and cooperation. 

 

Nepal opened an Honorary Consulate General in Colombo in 1975 and established its embassy in 1995. Sri Lanka has a residential embassy in Kathmandu since 1993. Nepal and Sri Lanka are the founder members of the South Asian Association for Regional Cooperation (SAARC) and are also the members of another regional organization called Bay of Bengal Initiatives for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC). Both countries share similar views on many international issues and work closely in various international forums such as the UN, NAM, WTO, etc.

 

Trade and Commercial Relations

Nepal and Sri Lanka concluded bilateral trade agreement on 3 April 1979. Despite this agreement, trade between the two countries is not up to the desired level due to, among other things, higher cost of transportation, lack of conducive environment for business, lack of interests on the part of business people etc.

 

Nepal’s Trade with Sri Lanka

Sri Lankas’ major exports to Nepal are cocoa and cocoa preparations, coffee, tea, spices, electrical machinery and equipment, parts of sound recorders and reproducers, television, cereal preparations, flour, starch or milk pastry cooking products, sugar and sugar confectionery, miscellaneous edible preparations, apparel articles and clothing accessories- knitted or crocheted , edible vegetables, certain roots and tubers and so on.

 

Sri Lanka’s major imports from Nepal are grains (lentils). Other import items, though insignificant, are plastic articles, articles of wood charcoal , carpets and other floor coverings, art work, collectors' pieces and antiques, electrical machinery and equipment and parts of sound recorders and reproducers, television, printed books, newspapers, pictures and products related to the printing industry, manuscripts, raw hides, skins (other than fur skins), leather and so on.

 

The trade figure for the past four years between Nepal and Sri Lanka has been as follows:

 

 

Tourists from Sri Lanka

Lumbini is one of the holiest destinations to the Sri Lankan Buddhists. Sri Lankan government has been reiterating its support to Nepal’s efforts to further develop Lumbini as a City of World Peace. Sri Lanka has constructed rest house for Sri Lankan Buddhist pilgrims and a Monastery Complex in Lumbini. 

 

 

Air Services Agreement 

With the aim to increase tourists flow from either country through direct air connectivity between Kathmandu and Colombo, Nepal and Sri Lanka had signed an Air Services Agreement (ASA) on 19 February 1977. On 23 November 2004, a new Memorandum of Understanding (MOU) was signed by both nations in Colombo for reviewing and replacing the previous agreement. The Air Service Agreement and additional MOU on increasing the air seats and providing fifth freedom rights to Sri Lankan airlines was agreed at the negotiations held during 22-24 January 2009, in Kathmandu. 

 

 

Joint Venture 

In the 1990’s the Sri Lankan Bank of Ceylon opened a joint venture bank in Nepal. However the Sri Lankan bank withdrew later due to what they call as unfavourable circumstances. Presently some commercial banks operate between the two countries. Commercial Bank of Ceylon, Sri Lanka and some of Nepal’s private sector bank have close links. In October, 2013 delegation of Commercial Bank of Ceylon, Sri Lanka visited Nepal. Nepal Sri Lanka Chamber of Commerce has been established for easing joint ventures and trade between both nations. Nepali investors have invested over $ 200 million in Sri Lanka’s hotel and leisure sector like the Hotel Taj Samundra and Grand Oriental Hotel. Binod Chaudhary of Chaudhary Group is planning to invest US $ 100m for setting up cement plant and some leisure projects in coastal area of Sri Lanka. 

 

Joint Economic Commission

 Nepal and Sri Lanka has signed an Agreement on March 2-4, 2009 to establish Joint Economic Commission to be led by the Foreign Ministers of both countries. The agreement contains provisions for cooperation in areas of trade, finance, agriculture, industry, development of infrastructure, science and technology, investment and other matters mutually agreed upon. The first meeting of JEC is to be held in Colombo.

 

Exchange of Visits

Exchange of high-level visits from both sides at various levels has contributed in elevating existing bilateral relations to new heights and have proved highly productive for creating an conducive atmosphere for upgrading mutual trade and commercial relations.