Redefining Australia’s South Asian foreign policy particularly with Sri Lanka

By Srimal Fernando and Justin Chua

Australia’s relations with South Asia continues to grow as countries such as Sri Lanka seek to expand their relations with the world. Australia’s push to integrate itself within the Asia-Pacific region has seen it develop stronger relations with Asian countries such as Sri Lanka. With a largely developed economy and society, Australian businesses are seeking new trade and investment opportunities in a region requiring development. Shared historical links between Australia and other Commonwealth countries in the region has helped facilitate greater co-operation and can be readily seen today.

As South Asia continues to further integrate with the rest of the world, greater opportunities exist for countries such as Australia to create synergies with local partners, being brought in to increase trade, mediate conflicts and promote stability within the region and beyond. Countries such as India, with its current foreign policy of the Indo-Pacific, largely coincides with Australia’s policy in South Asia. Being an important island south of India, Sri Lanka has also strengthened its foreign relations with Australia through improving political and economic ties.


Sri Lanka-Australia relations

Sri Lanka seeks to become more connected with the world and the geographically distant Australia in the Pacific region seeks to integrate with countries in the Indian Ocean. As Commonwealth nations, the two countries share a significant number of forums to allow for collaboration and understanding. Consequently, Sri Lanka has many opportunities to promote greater trade and investment. For example, many people now travel between Australia and Sri Lanka each year for education, business and sports.


Current trade opportunities for further integration

One of the major benefits of Sri Lanka’s geography is its location in the Indian Ocean. Being positioned along one of the busiest shipping routes in the world allows for the country to further develop into a logistics hub for the region. Greater investment in its port and transportation facilities will see greater efficiencies in the movement of goods and services, and potentially encourage more Australian companies to view the country as a gateway to South Asia.

The economies of South Asia are now on Australian investors’ radar, since the economies in the region are growing faster than ever. In addition, Sri Lankan economic policy has increasingly made it easier for Australian companies to invest in the island nation. The clearest signs of this bilateral trade can be seen by trade figures. In 2017, two way trade totalled more than AUD $1.4 billion. Sri Lanka also forms a major link for Australian entrepreneurs to gain great preferential market access to over 1.6 billion consumers through the South Asian Free Trade Area (SAFTA) arrangement.



The Australian Department of Foreign Affairs and Trade notes Australian companies have invested over AUD $89 million in 2017. With this growing trust, Sri Lanka needs to expand its current foreign policy to incorporate Australia more closely as a trade partner, allowing for greater exports and trade. Further liberalization and development in property rights will attract more foreign investors from countries like Australia to invest in Sri Lanka. More road and port infrastructure is being built, so Australian companies will make use of the island nation’s manufacturing and transport logistics industries. In addition, greater development of legal institutions and arbitration facilities may well see Sri Lanka become a trade hub for businesses who are desiring efficient and consistent outcomes in business.



Australians are increasingly travelling to Sri Lanka for holiday. In 2019, the Australian Department of Foreign Affairs and Trade revealed Sri Lanka was the 20th most popular destination for Australians, with approximately 114,000 Australians visiting the island nation. A greater investment in related industries will see more tourists arrive. Similarly, more direct flights from major Australian cities and promotional campaigns would further support the growth of the Sri Lankan tourism sector.



A growing number of Australian educational institutions are also providing opportunities for Sri Lankan students to pursue higher education in a global setting. Each year, thousands of Sri Lankans study various courses in Australia. Within Sri Lanka, more opportunities are available for Sri Lankan students to receive a global education through Australian educational institutions such as RMIT University. Consequently, Australian contributions in education will continue to further promote economic development in Sri Lanka.


On future ties

Australian and Sri Lankan ties will continue to deepen through greater cross-border trade and investment. Sri Lanka may well prove to be a gateway for Australians to South Asia in the future through greater development in education, legal institutions and transport infrastructure. On a broader scale, the island nation may one day become a cost-efficient and reliable hub for foreign companies from distant countries like Australia who want greater access to the region.



Dr. Srimal Fernando is a recipient of the prestigious O.P Jindal Doctoral Fellowship and the SAU Scholarship under the SAARC umbrella. He is an Advisor/Global Editor of Diplomatic Society for South Africa in partnership with Diplomatic World Institute (Brussels). He is also the winner of the 2018/2019 ‘Best Journalist of the Year’ award in South Africa, and has been the recipient of Global Communication Association (GCA) Media Award for 2016. In 2019 Dr Fernando was an Indian Council of World Affairs (ICWA) accolade recipient


Justin Chua is a foreign policy analyst who is based in Melbourne, Australia. He has a keen interest in commercial law and international relations with a particular focus on Asia-Pacific countries. He has studied business and law at universities such as RMIT University, University of Melbourne and University of Hong Kong, and has lived and worked in a number of countries in Asia. Chua is an Australian Lawyer as well as a Real Estate Agent.

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