Sri Lankan MSME's Integration with ASEAN

This chapter explores how Sri Lanka’s bilateral free trade agreements (FTAs) with Singapore and Thailand can be leveraged to enhance the integration of its micro, small and medium enterprises (MSMEs) into ASEAN markets. Using a document analysis approach, the study examined trade performance, FTA provisions and support mechanisms aimed at facilitating MSME participation in regional trade. The findings highlight the opportunities presented by these two FTAs in promoting MSME competitiveness, expanding access to ASEAN markets and benefiting from Sri Lanka’s growing infrastructure initiatives. Several challenges identified, including limited export diversification, inadequate market information and digital technology adoption, high insurance costs associated with trade financing and tariff asymmetry between trading partners. These issues hinder MSME competitiveness, and market access, despite the supportive frameworks outlined in the FTAs. The chapter concludes with actionable recommendations to strengthen Sri Lanka’s MSME engagement within the ASEAN context, emphasising policy alignment, capacity building and enhanced regional cooperation.