By: Staff Writer
February 28, Colombo (LNW): The Sri Lankan government is actively working to attract new Japanese investment as it seeks to repair strained diplomatic relations with Japan. In a recent meeting, President Anura Kumara Dissanayake engaged in discussions with Japanese Ambassador Akio Isomata, covering various bilateral interests and future collaboration.
During the meeting, the Ambassador extended an official invitation for President Dissanayake to visit Japan, expressing appreciation for the policy direction of the new administration. Japan is considering including Sri Lanka in its newly launched security cooperation assistance program, signaling a commitment to deeper engagement.
A significant focus of the discussions was the joint reconciliation initiative involving Japan, Switzerland, and South Africa, aimed at supporting northern communities affected by Sri Lanka’s 30-year civil conflict. Additionally, the two sides reviewed the status of Japanese investments in Sri Lanka, with special attention given to the digital economy and airport infrastructure.
Japan reaffirmed its commitment to Sri Lanka’s digital transformation efforts and expressed interest in funding port and aviation-related projects. Currently, around 60 Japanese-invested enterprises operate in Sri Lanka under the Board of Investment (BOI) framework, contributing approximately $350 million in cumulative investment and generating over 12,000 jobs. Beyond these major enterprises, several small-scale Japanese businesses are active in sectors like tourism, apparel, and export trading.
One of the key projects under scrutiny is the Jaya Container Terminal, initially funded by Japan in the 1980s and fully owned by the Sri Lanka Ports Authority. In 2019, India and Japan agreed to jointly invest $500-700 million in developing the East Container Terminal.
However, the Sri Lankan government later decided to keep full state ownership, leading to the project’s suspension. Political instability and economic crises between 2022 and 2023 further delayed several key initiatives, including a Japan International Cooperation Agency (JICA) loan worth $464 million for the expansion of Bandaranaike International Airport.
Despite these setbacks, Sri Lanka has now resumed efforts to rebuild its relationship with Japan. A recent development includes the collaborative effort between Sri Lanka, Japan, and India on the West Container Terminal, which will operate as a public-private partnership. Unlike previous projects, this model is expected to ensure more stability and efficiency, with the Sri Lanka Ports Authority and Japanese and Indian firms taking the lead.
Japan’s foreign direct investment (FDI) in Sri Lanka dates back to the 1970s, with the first major project being a joint venture between Noritake of Japan and the Ceylon Ceramics Corporation in 1972. Over the decades, Japanese investments have played a vital role in Sri Lanka’s industrial growth, particularly in electronics, ceramics, engineering, and metal industries.
Since 1996, major Japanese multinational corporations such as NTT, Mitsui Group, and YKK have invested in large-scale infrastructure and manufacturing ventures. Existing companies in ceramics and electronics, including Noritake Lanka Porcelain, Dankotuwa Porcelain, and FDK Lanka, have also expanded their operations in Sri Lanka through new investments.
As Sri Lanka’s new government takes steps to stabilize its economy and regain investor confidence, fostering stronger economic ties with Japan remains a priority. With renewed cooperation in key sectors, both nations are set to benefit from enhanced trade, investment, and infrastructure development.
