At the Interactive Session of the Sri Lanka-Japan Business Council
2019/3/22
Ambassador's Speech
Mr. Daya Weththasinghe, President of the Sri Lanka-Japan Business Council,
Members of the Sri Lanka-Japan Business Council,
Distinguished guests,
Ladies and gentlemen,
Thank you for inviting me to the Interactive Session of the Sri Lanka-Japan Business Council. It is my great pleasure to meet the members of the Council, who are at the same time prestigious entrepreneurs. Also, I would like to express deep appreciation to the Council for its valuable contribution to strengthening Japan-Sri Lanka business relations. I would like to take this opportunity to share with you our views on developing business relations between Japan and Sri Lanka.
Firstly, let us look at the recent data on economic relations between Japan and Sri Lanka.
Sri Lanka’s exports to Japan have accounted for around 2% of its total exports in the past 5 years. In 2017, Japan was the 13th export destination for Sri Lanka. The main export items are tea, clothing, fresh fish, etc.
Sri Lanka’s imports from Japan have accounted for between 4% and 7% of its total imports in the past 5 years. In 2017, Japan was the 5th largest import source for Sri Lanka. The main import items are motor vehicles, construction machines, parts of motor vehicles, etc.
As for foreign direct investment (FDI), Japan has accounted for between 2% and 7% of the total FDI inflows to Sri Lanka in the past 5 years, though it has fluctuated year by year. In 2017, Japan was the 6th largest FDI source country. Recent examples of investment projects by Japanese companies include a solar panel manufacturing factory in Katunayake and a luxury hotel in Galle.
In respect of tourism, the number of tourists from Japan to Sri Lanka has been steadily growing from around 40,000 in 2014 to around 50,000 in 2018. This accounted for 2.1% of the total number of tourists in 2018, and ranked 12th.
As these figures show, though Japan and Sri Lanka are important trade and investment partners, there still remain untapped potential for further development of business relations between our two countries.
It is encouraging to see an increasing number of Japanese companies show keen interest in doing business with Sri Lanka. In January last year, the large business delegation headed by the Chairman of the Japanese Chamber of Commerce and Industry visited Sri Lanka. Further, recently the Japanese Chamber of Commerce and Industry in Singapore and that in Bangkok both visited Sri Lanka to study business opportunities here.
This interest comes from renewed recognition on the Japanese side of Sri Lanka’s great potential for growth, benefitting from its strategic location in the middle of the East-West shipping route, its proximity to the rapidly growing Indian Subcontinent and neighboring regions, as well as its strong workforce with diligence, high educational level, and English proficiency. In addition, Sri Lanka has a lot to offer in tourism, including 8 world heritage sites, beautiful beaches, warm hospitality and Ayurveda, all of which can attract foreign investment in tourism. Sri Lanka is potentially one of the next business frontiers for Japanese business activities beyond conventional venues like North America, Europe, East Asia and Southeast Asia.
As I understand, the basic strategy of the government of Sri Lanka for economic growth is to enhance its function as a logistics hub, incorporate the country into the global value chain, attract investments from abroad, thereby creating employment opportunities and generating exports. Business facilitation services provided by the BOI and preferential tax treatments stipulated in the newly enacted Inland Revenue Act will be an incentive for foreign investors.
Actually, a lot of Japanese companies have visited Sri Lanka for inspection to consider whether they can really start a business here. These companies are looking for reliable local partners with experience, know-how, and business connection, so there may be good opportunities for the members of this Council. In the course of their consideration, these companies also collect information on their predecessors; those are the Japanese companies already operating in Sri Lanka, as examples of precedent for their reference.
However, among the Japanese companies already operating in Sri Lanka, some companies are suffering from unclear and unpredictable policies of the government, including sudden changes in tax systems and delay of tax refund, etc.
In order to promote trade and investment between the two countries, it is important for the government to formulate and implement policies with transparency so that private companies can concentrate on business with predictability. This is the issue of investment climate, business environment, or ease of doing business. The governments of Japan and Sri Lanka have held a lot of dialogues at various levels to improve the business environment of Sri Lanka, and promote trade and investment between the two countries.
In October 2015, at the Summit Meeting between the two Prime Ministers of Japan and Sri Lanka, both leaders decided to hold an Economic Policy Dialogue at the Senior Officials’ level, as a framework to consider concrete measures for future enhancement of economic cooperation.
Following the Economic Policy Dialogue held in 2016, Working Group Meetings were held from 2016 to 2017 to create a Japan-Sri Lanka Investment Promotion Roadmap.
Consequently, at the Summit Meeting again in April 2017, both leaders welcomed the formulation of the Roadmap, which aims to outline concrete steps for investment promotion.
Following this Roadmap, the Japanese side has conducted surveys for setting up industrial parks in Sri Lanka catering to the needs of Japanese companies, and has implemented technical support for human resources development. On the other hand, the Sri Lankan side has implemented introduction of investment incentives, and has provided matchmaking opportunities between the companies of both countries.
Not only the governments, but private companies have also been engaged in bilateral economic dialogues with a view to improving the business environment of Sri Lanka. A good example is the “Japan-Sri Lanka Government-Private Joint Forum” which is annually held with the participation of the BOI and relevant authorities, the Japanese Chamber of Commerce and Industry in Sri Lanka (JCCISL), and our Embassy. Requests and proposals from the JCCISL to the BOI always include ones with regard to the sudden changes in tax systems and delay of tax refund, which I mentioned earlier. We will continue this Forum in cooperation with the Sri Lankan side, if possible, more frequently. This is because addressing the issues the existing Japanese companies are faced with will not only benefit these companies but also lead to better investment climate for all foreign investors.
In addition, exchanges between private companies of both countries are expected to be conducted more actively, whether formally or informally. A good example is the “Economic Joint Committee” which has been held between this Council and its Japanese counterpart, the “Japan-Sri Lanka Business Cooperation Committee (JCCISL).” Another good example is the large-scale business delegation headed by the Chairman of the Japan Chamber of Commerce which visited Sri Lanka in January 2018. Further, there were many exchanges, such as the visits to Sri Lanka by the Japanese Chamber of Commerce and Industry in Singapore and that in Bangkok, the visit to Japan by the COYLE, or the Chamber of Young Lankan Entrepreneurs, to name a few. We expect new ideas of business will be born in the course of such exchanges.
It goes without saying that Japanese government agencies are also playing pivotal roles in promoting bilateral economic relations.
JICA supports with ODA the development of infrastructure and human resources in the public sector of Sri Lanka which are necessary to the economic growth of the country.
JETRO provides information on trade and investment with interested Japanese companies, organizes Sri Lanka business seminars in Japan especially on the occasion of Sri Lankan dignitaries’ official visits to Japan. JETRO further provides information on world trade exhibitions, and also operates a database for business matchmaking between private companies.
AOTS conducts technical and management training for human resources development in the private sector of Sri Lanka.
JBIC and NEXI are ready to provide semi-commercial loan and insurance.
Through these public-private economic dialogues and the activities of Japanese government agencies, we will strengthen the relations between the governments and private companies of both countries, and promote bilateral trade and investment between the two countries. Of course, our Embassy has been deeply involved in these efforts, and we will continue to do our best in the future. Thank you very much for your attention.
Members of the Sri Lanka-Japan Business Council,
Distinguished guests,
Ladies and gentlemen,
Thank you for inviting me to the Interactive Session of the Sri Lanka-Japan Business Council. It is my great pleasure to meet the members of the Council, who are at the same time prestigious entrepreneurs. Also, I would like to express deep appreciation to the Council for its valuable contribution to strengthening Japan-Sri Lanka business relations. I would like to take this opportunity to share with you our views on developing business relations between Japan and Sri Lanka.
Firstly, let us look at the recent data on economic relations between Japan and Sri Lanka.
Sri Lanka’s exports to Japan have accounted for around 2% of its total exports in the past 5 years. In 2017, Japan was the 13th export destination for Sri Lanka. The main export items are tea, clothing, fresh fish, etc.
Sri Lanka’s imports from Japan have accounted for between 4% and 7% of its total imports in the past 5 years. In 2017, Japan was the 5th largest import source for Sri Lanka. The main import items are motor vehicles, construction machines, parts of motor vehicles, etc.
As for foreign direct investment (FDI), Japan has accounted for between 2% and 7% of the total FDI inflows to Sri Lanka in the past 5 years, though it has fluctuated year by year. In 2017, Japan was the 6th largest FDI source country. Recent examples of investment projects by Japanese companies include a solar panel manufacturing factory in Katunayake and a luxury hotel in Galle.
In respect of tourism, the number of tourists from Japan to Sri Lanka has been steadily growing from around 40,000 in 2014 to around 50,000 in 2018. This accounted for 2.1% of the total number of tourists in 2018, and ranked 12th.
As these figures show, though Japan and Sri Lanka are important trade and investment partners, there still remain untapped potential for further development of business relations between our two countries.
It is encouraging to see an increasing number of Japanese companies show keen interest in doing business with Sri Lanka. In January last year, the large business delegation headed by the Chairman of the Japanese Chamber of Commerce and Industry visited Sri Lanka. Further, recently the Japanese Chamber of Commerce and Industry in Singapore and that in Bangkok both visited Sri Lanka to study business opportunities here.
This interest comes from renewed recognition on the Japanese side of Sri Lanka’s great potential for growth, benefitting from its strategic location in the middle of the East-West shipping route, its proximity to the rapidly growing Indian Subcontinent and neighboring regions, as well as its strong workforce with diligence, high educational level, and English proficiency. In addition, Sri Lanka has a lot to offer in tourism, including 8 world heritage sites, beautiful beaches, warm hospitality and Ayurveda, all of which can attract foreign investment in tourism. Sri Lanka is potentially one of the next business frontiers for Japanese business activities beyond conventional venues like North America, Europe, East Asia and Southeast Asia.
As I understand, the basic strategy of the government of Sri Lanka for economic growth is to enhance its function as a logistics hub, incorporate the country into the global value chain, attract investments from abroad, thereby creating employment opportunities and generating exports. Business facilitation services provided by the BOI and preferential tax treatments stipulated in the newly enacted Inland Revenue Act will be an incentive for foreign investors.
Actually, a lot of Japanese companies have visited Sri Lanka for inspection to consider whether they can really start a business here. These companies are looking for reliable local partners with experience, know-how, and business connection, so there may be good opportunities for the members of this Council. In the course of their consideration, these companies also collect information on their predecessors; those are the Japanese companies already operating in Sri Lanka, as examples of precedent for their reference.
However, among the Japanese companies already operating in Sri Lanka, some companies are suffering from unclear and unpredictable policies of the government, including sudden changes in tax systems and delay of tax refund, etc.
In order to promote trade and investment between the two countries, it is important for the government to formulate and implement policies with transparency so that private companies can concentrate on business with predictability. This is the issue of investment climate, business environment, or ease of doing business. The governments of Japan and Sri Lanka have held a lot of dialogues at various levels to improve the business environment of Sri Lanka, and promote trade and investment between the two countries.
In October 2015, at the Summit Meeting between the two Prime Ministers of Japan and Sri Lanka, both leaders decided to hold an Economic Policy Dialogue at the Senior Officials’ level, as a framework to consider concrete measures for future enhancement of economic cooperation.
Following the Economic Policy Dialogue held in 2016, Working Group Meetings were held from 2016 to 2017 to create a Japan-Sri Lanka Investment Promotion Roadmap.
Consequently, at the Summit Meeting again in April 2017, both leaders welcomed the formulation of the Roadmap, which aims to outline concrete steps for investment promotion.
Following this Roadmap, the Japanese side has conducted surveys for setting up industrial parks in Sri Lanka catering to the needs of Japanese companies, and has implemented technical support for human resources development. On the other hand, the Sri Lankan side has implemented introduction of investment incentives, and has provided matchmaking opportunities between the companies of both countries.
Not only the governments, but private companies have also been engaged in bilateral economic dialogues with a view to improving the business environment of Sri Lanka. A good example is the “Japan-Sri Lanka Government-Private Joint Forum” which is annually held with the participation of the BOI and relevant authorities, the Japanese Chamber of Commerce and Industry in Sri Lanka (JCCISL), and our Embassy. Requests and proposals from the JCCISL to the BOI always include ones with regard to the sudden changes in tax systems and delay of tax refund, which I mentioned earlier. We will continue this Forum in cooperation with the Sri Lankan side, if possible, more frequently. This is because addressing the issues the existing Japanese companies are faced with will not only benefit these companies but also lead to better investment climate for all foreign investors.
In addition, exchanges between private companies of both countries are expected to be conducted more actively, whether formally or informally. A good example is the “Economic Joint Committee” which has been held between this Council and its Japanese counterpart, the “Japan-Sri Lanka Business Cooperation Committee (JCCISL).” Another good example is the large-scale business delegation headed by the Chairman of the Japan Chamber of Commerce which visited Sri Lanka in January 2018. Further, there were many exchanges, such as the visits to Sri Lanka by the Japanese Chamber of Commerce and Industry in Singapore and that in Bangkok, the visit to Japan by the COYLE, or the Chamber of Young Lankan Entrepreneurs, to name a few. We expect new ideas of business will be born in the course of such exchanges.
It goes without saying that Japanese government agencies are also playing pivotal roles in promoting bilateral economic relations.
JICA supports with ODA the development of infrastructure and human resources in the public sector of Sri Lanka which are necessary to the economic growth of the country.
JETRO provides information on trade and investment with interested Japanese companies, organizes Sri Lanka business seminars in Japan especially on the occasion of Sri Lankan dignitaries’ official visits to Japan. JETRO further provides information on world trade exhibitions, and also operates a database for business matchmaking between private companies.
AOTS conducts technical and management training for human resources development in the private sector of Sri Lanka.
JBIC and NEXI are ready to provide semi-commercial loan and insurance.
Through these public-private economic dialogues and the activities of Japanese government agencies, we will strengthen the relations between the governments and private companies of both countries, and promote bilateral trade and investment between the two countries. Of course, our Embassy has been deeply involved in these efforts, and we will continue to do our best in the future. Thank you very much for your attention.