Japan backs Sri Lanka’s recovery, commits loans, investment and export push
Daily FT: Japan and Sri Lanka agreed to deepen cooperation across economic, investment, security and multilateral fronts, issuing a joint statement yesterday after President Anura Kumara Dissanayake’s meeting with Japanese Prime Minister Shigeru Ishiba in Tokyo recently.
Ishiba commended Sri Lanka’s recovery path under the International Monetary Fund (IMF) programme and debt restructuring, pledging continued Japanese support. As co-chair of the Official Creditor Committee, Japan was the first to conclude a bilateral restructuring deal with Colombo earlier this year.
Both sides agreed that steady implementation of reforms and early completion of debt restructuring are critical to restoring investor confidence and underlined the need for foreign loans consistent with debt sustainability.
Japan resumed 11 previously signed yen-loan projects in 2024, including transmission lines and digital television infrastructure.
Both leaders welcomed the recommencement of bidding for the second phase of the Bandaranaike International Airport expansion and pledged to expedite completion.
They also signed notes on grant aid to boost productivity in the dairy sector and agreed on the importance of transport solutions to ease congestion in Colombo and other major cities.
On trade and investment, the two sides endorsed a roadmap for an export-oriented industrial corridor and agreed to resume the Inter-Governmental Economic Policy Dialogue.
They welcomed the launch of a Japan–Sri Lanka Committee on Business Environment in August, to be held quarterly, aimed at improving transparency, predictability and non-discriminatory treatment for investors.
President Dissanayake highlighted a qualitative shift in the investment environment and invited Japanese corporates to explore opportunities in ICT, energy, tourism, manufacturing and other sectors.
Security cooperation was also advanced. Japan confirmed the provision of unmanned aerial vehicles to enhance Sri Lanka’s maritime surveillance and disaster relief capabilities under its Official Security Assistance program, the first extended to Sri Lanka.
Both sides welcomed continued port calls by Japan Maritime Self-Defence Force vessels, joint naval exercises, and the convening of the second Japan–Sri Lanka Defence Dialogue following the defence minister’s visit to Colombo in May.
The statement also included broader governance and development commitments. Japan pledged continued support for Sri Lanka’s anti-corruption drive and for socio-economic development in the Northern and Eastern Provinces.
Sri Lanka’s participation in Expo 2025 in Osaka and high-level business events in Tokyo and Osaka were noted as opportunities to further strengthen trade and investment links.
President Dissanayake expressed gratitude for Japan’s hospitality and for its long-standing role as a partner in Sri Lanka’s economic and social development.
OSL take:
The strong bilateral ties enjoyed between Sri Lanka and Japan were further strengthened during Sri Lanka’s President Anura Kumara Dissanayake’s recent visit to Japan. The commitment of loans and investments by Japan towards Sri Lanka’s development programme indicates an expansion of business opportunities in the country’s development agenda. With Sri Lanka on the path to becoming a hub in the South Asian region, the country’s requirements to be on par with the fast-evolving global business standards have presented many business/investment opportunities for foreign businesses/investors on the lookout for lucrative ventures in Sri Lanka’s growing economy. Foreign businesses could also look at forming partnerships or joint ventures with local businesses in order to expand operations in Sri Lanka and in the region.
| Article Code : | VBS/AT/20251007/Z_4 |