Trade & Investment

Trade and Investment Relations between Sri Lanka and Japan

1. An Overview

Sri Lanka and Japan are mutually maintaining historical relationship in the fields of political, cultural, trade and economic etc. Although diplomatic relations were established in April 1952, the two nations have nurtured a long standing relationship dating back to many centuries. The notable plea made in the speech of the late Sri Lankan President, H. E. J. R. Jayawardhana, as then Finance Minister of Sri Lanka, at the San Francisco Pease Conference speaking in favour of admitting Japan in to the committee of nations quoting the noble words of the Lord Buddha “Hatred ceases not by hatred but by love”. After the Tsunami disasters struck Sri Lanka in December 2004, Japan was the first country which came to assist with medical teams and allocated US$80 million as relief aide. In terms of technical assistance, through the different training programmes which have been provided in Japan for Sri Lankan’s and Japanese technical experts have been dispatched to Sri Lanka. Japan International Cooperation Agency (JICA) following the commencement of its operations in 1954, Sri Lanka was one of the first countries to have extended its technical assistance. Japan has assisted to develop larger scale infrastructure projects, power and energy, health, education, television systems, IT and some other development activities in Sri Lanka. In the light of the above, Japan has been more instrumental in the development and improvement of Sri Lanka’s socio-economic environment through its various Overseas Development Assistance (ODA) Programmes and actively participated in the areas of bilateral trade, investment and tourism.

Japan has been involved in the peace process of Sri Lanka, as one of the co-sponsors of the Tokyo Conference and pledged US$ 4.5 Billion for construction and development in Sri Lanka at the Donor Conference for the peace process in Sri Lanka convened by the Japanese Government in 2003 and Sri Lanka was extended honest and moral support to overcome the country’s 30 year-long terrorism two years ago. The country is now enjoying peace dividends meaningfully and permanently from North to South and East to West.

When, Japan was hit by the Great East Japan Earthquake on the 11^th of March 2011 and its related tsunami and nuclear disasters, Sri Lanka, even though as a small nation, was among the first country that came to help Japan with multiple support such as financial support and “Ceylon Tea” donations, the dispatch of a 15 member disaster relief team, offering hot rice and curry, blessing the victims by conducting religious activities here in Japan as well as in Sri Lanka.

2. Trade Relations

Sri Lanka was known as the “Island producing Tea and Gems” in Japan in the early decades of 20th century. Trade relations between our two nations has been nourished and nurtured for the last few decades. Sri Lanka is currently exporting to Japan products such as black tea, apparel, shrimp and prawn, ceramic porcelain, coconut products, rubber & rubber products, gems and jewellery, food items etc., at a total value of US $ 215.5 ml, while importing motor vehicles and parts, electrical and electronics items, iron and steel items, chemicals and made staple fibres etc., from Japan at a value of US$ 554.6ml in the year 2012.

Sri Lanka’s Exports, Imports & Trade Balance with Japan

(Value in US $ ml.) 2002 - 2012

Source: Dept. of Commerce of Sri Lanka

Following products are promoted for export from Sri Lanka to Japan

• Value added and bulk “Ceylon Tea”
• “Sri Lanka Apparel” and accessories
• “Ceylon Cinnamon”
• Gem and jewelry including “Ceylon Blue Sapphire”
• Natural “crepe” and “sheet” rubber, rubber gloves and rubber auto parts
• Foot wear, leather and plastic products
• Electronic apparatus, chips etc.
• Porcelain and ceramic items
• Wooden and educational toys
• Activated carbon
• Coconuts DC, cream and milk powder
• Coir, coir dust and thawashi brushes
• Confectionaries, biscuits, cookies etc.
• Fruits, vegetables, vegetable fats and oil fractions
• Cut flowers and foliage
• Ornamental fish
• Ayurvedic, herbal and organic products
• Spices and curry powder
• Essential oils
• Processed food
• Beverages such as Sri Lankan arracks and beer
• Sashimi -quality fish and processed fish
• Health and food supplements
• Minerals
• IT/ BPO/ KPO

Important

1. Under the Japanese Generalized System of Preferences (GSP) Scheme, there are a number of export products originating from Sri Lanka which are given duty reductions by the Japanese Customs. To download Japanese GSP kindly access the web link of the Ministry of Foreign Affairs of Japan: http://www.mofa.go.jp/policy/economy/gsp/index.html

2. For more information about Sri Lanka’s exports/ imports kindly access to the web sites of the Department of Commerce of Sri Lanka (DOC) and the Sri Lanka Export Development Board (EDB).

a. http://www.doc.gov.lk/web/index.php

b. http://www.srilankabusiness.com/

3. Investment Relations

Foreign Direct Investments (FDIs) by Japanese companies into Sri Lanka dates back to 1972 the first milestone was the establishment of a joint venture between Noritake of Japan and the Ceylon Ceramics Corporation. Since then, Japanese investment has contributed immeasurably to the country's industrial development, particularly in the electronics, ceramics, engineering, IT and metal based sector and infrastructure development. Since 1996, a number of large multinational conglomerates including Mitsui Group, Kawasho Corporation, and YKK have committed substantial investments in large infrastructure and manufacturing projects. At the same time, there are a number of collaborations with Dankotuwa Porcelain, Dainichi Creations, FDK Lanka Ltd, have expanded their investment in Sri Lanka. At present, there are over 60 Japanese enterprises as investment projects which are operating in Sri Lanka under the BOI Law with an estimated investment of US $ 350 million given more than 12000 new employment opportunities for Sri Lankans. There are also a number of small-scale enterprises with Japanese investments operating under the general laws of the country that are engaged in restaurants, apparel sector, tourism and travel, and export trading etc. With a view to attract and facilitate Japanese investments into Sri Lanka, two countries have entered into the Agreement on Avoidance of Double Taxation in 1967 and a Bilateral Investment Protection Agreement in 1982.

For Japanese investors the sectors in Sri Lanka such as, infrastructure projects such as roads and highways, sea ports and aviation, energy, IT & telecommunication, constructions, health and beauty, education, bio and environmental projects etc, electronics, electrical equipment, rubber based products, energy saving equipment, minerals and rare earths, automobile spare parts on OEM basis, food & fish processing, tourism and its related infrastructure, including hotels, ayurweda, spa and recreation etc., have been mainly targeted.

This Embassy, Ministries of Industry and Commerce and Economic Development of Sri Lanka mainly, with other Government Ministries and bodies, Chambers of Commerce and Industries and respective Business Cooperation Committees and Councils are working hard at promoting further Japanese investment to Sri Lanka particularly in the value- added industries.

Important

For more information about Sri Lanka’s investments potentials and related regulations, kindly access the websites of the Board of Investment of Sri Lanka.

http://www.investsrilanka.com/