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Reporting survey results on business needs to the Sri Lankan President
Toward improvement of the business environment for Japanese companies

October 2013

From October 13 to 15, Mr. Hiroyuki Ishige, Chairman and CEO of JETRO, visited Colombo, the largest city in Sri Lanka. He met with President Mahinda Rajapaksa, Industry and Commerce Minister Risad Badhiutheen and Investment Promotion Minister Lakshman Yapa Abeywardena.

In the joint statement announced when President Rajapaksa came to Japan in March this year, he and Japanese Prime Minister Shinzo Abe pledged two projects to be implemented by JETRO: business missions to Sri Lanka and a survey on the needs and strategies for Japan-Sri Lanka business. This visit by Chairman Ishige to the country aims at reporting the achievement of the latter project. Acknowledging and highly appreciating the results, the President extended his gratitude to JETRO. The report was also acknowledged by the two ministers. Based on the proposals JETRO submitted, concrete actions are expected to be taken by the Sri Lankan Government toward improvement in the business environment.

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Outline of the survey

Objectives To promote trade and investment between Sri Lanka and Japan, JETRO conducted a survey on the following items:
  1. Business strategies of Japanese companies in the country and challenges they are facing
  2. Examples of how Japanese companies are using locations in the country
The results have been reported to both governments of the two countries and widely disseminated to Japanese companies.
Survey period From June 12 to October 7, 2013
Method Questionnaire and interviews
Number of companies surveyed A total of 102 companies and associations
(Breakdown)
Companies in Sri Lanka: 73 (Japanese-affiliated: 63; Singapore-affiliated: 10)
Companies in Singapore: 7 (Japanese-affiliated: 7)
Companies in India: 13 (Japanese-affiliated: 7; India-affiliated: 5; associations: 1)
Companies in Japan: 9

Summary of the survey results

Strategic directions to be taken The focus is placed on attracting overseas investment related to manufacturing, incorporating it into Sri Lanka's industrial competitiveness and expanding exports. At the same time, due to increasing "China risks" such as rising labor cost, the "China plus one" trend by Japanese companies is accelerating. Now is the best time to attract these companies to the country.
Advantages of investment environment Sri Lanka has four advantages in terms of its investment environment:
  1. Political and social stability
  2. High quality of workers
  3. Potential for economic growth
  4. Geographical advantage
Prospective business model
  1. Gateway to India
  2. Look NEW Market. Geographical advantages which can simultaneously target the prospective NEW markets – North: India; East:ASEAN, China, Japan; West: Middle East, Africa
  3. Market for upper class and tourists
Issues to be resolved
  1. Issue: Insufficient industrial human resources such as skilled labor, engineers, managers
    Proposal: Enhancing development of industrial human resources
  2. Issue: Lack of consistent industrial policies (the best example is the rise in electricity rates in April 2013)
    Proposal: Formulating and implementing policies for fostering manufacturing & promoting FDI
  3. Issue: Lack of BOI functions
    Proposal: Enhancing BOI functions including one-stop services