As Prime Minister Ranil Wickremesinghe sets his focus to woo Japanese investors to Sri Lanka, he asked that Japan take on a more assertive role in developing the economic architecture of the Indian Ocean.
He added that the island nation be seen as a gateway between the Indo-Pacific Oceans; a logistics and trade hub for Japan to access the ‘rising middle class markets in Asia’.
Delivering the keynote address yesterday at the Business Forum organized by the Japan External Trade Organization (JETRO) in Tokyo, the Prime Minister stressed that the rise of the new economic order was very much in Asia. “It is in East Asia, South Asia, Middle East and Africa that you will find the rising middle class and the biggest consumer markets,” said Premier Wickremesinghe.
In this context, he welcomed Japanese Prime Minister Shinzo Abe’s ‘Free and Open Indo-Pacific Strategy’ which sought to “promote connectivity through free and open Indo- Pacific oceans via economic prosperity in the region, including Africa”.
The strategy which aims at building a network of security cooperation in the Indo-Pacific region to stem the risk of China changing the regional order by force, also has economic benefits for such countries which have seen major Japanese funding in return. ASEAN countries in particular have received development assistance for infrastructure- and human-resources development with Japanese firms focusing their FDIs on ASEAN countries.
Similarly, Premier Wickremesinghe asked that Japan take a more central role in shaping South Asian regional economic development. “Japan has become more important now as America shows reluctance to be involved in economics of the region, especially with its withdrawal from the TPP,” said the Prime Minister.
Premier Wickremesinghe who is also a strong supporter of ‘freedom of navigation in the seas’ and an economically integrated region found common ground in the Japanese Strategy and chose to echo the Japanese Parliamentary Vice Minister for Foreign Affairs Shunsuke Takei’s idea of “Indo-Pacific Ocean of World Trade’.
The question, he said, however, was the need for a “comprehensive plan of implementation for the Japanese proposal of two oceans.” This was especially important said, Premier Wickremesinghe in the light of other regional powers also having their own strategies for the region such as China’s ‘One Belt, One Road’ initiative and India’s ‘Look East Policy’.
“Japan has shown its ability through its relation to America. The Japanese Prime Minister met US President Trump twice, determining America’s reaction to Asia though economic relations not on the table. But time is short, how can the Japanese government with other governments work out what the plan is and how connectivity is to be established on infrastructure, roads and institutions? The foundation of prosperity not only requires Japanese government intervention but also requires the Japanese private sector,” said the Prime Minister as he pushed for greater connectivity through investment and trade with Sri Lanka and the region.
“In the next 20-30 years, the region is expected to have an additional population of 250 million people and the Japanese private sector has to invest here otherwise someone else will,” he said.
In reference to Prime Minister Abe’s USD 110 billion to the Asian Development Bank for development of “quality infrastructure” in Asia in 2015, Premier Wickremesinghe called for ‘partnership of quality infrastructure’ in the Indian Ocean as intervention to develop infrastructure in the countries of the Indian Ocean region was necessary before businesses could tap into the rising middle class market.
He further explained that Sri Lanka was the best country for the Japanese private sector to focus on given its strategic location in the Indian Ocean and the access the country would provide through its various Free Trade Agreements (FTAs) to bigger markets.
“We want Japan to use Sri Lanka as a hub for trade. We expect to deepen our existing FTA with India through the Economic and Technology Cooperation Agreement (ETCA), expect to sign a FTA with Singapore and another with China. We also hope to talk to Japan, Indonesia and other ASEAN countries with regard to FTAs,” explained the Prime Minister.
With Sri Lanka also poised to become a logistics hub, the Prime Minister invited Japanese investment in the Colombo and Trincomalee Ports.
“The new Terminal at Colombo will soon be open for investment. We invite Japanese companies for a joint venture. We also hope to further expand Colombo Port to the North up to 8—10 miles reaching Ja-Ela, making it the largest in the Indian Ocean. In addition, we have also invited Japan to partner with India to develop the Trincomalee harbor,” he said and added,
“The two Ocean policies are best when Japan, India and Sri Lanka are working together.”
The Prime Minister also announced that the government would offer a Separate Desk for Japanese Investors, a new set of tax incentives which will have generous depreciation and allow foreign investors to take out their profits out of Sri Lanka without paying any additional tax, a single window for investment, taskforce for FDIs and exports, taskforce on tourism and open up the economy further to encourage more investment into the country.