Can Sri Lanka be “China Plus One” country for Japanese investors?

If we can play our cards smartly and wisely we can also target to be a “China Plus One” country to Japanese investors

Our proposal on 5 August 2025, at the Annual General Meeting of the Sri Lanka-Japan Business Council, to create an exclusive Export Processing Zone for Japan – will it be a reality? 

It may be the right time now, with Japanese preferred Anti-Corruption and Transparency policies in place, for the Government to give thought to setting up an exclusive Export Processing Zone for potential Japanese investors.

Success stories of Neemrana Industrial Zone in Rajasthan, India and Bangladesh Special Economic Zone (BSEZ), also a Japanese-invested industrial zone on the outskirts of Dhaka, gives us a clear signal of the direction we need to follow. 

It may be prudent to establish a zone closer to the Colombo Port which has a huge advantage against any ports in the region. 

A zone closer to Colombo has an absolute advantage in terms of global supply chain, particularly compared to ones in Bangladesh, because Sri Lanka has an FTA with India, which is now becoming the favoured opportunity for many Japanese companies as “China Plus One” destination for their global supply chain strategy. 

Bangladesh is also having a hostile situation due to political instability after former Prime Minister Sheik Hasina was removed from office. 

In fact, tenant companies in Bangladesh’s BSEZ are not eyeing the Indian market, but rather on domestic (Bangladeshi) or Japanese market. 

Therefore, if Sri Lanka establishes a zone, it will not have to worry about competing with Bangladesh BPEZ.

If Sri Lanka decides to set up a zone, we should try to follow the Bangladesh model in setting up the zone.

Bangladesh BSEZ is a flagship project in Bangladesh to promote Japanese investment in the manufacturing sector, sponsored by Sumitomo Corporation (61% share), one of the biggest trading/investment firms of Japan, and co-invested by JICA (15% share) through the Private Sector Investment Finance window of JICA, and Government of Bangladesh (24% share). 

JICA also has financed BSEZ’s infrastructure development through the sovereign loan window, and is also providing technical assistance to the government of Bangladesh in terms of development of customs functions inside the BSEZ premises.

Therefore, if we do consider to set up a zone to invite Japanese investors, we need to try to replicate these models. 

Our high literate, trainable youth will no doubt add value to any Japanese investing enterprise.  

Our country is blessed with non-comparable natural beauty which Japanese nationals will always appreciate. Within a few hours we can reach out to the most beautiful seaside resorts and picturesque cooler climates where virgin waterfalls and the green carpeted tea estates are. 

Golf courses located in Colombo, Nuwara Eliya, Hambantota and Kandy will provide the ultimate satisfaction any golfer would look for. 

The most popular Ayurveda and the most venerated Theravada Buddhism will certainly be an advantage to Japanese communities residing in Sri Lanka. 

The above will be in our favour when investment decisions are made. 

With all these blessings on our side, if we can play our cards smartly and wisely we can also target to be a “China Plus One” country to Japanese investors.

(The writer is the President, Sri Lanka-Japan Business Council of the Chamber of Commerce, and Recipient of the Order of the Rising Sun Gold and Silver Rays from the Government of Japan.)