Japan urges Sri Lanka to seize reform opportunity and boost bilateral ties

By Divya Thotawatte 

As economic uncertainty looms globally, Sri Lanka should pursue strategic reforms, diversify exports, strengthen foreign investment and defend the global free trade system, said Japanese Ambassador Akio Isomata while pledging continued bilateral cooperation to support these efforts. 

This discussion took place at an interactive members’ evening with the Japanese Ambassador on the topic of ‘Aligning Sri Lanka’s economic revival with opportunities in Japan’. The event was organised by the Sri Lanka Japan Business Council and Expo 2025 where, delivering a speech, Ambassador Isomata emphasised the gravity of the current global situation, urging for collaborative reform, innovation and resilience.

He stated that in the face of the economic turbulence created by the “US typhoon” (referring to the trade tensions and policy shifts that were seen and affecting the global markets), diplomacy, trade policy, and domestic reform were three key fronts where Sri Lanka, Japan, and other countries must focus on and act together. “I think this difficult situation is a good opportunity for all of us here to proceed with real reform and true innovation.”

On the diplomatic front, while bilateral negotiations with the US were a priority, he also underlined the importance of the preservation of the global free trade system. “We have to emphasise the importance of the free trade system. We cannot just do away with 80 years of history of the Bretton Woods system, the free trade system we have built up from the experience of World War II. We have to emphasise the importance of this here, there and everywhere.” 

In terms of trade policy, he urged the country to diversify export goods, export destinations, and supply chains under strategic trade policies, suggesting that new or strengthened Free Trade Agreements (FTAs) could act as a buffer against external shocks from the current global economic environment. 

It was also important to enhance productivity and competitiveness to survive this “very serious situation”. Looking at the domestic economic system, he emphasised the need for structural reform, and a mid-term and long-term industrial development policy that would improve productivity and competitiveness within industries. 

Ambassador Isomata also highlighted strengthened foreign investment ties as essential. “In order for us to be able to invite more foreign investment into our countries to energise or rejuvenate our economy, we have to concentrate and constantly improve investment and our business environment for that purpose. We all have to listen to the views of foreign investors.” 

Turning to Sri Lanka, he also reaffirmed Japan’s commitment to the country’s economic recovery, and welcomed the country’s recent economic gains under the IMF framework, including a recently finalised debt restructuring agreement as a significant milestone. 

“As we all know, Sri Lanka is now back on the right track for economic recovery, staying within the IMF framework. We have just finished the finalisation of this debt restructuring between the two countries. Of course, earlier last year there was a signing of MoU between the Sri Lankan Government and major creditor countries led by Japan, France and India.” 

He added that according to the latest economic review by the Central Bank, Sri Lanka had registered 3% real economic growth in 2024, and by the end of March, held foreign reserves of $ 6.5 billion. Therefore, now was also a pivotal time to attract foreign investment. 

The Ambassador also said that it was necessary to further the economic collaborations between Japan and Sri Lanka, explaining ongoing efforts to boost investment and foster deeper business ties between the two countries. A key focus was also on youth and labour mobility, he said, highlighting two Japanese programs; the Technical Intern Training Program (TITP) and the Specified Skilled Worker (SSW) scheme, that would allow young Sri Lankan labourers gain industry experience for up to 10 years. 

“Here in Japan, we will continue to be a committed partner of Sri Lanka for its development and prosperity. We are ready to extend any assistance that is required and within our power. What I want to do is continue to have good discussions with the business sector of Sri Lanka and all the segments of Sri Lankan society,” added the Ambassador. 

Opportunities for Sri Lanka at Expo 2025

Speaking at the event, Expo Osaka 2025 Commissioner General Sampath Nissanka discussed the event’s magnitude and the opportunities that lay for Sri Lanka as the country participated and showcased its potential in the global platform. With an estimated 28 million visitors, including 3.5 million international visitors, this was a “golden opportunity” for Sri Lanka to spotlight its heritage and investment potential, he said.

“Expo 2025 Osaka is a global stage where 160+ countries will converge under the theme of ‘Designing Future Society for Our Lives,’. It’s a global stage to showcase our country’s pride, heritage and vision for the future. To our industry leaders, your collaboration is not just welcome, it is essential.”

He explained that Expo 2025 was not a conventional exhibition, but a six–month dialogue on sustainability, technology and human heritage. The Sri Lankan Pavilion would be located in the type C East section of the venue on Osaka’s Yumeshima Island, spanning 53 square metres, with an additional 15 square metres dedicated for commercial purposes. The design will include tourism information counters, a tea bar, a meeting space, and areas for industry stakeholders and artefact displays. It was a platform to attract new investments and build B2B and B2C partnerships, Nissanka noted. 

“Expo 2025 is a real moment in history. It’s like a chance to visit 160 countries in one place,” he said. 

- Pix by Ruwan Walpola