Sri Lanka invites Japanese SMEs to set up manufacturing facilities

The private sector has called on Japanese small and medium enterprises to set up shop in Sri Lanka to focus on exports to the Indian and Pakistan markets, utilising the Free Trade Agreements (FTAs) with Sri Lanka.
The invitation follows one of Japan’s largest banks, the Bank of Tokyo Mitsubishi, UFJ becoming the first bank to sign a Memorandum of Understanding with the Board of Investment (BOI) in Sri Lanka to encourage Japanese investments.
The aim of the agreement is to promote Sri Lanka as an attractive investment destination to the bank’s varied clientele, scattered across several countries.
“We wish to extend our invitation to the Japan-Sri Lanka Business Co-operation Committee to consider inviting SMEs in Japan to set up their manufacturing facilities in Sri Lanka and make use of the opportunity of entering Indian and Pakistan markets through the present Free Trade Agreements Sri Lanka is enjoying with these two countries,” said Daya Weththasinghe, President of the Sri Lanka-Japan Business Co-operation Committee of the Ceylon Chamber of Commerce.
Speaking at a meeting held on 18 August with the counterpart organisation Japan-Sri Lanka Business Co-operation Committee of the Japan and Tokyo Chambers of Commerce and Industry, he added: “Indeed, many of Japan’s SMEs have come to rely more on international markets.”
Tadayuki Seki, newly-appointed Chairman of the Japan-Sri Lanka Business Co-operation, who is also the Executive Vice President of ITOCHU Corporation Japan, visited the Ceylon Chamber of Commerce to meet the Executive Committee of the Sri Lanka-Japan Business Co-operation Committee of the Ceylon Chamber of Commerce to discuss the way forward of promoting trade, investment and tourism between Sri Lanka and Japan.
More than 99% of all businesses in Japan are Small or Medium-sized Enterprises (SMEs); they also employ a majority of the working population and account for a large proportion of economic output. While most of these companies are not as well-known as Japan’s giants, they form the backbone of the service sector and are a crucial part of the manufacturing and export supply chain.
The definition of what constitutes an SME varies between countries: this paper uses the definition according to the Small and Medium-sized Enterprise Basic Act and used by Japan’s Ministry of Economy, Trade and Industry (METI). This classifies as SMEs businesses in the retail or services sector with less than ¥50m (US$600,000) in capital, those in the wholesale sector with less than ¥100m (US$1.2m) in capital, and those in manufacturing with less than ¥300m (US$3.6m) in capital. In addition, it restricts the definition to those in retail with fewer than 50 employees, those in services or wholesale with fewer than 100 employees, and those in manufacturing with fewer than 300 employees.
SMEs are prevalent across the Japanese economy, constituting the lion’s share of enterprises in all sectors. SMEs are most numerous in the retail, services and restaurant/lodging industries but among the most productive are those in the manufacturing sector. While many of those in the services sector are wholly reliant on domestic demand, a large proportion of SME manufacturers are essential suppliers to Japan’s famous large exporters. SMEs should be making the most of growth opportunities outside their domestic market.
The Sri Lanka-Japan Business Co-operation Committee (SLJBCC) was set up in 1979 by the Ceylon Chamber of Commerce following a Memorandum of Understanding with the Japan-Sri Lanka Business Co-operation Committee (JSLBCC) setup by the Japan Chamber of Commerce and Industry (JCCI). Since then, 18 joint meetings have been held in Sri Lanka and Japan, the most recent in Tokyo, Japan in June 2014. The 19th joint Committee Meeting is scheduled to be held in 2015 in Colombo.
The SLJBCC is the first bilateral business council to be set up by the Ceylon Chamber of Commerce with the main objective to promote trade in goods, tourism and other services between Sri Lanka and Japan and also to attract investment from Japan to Sri Lanka and encourage the establishment of joint ventures in Sri Lanka with investors from Japan.