Japanese Ambassador in Colombo Mizukoshi Hideaki said that in trying to overcome the economic crisis Sri Lanka should manage external pressures by way of IMF conditions.Ambassador Hideaki said so at a JICA programme involving the Colombo University and Peradeniya University as well as the members of JDS Alumni Association recently.

The outgoing Japanese envoy said that he would be leaving Colombo at the end of this month. He said:.” I came to Sri Lanka in November 2021 during the tenure of Gotabaya Rajapaksa. I experienced with Sri Lankan people the worst ever economic crisis and Aragalya movement in 2022.”

Referring to the turbulent past of Japan with the focus on WW ii and allied occupation of the country, Ambassador Hideaki said that for Sri Lanka, in the process of rebuilding its economy, there were several lessons to be learned from Japan’s experience, but I would like to highlight three key points.

Ambassador Hideaki said : “Firstly, taking advantage of external pressure. Looking back at Japan’s history, most reforms in Japan that were achieved would not have been possible without pressure from the international community. The reformist leaders of Japan, whether during the Meiji restoration period or under occupation after WWII, had made wise decisions for the future of the country decisions under foreign pressure.

Today, Sri Lanka is trying to reform the economic system under the agreement with the IMF. Reforms such as tax reform, electricity reform, or SOE (state-owned enterprises) reform may be challenging and not always popular to citizens. However, viewing the utilisation of such external pressure for the betterment of the country should not be seen as a weakness but as a testament to the wisdom of leaders. India which went into financial crisis in 1991, went through structured adjustment of the IMF and World Bank. The economic reforms which have achieved at the time transformed India into a fast-growing economy. From an international perspective, agreements with the IMF serve as backing for Sri Lanka’s commitment to pursuing rational and consistent economic policies.

Japan recently announced the resumption of 11 yen loan projects that have been suspended since May 2022 due to the default of Sri Lanka ahead of any other foreign countries. It is important to recognize that this resumption was done on the basis of Sri Lanka’s agreement with IMF and official creditor countries.

2nd lesson from Japan’s experience that I can think of is importance of building up a competitive industry for economic growth. Sri Lanka is now at a crossroads. This economic crisis can be utilized as a golden opportunity to transform and grow. Japan’s experience of the economic miracle shows that it is important to formulate its industrial policy to foster a competitive export industry. What can be the strong and competitive industries for Sri Lanka?

Sri Lanka’s economy has stabilized under the IMF programme. The inflation was contained to single digit and the GDP growth turned positive from the 4th quarter of the last year. I commend the immense efforts of the government and the people of Sri Lanka to bring about this economic stability in a very short time. However, once Sri Lanka lifts its import restriction, there is a danger of foreign currency shortage happening again. Therefore, after achieving the stabilisation, it is essential to build up a competitive industry that can push sustainable development of the country and earn foreign currencies. In building up industries, Sri Lanka may learn lessons from Japan’s industrial policies. It is important not to protect a loss making industry with government money but to ensure a smooth transition from uncompetitive industry to more competitive industry.

The third point I would like to raise is overcoming corruption. I would like to touch upon corruption because it is important for the development of Sri Lanka. As Sri Lankan people having chosen a new leader, Anura Kumara Dissanayake, so committed to overcoming corruption, there is a unique opportunity to eradicate this malady that has been runing this country for a long period. Observing Sri Lankan politics since I came here, I would like to point out two aspects of problems of corruption in Sri Lanka.

First, corruption is a source of distrust of leaders of the country by the people, and it discourages people from being responsible citizens of the country when leaders are corrupt. It gives convenient excuses to tax payers for tax evasion. Secondly, it is very harmful when Sri Lanka wants to attract foreign investment. Transparent and predictable business environment is essential to gain trust from foreign investors.

Japanese companies are nowadays strictly observing the compliance obligation and therefore never offer bribes or kickbacks. If that kind of culture remains in Sri Lanka, there is no prospect for Japanese investment coming into Sri Lanka. I am saying this because I would like to see more Japanese investment in Sri Lanka to support economic growth. Sri Lankan people have chosen a leader who has promised to eradicate corruption as his No.1 agenda. I have mentioned earlier that Japan ranks in 20th place out of 180 as least corrupted countries. Sri Lanka’s ranking is No.101. I hope, Sri Lanka will draw lessons from experiences of various countries, including Japan, to develop effective anti-corruption mechanisms. Recently I met Dr. Nandika Sanath Kumanayake, the new secretary to the President who has studied in the National Graduate Institute for Policy Studies (GRIPS) in Japan and completed MA and PhD, and he is an expert on the corruption issue. I offered him to share the experiences of anti-corruption measures that Japan has been taking to date.

There are many other lessons that can be drawn from Japanese experiences and we are ready to provide opportunities for Sri Lankan people to learn from them through JICA programs and other means.

Japan made best effort in supporting Sri Lankan people with humanitarian assistance and Sri Lankan government in negotiation of the debt restructuring. Starting from the worst time in 2022, Sri Lankan economy has recovered considerably. As my term was approaching to the end, on the 21st of September, Sri Lankan people chose a change to a completely new system in a peaceful and transparent way. I highly appreciate all Sri Lankas for this democratic process. In my remaining 3 weeks in Sri Lanka, I would like to lay the foundation of trust and friendship between our two new governments and people of Japan and Sri Lanka.”