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Japanese firms signal expansion drive amid reform push — JETRO

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Hiroki Oi

More than half of Japanese companies operating in Sri Lanka are planning to expand their businesses over the next two years, reflecting renewed investor confidence as the country stabilises its economy, according to the latest survey by the Japan External Trade Organization (JETRO).

Hiroki Oi, Resident Representative of JETRO Colombo Office, said the findings indicate a steady recovery in sentiment among Japanese investors.

“The share of Japanese companies in Sri Lanka planning expansion has risen to 51.6%. This marks a significant increase from 36.7% in 2024, 25% in 2023 and just 9.5% in 2022,” Oi said, presenting the 2025 Survey on Business Conditions of Japanese-Affiliated Companies Overseas.

He noted that expansion intentions have increased for three consecutive years, signalling that Japanese firms are taking a longer-term view of Sri Lanka’s potential.

At the same time, operating profit expectations show cautious optimism. According to the survey, 39.3% of Japanese companies expect operating profit to increase in 2025 compared to 2024, while 50% expect no change and 10.7% anticipate a decrease.

For 2026, the share expecting an increase rises further, while those forecasting a decline drops.

However, profitability levels remain a concern. Only 46.4% of Japanese firms in Sri Lanka expect to record profits in FY2025 — unchanged from the previous year — while 39.3% foresee losses.

“Sri Lanka needs to improve profitability to remain competitive with neighbouring countries,” Oi stressed, pointing out that several regional markets report higher shares of profitable Japanese affiliates.

Japanese companies in Sri Lanka operate across diverse sectors including manufacturing, construction, trade and finance, logistics, tourism, healthcare and IT.

Japan remains the largest export destination for Japanese-affiliated companies based in Sri Lanka, accounting for 43.9% of exports, followed by Europe at 13.4% and the United States at 12.1%.

The survey also highlights both strengths and risks in the local investment climate. Companies cited fewer linguistic and communication barriers (56.7%) and relatively low labour costs (40%) among the key advantages of operating in Sri Lanka.

Market scale and growth potential were also viewed positively.

Yet concerns persist. Political and social instability was identified as the top risk by 83.3% of respondents, followed by unclear policy management by local authorities (60%) and underdeveloped legal systems (46.7%). Time-consuming tax and administrative procedures were also flagged as significant operational hurdles.

Oi emphasised that policy clarity and administrative efficiency will be crucial to sustaining investor confidence.

“Clear, transparent and consistent policy management, along with improvements in administrative procedures, will further enhance Sri Lanka’s attractiveness as an investment destination,” he said.

As Sri Lanka advances its reform agenda, the survey suggests that while Japanese firms remain watchful on profitability, a majority are prepared to deepen their engagement — provided stability and structural improvements continue.

“The steady rise in expansion intentions demonstrates that Japanese companies recognise Sri Lanka’s long-term potential,” Oi observed. “The challenge now is to convert that potential into sustained profitability and competitiveness.”

By Ifham Nizam



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ADB-funded Thalaiyadi plant serves as blueprint for vulnerable dry zones in Sri Lanka

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Thalaiyadi SWRO desalination plant Photo Credit: ADB

Sri Lanka should adopt a diversified water-security strategy, says chief engineer

By Sanath Nanayakkare

For generations, the Jaffna Peninsula has relied almost entirely on an underground freshwater lens. With no major perennial rivers to lean on, the region has long walked a tightrope between water scarcity, seasonal droughts, and a creeping groundwater salinity that has challenged communities across the North. Today, however, a monumental shift is underway along the windswept Vadamaradchi coast.

To understand how Sri Lanka is rewriting its water security playbook, one need only look to the Thalaiyadi Seawater Reverse Osmosis (SWRO) Plant.

V. Vijayakanth, Chief Engineer of the Jaffna Kilinochchi Water Supply and Sanitation Project (JKWSSP), recently explained the engineering marvels, environmental safeguards, and long-term vision driving this landmark infrastructure project.

“Building a multi-million-gallon desalination plant on an open, deep-sea coastline facing the Indian Ocean was no small feat,” he said.

Vijayakanth noted that the project required extensive marine, geotechnical, and ecological investigations before a single pipe was laid.

“The scale of the marine installation was striking: an intake and outfall system featuring roughly 1,300 metres of large-diameter pipeline, buried two metres beneath the seabed in water depths reaching up to 12 metres. Because ocean work is strictly dictated by nature, the team had to mobilise an excavator-mounted barge from India and execute a complex offshore operation within a very tight window before the onset of the monsoon.”

“One of the greatest historical hurdles of reverse osmosis technology has been its heavy appetite for electricity. To keep operational costs in check, the Thalaiyady plant integrates state-of-the-art isobaric pressure-exchanger energy recovery systems. These devices capture hydraulic energy from the high-pressure brine reject stream and transfer it directly back to the incoming seawater feed – recovering roughly 95% of available energy and slashing power requirements.”

“Environmental stewardship was equally central to the design. To prevent high-salinity discharge from harming the marine ecosystem, the plant utilizes an offshore outfall equipped with specialized diffusers positioned more than 500 metres from the shore. This ensures rapid mixing within a tightly monitored zone, safeguarding local marine life,” he said.

Karaveddi Water Supply Scheme

The impact of the plant is already tangible on the ground. Producing water that meets rigorous national quality standards (SLS 614:2013), the facility feeds into a vast transmission network linked to elevated service reservoirs. These tanks regulate hydraulic pressure across sprawling distribution routes, bringing relief to areas historically plagued by hard, brackish water.

V. Vijayakanth, Chief Engineer of Jaffna Kilinochchi Water Supply and Sanitation Project (JKWSSP)

Currently, about 1,600 households in the Karaveddi Zone are actively connected to the desalinated supply, with water flowing across a regional network stretching from Kodikamam and Jaffna City down to distant island communities like Delft, Kayts and Punguduthivu.

The peninsula’s total daily drinking water demand hovers around 50,000 cubic metres for a population of roughly 600,000. Operating at full capacity, the Thalaiyadi plant yields 24,000 cubic metres per day – meeting nearly half of the region’s current needs.

Yet, planners are already looking decades ahead. Driven by economic development, tourism, and proposed industrial zones like Kankesanthurai, projected potable water requirements for domestic, commercial, and industrial needs are expected to climb from 95,000 cubic metres per day in 2025 to 135,000 by 2045, and 175,000 by 2065. Meeting this future trajectory will require a diversified national strategy combining desalination with surface-water preservation and rainwater harvesting.

When asked whether Sri Lanka should lean exclusively on seawater conversion amid intensifying climate volatility, Vijayakanth emphasised the need for a balanced approach: “Sri Lanka should adopt a diversified water-security strategy, prioritising sustainable surface-water development, groundwater protection, rainwater harvesting, water conservation, treated wastewater reuse and catchment protection. Desalination can complement these sources as a valuable climate-resilient and drought-proof option where appropriate.”

Backed by financial and technical collaboration from the Asian Development Bank (ADB), the project has given the National Water Supply and Drainage Board (NWSDB) invaluable expertise in advanced desalination management. Crucially, a two-year hands-on training program is ensuring that local technical staff master everything from membrane upkeep to preventive maintenance.

As climate variability accelerates, Thalaiyadi serves as a vital proof-of-concept. While energy-intensive desalination cannot replace conventional freshwater sources everywhere, Vijayakanth emphasises that it stands as an indispensable, drought-proof shield for Sri Lanka’s vulnerable dry zones – turning the ocean itself into a secure foundation for the nation’s future.

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Tropic Of Linen takes new form at The Shoppes at City of Dreams

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From left: Tropic Of Linen Founders Minha Akram and Shukran Salih

Sri Lankan fashion label Tropic Of Linen recently opened the doors to its second boutique, located at The Shoppes at City of Dreams.

For over a decade, linen has formed the core of the brand’s inspiration and business ethos. Its textures, movement, and natural irregularities carry through the striking interior of Tropic Of Linen’s newly opened second store. Large sculptural forms in wind-worn sandstone sit against softer curves, while a grand olive tree anchors the heart of the store, reaching up toward a skylight and giving life to the entire space.

Drawing on her background in fine art and design, co-founder Minha Akram envisioned a layered, sensory interior intended to draw people into the world of Tropic Of Linen and invite them to linger.

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ANC Education celebrates ‘Class of 2026’ at graduation ceremony in Colombo

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The ceremony marked both a conclusion and a new beginning, with ANC celebrating student progress and future success

ANC Education held its 2026 graduation ceremony at BMICH, Colombo, celebrating graduates across multiple programmes. The cohort included 53 BBA graduates from Northwood University, 22 Psychological Sciences graduates from Northern Arizona University, 320 Pearson BTEC HND graduates, and 29 BTEC Level 7 graduates, alongside foundation, diploma, and transfer pathway students. Senior representatives from partner institutions attended.

Best Performer Awards recognised outstanding academic achievement. The event honoured years of hard work and support from families and educators. Since 2002, ANC has provided local and international pathways. Graduates now pursue careers, further studies, or international opportunities.

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