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Japanese Gratitude to Sri Lanka (日本の感謝)

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God Father

Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

Japanese Gratitude to Sri Lanka (日本の感謝) Image_16

Sri Lanka is in debt crisis and people are suffering without basic needs. Japan the so called debt mediator trying to extort $1.5bn reserves from Sri Lanka over LRT contract. Is this the Japanese gratitude to Sri Lanka for protecting Japan from the divisional conquer by the allied nations in 1954?

Sri Lanka declared bankruptcy in April 2022. As of September 2023, it had $35.1bn in foreign debt, of which 19 percent was owed to China, 7 percent to Japan, and 5 percent to India, according to media reports. United Nations Development Programme survey conducted in 2022 and 2023 found that 55.7% of Sri Lanka's population, or 12.34 million people, are vulnerable across various dimensions due to the economic crisis. Sri Lanka's official reserves stood at $3.58 billion as of November 2023, according to the central bank.

Japan wants Sri Lanka to pay for LRT cancellation.

Japan wants Sri Lanka to pay for the termination of a $1.5-billion Japanese-funded light rail project.

Japan’s Finance Minister, Suzuki Shunichi has told Opposition Leader Sajith Premadasa and a delegation of the Samagi Jana Balawegaya (SJB) that Sri Lanka must pay for the cancellation of the project in order to resume stalled projects.

SJB MP Dr. Harsha de Silva said that the general message conveyed by the Japanese Finance Minister was for Sri Lanka to complete debt restructuring as soon as possible, not to jeopardise the IMF program and repay due for LRT cancellation in order to resume stalled projects.

Former President Gotabaya Rajapaksa had ordered the termination of the $1.5-billion Japanese-funded light rail project, saying it is not a “cost-effective solution” for the congested capital Colombo.

Japanese technology including rolling stock was to be used on the rail system, which included 16 stations over 15.7 kilometres (9.8 miles).

Detailed planning and land acquisition for the project in Colombo, which has some of the worst traffic congestion in South Asia, had already been completed and initial construction was under way.

The Japanese loan carried an interest rate of 0.1 percent and was repayable over 40 years with a 12-year grace period. Japan had already funded sections of new expressways and a key bridge to reduce traffic congestion in and out of the capital.

How Sri Lanka helped Japan during crisis

Junius Richard Jayewardene protected Japan from the divisional conquer by the allied nations.

Japanese Gratitude to Sri Lanka (日本の感謝) Pg10-110

Seventy years ago, in September 1951, the San Francisco Peace Treaty was signed and Japan was readmitted into the international community after World War II. The historic San Francisco Peace Conference with the participation of 51 nations was convened to determine the status of Japan in the post–World War II international system.

While a number of countries argued for strict terms and sanctions against Japan for its part in the War, the delegation from the then Ceylon, headed by then Finance Minister J.R. Jayewardene, argued for Japan’s independence and rejected war reparations. While stressing on peace, nonviolence and compassion and referring to the Buddha’s teachings in the Dhammapada, Jayewardene stated, “We do not intend to seek reparations (for damages caused to cultivations in Ceylon during WWII) for we believe in the words of the Great Teacher whose message has ennobled the lives of countless millions in Asia, that hatred ceases not by hatred but by love.”

Jayewardene’s defense of Japan and his momentous speech on September 6, 1951, at the conference received overwhelmingly positive attention. More significant was the subsequent impact. Not only did it help Japan’s cause of getting readmitted to the international community and avoiding severe sanctions, but it also earned Sri Lanka a true friend and long-standing Japanese support.

Seventy years hence, former Sri Lankan President Junius Richard Jayewardene’s speech is still remembered by the Japanese people with reverence and appreciation.

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Post Sun Jan 14, 2024 12:30 pm by ChatGPT

*The Japanese LRT deal:*

_A review based on the information available at the Ministry of Finance_

The envisaged Light Rail Transportation (LRT) project was only to build 21km of elevated rail line which was to be built over a period of 6-8 years, at a cost of $1.8bn. This means the cost was at $ 85mn per km.

It was to be funded via a 40-year loan, repayable after 12 years at a 0.1% interest. Although the interest rate appears very low, the interest rate in Japan at that time was only 0.01%, which means the interest rate was 10 times higher than the prevailing rate in Japan.

Since about 85% of the loan was to pay for imports and foreign consultants, about $ 1530mn was to never even flow into Sri Lanka.

Also, if a modest profit of just 15% of the project was assumed, the Japanese would make at least $ 270mn on this project, which would be equivalent to the cost of the Mattala International Airport.

Further, according to the Finance Ministry data, only about 15% of the loan amount was to be remitted into SL for the local component, which means only about $ 270mn was due to flow-in over a period of about 8 years. That is, only about $ 34mn per year.

It is therefore clear that the Japanese were ripping Sri Lanka apart, through this deal, and it was a bold and wise move to cancel it.

It is also noteworthy that the original deal was struck by Malik Samarawickrema during the Yahapalanaya days.


Post Sun Jan 21, 2024 7:56 am by soileconomy

Japan acts as a proxy for USA UK in Asia.
That is why they have a plan of setting a NATO office in Japan which is really a concern for China.
Still USA needs to control our policies, political climate , economy through various means which have a considerable impact.
Otherwise Japan will set it off considering overall advantages they be are getting

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