NE Asia Geopolitical Significance

By Dr Srimal Fernando | Published: 2:00 AM Mar 1 2021
Columns NE Asia Geopolitical Significance

By Dr Srimal Fernando 

The twenty-first century is said to be the Asian century with the rise in geo-economic power in this region; a vital factor in influencing robust foreign policy initiatives of these economies. With these changes currently underway, Japan and South Korea remain as the most economically dominant states from among the North East Asian nations. Given such changes taking place in many parts of Asia, Sri Lanka needs to vigilantly look at strategic readjustments to initiate key changes in its economic landscape. Aligned with such initiatives, the latest assertiveness in Sri Lanka’s diplomatic undertakings in the North East Asian region has been of significant importance in the country’s foreign policy approach.  For instance Sri Lanka’s ties with the Russian Far East, North East China, Mongolia and Taiwan have made great strides in the recent past. Given the current geo economic trend, tapping into the full potential of well integrated trading blocs such as North East Asia has a comparative advantage for small economies such as Sri Lanka. It is worth comprehending the underlying reasons as to why Sri Lanka needs to reorient its ties with the North East Asian bloc. 

Sri Lanka- Japan Cooperation 

The legacy of the friendship between Sri Lanka and Japan has a deep rooted history going back to the San Francisco Peace Treaty in 1951. The increasingly warm bilateral relations between both nations is a welcome development for Sri Lanka; a small island state. Previously, Sri Lanka was the largest per capita recipient of bilateral aid from Japan. From 1965 to 2018, Sri Lanka received approximately US$ 10.2 billion as Overseas Development Assistance (ODA) in the form of capacity building and financial aid from Japan. In the year 2000, Sri Lanka was the eighth largest recipient of Japanese aid. Presently Japan is Sri Lanka’s second largest aid donor and tenth largest trading partner. A few years ago, bilateral trade between Sri Lanka and Japan stood at US$ 1.2 billion. Post 2002, Japan played an active and key political role in Sri Lanka’s peace process with a keen interest in establishing peace in the Nation. Going forward, both countries are considering setting up industrial parks as a tool to resolve barriers in investment and trade. 

Sri Lanka and South Korea Relations

Since establishing diplomatic relations in 1977, South Korea and Sri Lanka have come a long way to form a cordial bilateral partnership. The two countries have recently discussed numerous areas of mutual interest while expressing their desire to further enhance bilateral relations. 

In 2019, South Korea was identified from amongst a small basket of nations with whom Sri Lanka could explore future prospects of entering into a bilateral free trade agreement (FTA) or a preferential trading arrangement (PTA). Currently bilateral trade between the two countries stands at approximately US$ 487 million. Half of Sri Lanka’s exports to Korea comprise of apparels, tea, rubber products and coconuts of which apparel exports rank as number one and accounted for 34 per cent of the country’s total export earnings in 2014.   

 South Korea continues to be one of the vital sources of foreign direct investment (FDI) in Sri Lanka with over 70 South Korean companies based in the island nation. An agreement for the Promotion and Protection of Investments was signed on 28 March 1980 between the Governments of the Republic of Korea and the Democratic Socialist Republic of Sri Lanka. From 1980 to the 1990s, South Korea was the biggest foreign direct investor in Sri Lanka. Total assistance and grants provided to Sri Lanka since 1987 for various ODA projects by the Korea International Cooperation Agency (KOICA) exceeds US$ 1 billion. 

The South Korean Government has provided employment prospects for Sri Lankan workers under the Employment Permit System (EPS).  Starting with a batch of 214 workers in 2004, currently around 28,000 Sri Lankans are employed in the construction, manufacturing and fisheries sectors on contractual basis under this scheme. 

South Korea’s largest airline, Korean Air commenced direct flights between Seoul and Colombo three times a week since 2013. Though tourist arrivals from South Korea increased to 15,963 in 2017, registering a growth of 270 per cent, Sri Lanka could only tap into 0.5 per cent of South Korea’s total international travelers.

Russian Far East and North East China  

Colombo’s strong Diplomatic ties with North East China and the Russian Far East goes back to the early times of the Soviet Union and was characterised in the form of closer diplomatic, economic, and military support in the post-independence period. 

Sri Lanka’s diplomacy with Russia provides the advantage of gaining access to the North Pole Route (NPR) through the Eurasian Economic Union (EAEU) to promote its commercial use while pre-empting the Arctic Ocean market. 

China’s approach in dealing with small island nations such as Sri Lanka has long term benefits as well as grave challenges. The recent past has seen China’s growing influence in terms of large investments that have changed the social dynamics in island nations impacting on their political mindsets and foreign policy shaping. However, Sri Lanka appears to be building new diplomatic ties with the Northeast Asian nation.  

Trade Diplomacy with Taiwan and Mongolia

Sri Lanka is Taiwan’s 42nd export partner and 54th  trading partner. According to the Bureau of Foreign Trade; Ministry of Economic Affairs, bilateral trade between the two countries in 2019 recorded US$ 365.37 million while total Taiwanese investments in Sri Lanka currently is approximately US$ 6.9 million.

 Mongolia has been formally appointed as a stakeholder of the Asia Pacific Trade Accord (APTA) in which Sri Lanka too is a partner state.  


The geopolitical dynamics in the Indian Ocean has given rise to a new trend of power competition in this region.  While the Global economic order underwent rapid changes in recent decades alongside sharp changes in the prospects of North East Asian nations, Sri Lanka is a vital strategic partner for these nations in the Indian Ocean region. 

 In recent years, interdependence and bandwagoning have become fundamental elements of foreign policy dynamics. Such changes in the international environment have a profound significance in Sri Lanka’s foreign policy paradigm. To move ahead Sri Lanka which is a small island state would need to reframe its foreign policy orientation given that ties with the North East Asian nations are anchored on a solid economic foundation. 

While there is a gap in the relationship with Sri Lanka’s closest and oldest allies, it is imperative that the country maintains a strong balance in its foreign policy alignment.  While time tested relationships with old friends such as Japan and Korea need to be kept alive, Sri Lanka needs to cultivation healthy ties with countries in the North East Asian region.  

About the Author

Dr. Srimal Fernando received his PhD in the area of International Affairs. He was the recipient of the prestigious O. P Jindal Doctoral Fellowship and SAU Scholarship under the SAARC umbrella. He is also an Advisor/Global Editor of Diplomatic Society for South Africa in partnership with Diplomatic World Institute (Brussels). He has received accolades such as 2018/2019 ‘Best Journalist of the Year’ in South Africa, (GCA) Media Award for 2016 and the Indian Council of World Affairs (ICWA) accolade. He is the author of ‘Politics, Economics and Connectivity: In Search of South Asian Union.

By Dr Srimal Fernando | Published: 2:00 AM Mar 1 2021

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