Korea could again be Sri Lanka’s top investor

South Korean businesses were the predominate foreign investors in Sri Lanka some 30 years ago before civil war paralyzed the country, leveraging the experience gained there to launch investment forays into other nations, according to Sri Lanka’s top diplomat here.

That was a time of peace.

From 1983, separatists from the minority Tamil community battled government forces for 26 years until they were finally crushed in 2009.

The nation is now finally emerging from that nightmare on a raft of rapid development, massive foreign investment ― the country forecasted $1.8 billion in FDI for 2014 ― and dozens of big infrastructure projects.

The fruits of peace included clearing over a million landmines, re-settling some 300,000 mostly internally displaced Tamils, and rebuilding schools, hospitals, roads, places of worship and thousands of homes. The country has had average GDP growth of 8 percent per annum over the past four years.

Sri Lankan President Mahinda Rajapaksa, in power since 2005, has been credited with winning the war against the Tamil separatists, but critics have questioned whether peace has been truly secured.

Four and a half years after the war, allegations that Tamils are being subjected to abuses surfaced to embarrass the government as it showcased national development and social progress to leaders from more than 50 countries at a Commonwealth summit last week in the capital Colombo.

“Many heads of state visited Sri Lanka and saw for their own eyes the progress that Sri Lanka has made since 2009. Sri Lanka has been given an opportunity to show off the progress we have made,” said Sri Lankan Ambassador to South Korea Tissa Wijeratne in an exclusive interview with The Korea Herald at his office in Seoul on Nov. 7.

Sri Lanka hosted world leaders at the Commonwealth Heads of Government Meeting and related forums from Nov. 10 to 17.

“The fact that the Commonwealth countries agreed to have Sri Lanka host the summit was due to the peace achieved after 30 years of civil war,” he said.

If Rajapaksa can prove his critics wrong and achieve a lasting peace for his country, then South Korea could gain big, according to Wijeratne, because Asia’s fourth-largest economy was Sri Lanka’s largest foreign investor in the 1980s before civil war devastated the island nation. There is every reason to believe South Korea could once again become Sri Lanka’s No. 1 investment partner, he said.

“We have close historic ties. South Korean investors were some of the most active in Sri Lanka 30 years ago with more than 150 investment projects,” he said.

But for the time being, China is Sri Lanka’s No. 1 investment partner. South Korea does not even rank in the top five.

Sri Lanka’s free trade agreements with India and Pakistan make it an ideal entry point for Chinese products into South Asian markets. Even a cursory look shows that Chinese investments have made a big impact in Sri Lanka, and trade delegations from China make regular trips to the island.

South Korea could be following the lead of its larger neighbor. Since 2009, Sri Lanka and South Korea have inched up relations across the diplomatic gambit from politics to trade, tourism and people-to-people exchanges.

Wijeratne described cooperation in overseas development, a guest worker program that sees some 25,000 Sri Lankan workers be employed at South Korean farms and factories, and numerous South Korean investment projects in Sri Lanka.

The number of Sri Lankans permitted to work in South Korea will increase soon, Kim Young-mok, the head of Korea International Cooperation Agency, reportedly said during his visit to Sri Lanka last month.

Samsung Engineering & Construction is engaged in work on building a slew of shopping complexes, Hyundai E&C is heading up an expansion project of the country’s main port in Colombo and Kyungnam Enterprises has long been a major player in building highways in the rural areas of Sri Lanka.

Two way ties date back decades. Though the two Asian nations established diplomatic relations in 1977, South Korea opened a trade office in Colombo in 1968.

Those ties culminated in Rajapaska visiting Seoul in 2012. Prime Minister Chung Hong-won traveled to Colombo on a three-day official visit in August. Wijeratne described the first state-level visit in 36 years as nothing short of “historic.”

It was Chung’s first foreign trip after his appointment as prime minister.

The ambassador also said that Hyundai E&C’s CEO was bringing a delegation with him to participate in a business forum taking place ahead of the main summit due to expanding ties between South Korea and Sri Lanka.

South Korea appears to be acutely aware it has a major stake in securing the peace in Sri Lanka, as it built an international convention center in Colombo for the Commonwealth meeting to the tune of $9 million.

The construction of the convention center is the result of a deal inked between KOICA and Sri Lanka’s Urban Development Authority.

By Philip Iglauer (ephilip2011@heraldcorp.com)