Sri Lanka is back in the limelight due to the latest political developments and massive public protests in response to the deepening economic crisis in the country.
Six-time prime minister Ranil Wickremesinghe has been elected as crisis-wracked Sri Lanka’s new president in a parliamentary vote. He has takes charge of a bankrupt nation that is in bailout talks with the IMF, with its 22 million people enduring severe shortages of food, fuel and medicines.
This TRENDS report sheds light on the Gulf investments in the country, where the two sides had witnessed an expansion in the economic and trade relations, covering several key sectors, in the recent past.
UAE
The UAE is Sri Lanka’s largest and most important trading partner in the Middle East, with the two countries exchanging official visits in recent years, trade and economic delegations attending forums and meetings, and exploring trade and investment prospects between the two countries.
The UAE invests in Sri Lanka in both the private and public sectors, as well as in infrastructure and tourism.
The two countries signed several agreements, including an air transport agreement, an agreement to avoid double taxation, a memorandum of understanding in the field of the workforce, the formation of a joint committee between the two countries, a memorandum of understanding to improve cooperation in the field of power, and a draft agreement to protect and encourage investment.
Sri Lanka is an ideal economic partner for the business community in Abu Dhabi, as it is distinguished by its many important products and resources such as construction materials, rubber products, plastics, food products, and others. It’s also a significant importer of the UAE oil.
Tea accounts for approximately half of overall exports, along with textiles, spices, fruits and vegetables, and canned and packaged goods.
Oman
Oman is one of the Gulf countries with investment relations with Sri Lanka, especially as they overlook the Indian Ocean.
An economic delegation from the country visited Sri Lanka in March to promote Omani investments there to explore trade and investment opportunities in the Asian region.
The two countries took several initiatives in the main areas of common interest, including direct maritime connectivity, intending to achieve another milestone in bilateral relations in the coming years.
Previously, the two countries hosted a series of online virtual meetings between various private sector enterprises in the industries of food, drinks, fruits and vegetables, boat construction, Ceylon tea, and information and communication technology (ICT & BPM) to promote bilateral trade.
According to the most recent figures, the overall trade exchange between Oman and Sri Lanka was 45 million dollars at the end of 2020 and 112 million dollars in the first six months of 2021.
Liquefied petroleum gas, semi-finished products of iron, steel, and propylene, Omani fish, and paper bags were the important Omani exports to Sri Lanka. In contrast, the Omani imports from Sri Lanka were tea, spices, coconut, and various control panels and digital control.
Saudi Arabia
Infrastructure projects, power, building and construction, health care, tourism, and real estate in the residential and hotel sectors are among the $8 billion in Saudi investments in Sri Lanka.
The Saudi business sector has previously launched the largest Saudi investment project of its kind in Sri Lanka under the name “Dana Holding,” which began with a half-billion-dollar investment. It is a massive corporation that works on infrastructure projects in various industries and the tourist, real estate, and hotel sectors.
Saudi Arabia has also implemented various projects in rural areas and cities in Sri Lanka, covering infrastructure, construction, hospitals, and bridges. The kingdom imports processed rubber, coconut, and fruits from Sri Lanka.
Qatar
Qatar is also one of the Gulf countries with investments in Sri Lanka.
The First Vice-President of Qatar Chamber, Muhammad Al-Kuwari, stressed that Sri Lanka is a leading and attractive destination for Qatari investments because of its huge opportunities in many sectors.
The volume of trade exchange between Qatar and Sri Lanka reached $77.91 million at the end of 2017, and about 210 Sri Lankan companies operate in Qatar, established in partnership with the Qatari side, with a capital of approximately $12.496 million.
Bahrain and Kuwait
Sri Lanka is Kuwait’s most important economic partner, with $59 million in trade exchange between the two countries in 2019.
Sri Lanka is the 28th best exporter to Kuwait, with primary exports being tea, precious stones, jewelry, and fruits.
On the other hand, the most visible Bahraini investment in Sri Lanka is non-oil bilateral commerce, valued in the tens of millions of dollars.
The sum of trade interaction between the two nations has already been acknowledged by the Sri Lankan ambassador to Bahrain, Saj Mendez, to be around $49 million.
Some important Sri Lankan exports to Bahrain are electrical appliances, foods, fruits, and vegetables, while aluminum is the essential Bahraini export to Sri Lanka.