UAE is Sri Lanka’s biggest trading partner in the Middle East

The United Arab Emirates (UAE) is Sri Lanka's sixth-largest source of Foreign Direct Investment (FDI) inflows. According to a Sri Lankan official in correspondence with gulf media, the UAE is also its largest trading partner in the Middle East. It has bilateral trade representing over half of the country's entire business with the region.

In an interview during his official visit to Abu Dhabi, Sri Lankan Foreign Secretary, Ravinatha P. Aryasinha, said there was a quantum leap in bilateral trade ties between Sri Lanka and the UAE over the past three years.

During 2015-2018, FDI inflows from the UAE to Sri Lanka amounted to $641 million, he said. Sri Lanka earned $593 million in FDI from the UAE during 2015-2017, which accounted for 6.1 percent of the country's total FDI inflows over that span, he said.

"We had 48 million dollars worth of FDI from the UAE in 2018 alone," Aryasinha reported. In 2016, bilateral trade was $1.34 billion, increasing to $2.13 billion in 2018, seeing a rise of 62.92 percent, he said.  Of the $2.13 billion markets in 2018, Sri Lanka's total exports to the UAE amounted to $290 million, and total UAE imports to Sri Lanka amounted to $1.84 billion, the official said. The principal exports from Sri Lanka were tea ($48 million), coffee, apparel, and tobacco, while petroleum and related products were major UAE imports, he explained.

Since most of the oil imports from Sri Lanka come from the Arab Gulf countries, including the UAE, the region plays a crucial role in the energy security of the country, Aryasinha said.

In 2018, Sri Lanka's trade with the UAE accounted for 56.5 percent of the country's total business together with the Middle East, making the UAE its region's largest trading partner, the official said.

In 2018, trade between Sri Lanka and the Middle East (14 countries, including the UAE) accounted for $3.77 billion, of which total exports from Sri Lanka to the Middle East amounted to $1.16 billion, and total Middle East imports reached $2.61 billion, Aryasinha explained.

Approximately 71,636 Middle East tourists visited Sri Lanka in 2018, and, he said, 5,785 were from the UAE. 

In 2018, Sri Lanka also received $3.59 billion worth of foreign remittances from over one million Sri Lankans working in the Middle East, representing 52.2 percent of the country's total,  over the same period, Aryasinha said.

According to Vision 2025, Sri Lanka will take practical steps to move from exporting predominantly low-tech products to high-tech products and attracting knowledge-based transformational investments. Future bilateral relations must form the enormous possibility that exists in the UAE as an export market and as a principal investor in the world.

OSL Take: Sri Lankan authorities are engaged in a global drive to promote trade and investments on the island. The country has also participated in many large scale international exhibitions and initiated bilateral trade discussions with many foreign countries. Meanwhile, the government of Sri Lanka is continuously developing the ease of doing business environment in the country. Also, the country’s geographical positioning in the Indian Ocean, along with the many trade agreements as well as trade concessions enjoyed by the island, makes Sri Lanka the ideal business/investment destination in the South Asian region. In this backdrop, the discussions on trade and investments in the UAE would open up business/investment opportunities for businesses in both countries.

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