UAE is Sri Lanka’s largest trading partner in Middle East

The United Arab Emirates (UAE) is the sixth largest source of the Foreign Direct Investment (FDI) inflows to Sri Lanka, and its largest trading partner in the Middle East with bilateral trade representing more than half of the country’s total trade with the region, a top Sri Lankan official told the Emirates News Agency, WAM.

There was a quantum leap in bilateral trade exchanges between Sri Lanka and the UAE, with 62.92% increase during the past three years, Sri Lankan Foreign Secretary Ravinatha P. Aryasinha said in an interview during his official visit to Abu Dhabi.

The FDI inflows from the UAE to Sri Lanka during 2015-2018 were to the tune of $ 641 million, he revealed. During 2015-2017, Sri Lanka received $ 593 million in FDI from the UAE, which represented 6.1% of the total FDI inflows to the country during that period, he said.

“In 2018 alone, we had FDI worth $ 48 million from the UAE,” Aryasinha revealed. The bilateral trade in 2016 was $ 1.34 billion, which jumped to $ 2.13 billion in 2018, witnessing a 62.92% increase, he said.

Of the $ 2.13 billion trade in 2018, total exports from Sri Lanka to the UAE were to the tune of $ 290 million and total imports from the UAE to Sri Lanka were valued at $ 1.84 billion, the official said. Tea (worth $ 48 million), coffee, apparels, and tobacco were the major exports from Sri Lanka, whereas petroleum and related products were major imports from the UAE, he explained.

As most of Sri Lanka’s oil imports are from the Arabian Gulf countries, including the UAE, the region has a crucial role in the country’s energy security, Aryasinha said.

Sri Lanka’s trade with the UAE in 2018 represented 56.5% of the country’s total trade with the Middle East, making the UAE its largest trading partner in the region, the official revealed.

The trade between Sri Lanka and the Middle East (14 countries, including the UAE) accounted for $ 3.77 billion in 2018, of which total exports from Sri Lanka to the Middle East amounted to $ 1.16 billion and total imports from the Middle East were pegged at $ 2.61 billion, Aryasinha explained. About 71,636 tourists from the Middle East visited Sri Lanka in 2018 and 5,785 of them were from the UAE, he said.  Sri Lanka also received $ 3.59 billion worth foreign remittances in 2018 from over one million Sri Lankans working in the Middle East, which represented 52.2% of the total remittances the country received during the same period, Aryasinha said.

These were from Bahrain, Iran, Iraq, Israel, Jordan, Kuwait, Oman, Palestine, Qatar, Saudi Arabia, Syria, Turkey, UAE, and Yemen. Saudi Arabia is hosting the largest number of Sri Lankans in the region – more than 400,000. Although Sri Lankans have been travelling to the Middle East and Southeast Asia for many years for work, the number of people going to new destinations has been increased in recent years. “Many people are now going to South Korea, Italy, Germany and Cyprus and the Caribbean,” he revealed. The remittances from the diaspora heavily support the Sri Lankan economy. The Government has introduced insurance scheme and pension fund for Sri Lankans living abroad to ensure their welfare, Aryasinha concluded.

Over the past three decades, Sri Lanka’s ties with the UAE have grown beyond labour relations – which was the focus when the island nation opened its resident mission in 1979 – to encompass bilateral trade and investments. Today, the UAE features among Sri Lanka’s top 10 trade partners. Bilateral trade touched $ 1.34 billion in 2016 with the balance of trade in favour of the UAE, mainly due to oil exports. Meanwhile, Sri Lanka exported $ 275 million worth of goods to the UAE. The brand Ceylon Tea is Sri Lanka’s single-largest export product to the UAE market. Other major exports are ready-made garments, coconut- and rubber-based products, seafood, spices, gems and jewellery.

There are however plans to take bilateral relations in another direction. Last September Sri Lanka unveiled Vision 2025, which aims to position the country as an export hub in the Indian Ocean.

As per Vision 2025, concrete steps will be taken to move from exporting mainly low-technology products to high-tech products and attracting transformational, knowledge-based investments. The immense potential that exists in the UAE as an export market and as a key investor in the country will shape future bilateral relations.

A number of UAE investors including Al Futtaim and Etisalat have already entered Sri Lanka. Recent years have also seen high-level bilateral visits.