The UAE will invest $30 million (Dh110m) into Sri Lanka this year – almost 90 per cent more than in 2007 – according to an estimate by the Sri Lankan Board of Investment (BOI). The UAE ploughed $16m into the island nation during 2007, but is set to step up its inward investment to cash in on a favourable investment climate.

If the BOI's forecast become a reality, it will strengthen the UAE's position as the lead investor in Sri Lanka from the Middle East. The UAE is behind 64 per cent of Middle East investment in Sri Lanka. Of the 53 projects from the Middle East, 34 are being funded by the UAE.

"The UAE is the most liberal economy in the Middle East and Dubai is popular as a multi-ethnic business centre where business is mainly managed and operated by non-nationals," said AWM Faizal, Desk Officer, Middle East Investments at Sri Lankan BOI. "There is an increasing trend in investments from Dubai, as we receive more inquiries and visits from potential investors."

Industries known to attract UAE investors include infrastructure projects, textiles, agriculture, jewellery and tourism.

Al Ghurair Group – initially involved in a retail trading project to import and distribute fertilisers – is a major investor from the UAE and has obtained approval to undertake three more projects.

Duminda Ariyasinghe, executive director, Investment Promotion, said: "Current predictions have been made with due consideration to the three projects involving Al Ghurair and because of the expansion of existing projects which commenced in 2007 such as Serendib Flour Mill and Iris Solutions, a subsidiary of UAE-based Iris Technologies."

The BOI has incentives to encourage foreign investment, such as three to 15-year tax holidays and a subsequent concessionary tax of 10 per cent to 20 per cent, duty-free imports of project-related goods, no restrictions on the repartition of approved projects, 100 per cent foreign ownership in most areas and 11 free trade zones.

Faizal said: "UAE investments to Sri Lanka are increasing due to the wide array of opportunities and because of the solid success previous investors from the Emirates have enjoyed."



Breaking the monopoly

When the Serendib Flour Mills began distributing flour on June 2 at Colombo Port it broke a long-standing milling monopoly in Sri Lanka held by Singapore's Prima group.

Members of the Al Ghurair Group of Companies of Dubai, National Flour Mills (NFM) and Emirates Trading Agency (ETA), invested $53m in Sri Lanka through their Serendib Flour Mills joint venture, ending the flour manufacturing monopoly enjoyed by Prima.