Increasing volumes of tea exports and rising oil prices are expected to help lift the value of trade between the two countries.
Tea and oil help to raise trade between UAE and Sri Lanka
Trade between the UAE and Sri Lanka is expected to exceed last year's total of US$364 million (Dh1.33 billion), spurred by rising volumes of tea exports to the Emirates and increasing oil prices.
Officials forecast tea exports will rise by about 30 per cent to up to 40 million kilograms by the end of the year, the same level as before the global financial crisis hit in 2008.
Tea represents 55 per cent of Sri Lankan exports to the UAE. Rubber and garments are the other main exports.
"Sri Lanka's economy is going through a very strong phase and it means both more inputs and more outputs," said Shamubeel Eaqub, the principal economist at the economics analysis firm NZIER in New Zealand.
"Those countries with transportation hubs will be seeing the first evidence of that and Dubai will be well placed to benefit," he said.
The flow of goods between the two countries has risen steadily after 25 years of civil war ended two years ago. The island's economy has been reinvigorated since the end of hostilities as government reforms have kick-started trade and tempted foreign investors.
Trade between the UAE and Sri Lanka last year grew 9.3 per cent to $364m, from 2009. Sri Lankan officials expect trade to rise further this year.
The UAE is the largest regional exporter to Sri Lanka, with oil shipped to the nation as well as a variety of other goods such as raw materials re-exported through Dubai. About 77 per cent of the country's oil requirements are estimated to come from the Middle East, equating to about $2.3bn. The rise in oil prices over the past year means the value of those exports has increased.
Investment ties between the two countries has also picked up in recent years.
"We look on investors from the Gulf and UAE as very important," said Sarath Amunugama, the senior minister of international monetary co-operation in Sri Lanka, during an investment roadshow to Dubai on Wednesday. There were further opportunities for UAE investors in the tourism and agricultural sectors, he said.
Al Ghurair Foods, part of the Dubai-based family group Al Ghurair, owns a stake in Serendib Flour Mills, a company based in Colombo. The company also has investments in the Sri Lankan property market.
Arab Orient Insurance, a subsidiary of Al Futtaim, is planning to set up an insurance firm in the country, according to media reports.
Al Futtaim, an automotive, retail, electronics and financial services conglomerate based in Dubai, paid more than Dh300m three years ago for a majority stake in Associated Motorways, the sole agent for Nissan vehicles and Yamaha motorcycles.