The end of insurgency has been a boon for the Sri Lankan economy as the island nation ushers in a new era of investments aimed at consolidating its reputation as a regional hub.
The end of the war in 2009 meant countless new opportunities for the Indian Ocean island nation and previously unexplored streams of business are opening up further.
The country has succeeded in establishing itself as a priority destination when it comes to investments and trading since the end of the Civil war in May 2009, paving the way for political, economic and social stability.
With the Sri Lankan government taking an aggressive stance with trade delegations, individual B2B businesses, and participation in trade fairs, and President Mahinda Rajapaksa himself making visits to other countries in search of trade partnerships, this is considered a true ushering in of a new era of unprecedented prosperity.
The flow of foreign direct investment (FDI) in the island state has gone up with many global corporate giants exploring the Lankan market for new ventures.
The credit for the surge goes to the Board of Investment (BOI), a government sanctioned body set up for the sole purpose of incremental investments.
Structured to function as a central facilitation point for investors for over 33 years, the BOI with its mandate encompassing the entire island has ensured this objective was met with a steady pace as the investment board, with clear set goals of increasing foreign investments and parallel economic growth, functions with the highest service levels ensuring flow of FDI.
Moreover, a high-powered cabinet sub-committee of inter-ministerial leadership has been constituted to serve as facilitator for investor’s assistance, which further strengthen the BOI, clear all bottlenecks and ensure speedy clearance of investment approvals so that investors can implement projects in a hassle-free atmosphere.
The BOI companies today employ about 500,000 workers and 65 percent of the companies represent Sri Lankan exports and, to be specific, nearly 90 percent of the country’s industrial exports.
The BOI, is therefore, a significant agent of change in the Sri Lankan economy with more than three decades of its existence.
It has radically transformed the island nation economically as well as socially, placing the country in a position where it can compete in an increasingly globalized world.
Sri Lankan economic experts believe that the most significant aspect of working with the BOI is that, when you sign an agreement with the board, the provisions embodied in the agreement remains valid for the life of the enterprise.
Successive governments cannot change these provisions, ensuring a degree of stability that few other countries can offer or match. Further, a contract with the BOI means concessions on taxes and duties, which are appropriated according to the level of investment.
Moreover, the BOI has established a series of Free Trade Zones (FTZs) and trade parks at strategic locations, which provide business owners the most conducive atmosphere for manufacturing purposes.
The island state has found traction in terms of investment flow from June 2009, with new opportunities in sectors such as water purification and supply, mini hydro power, mining, properties, the famed Sri Lankan teas (better known as Ceylon Tea), eco tourism, rubber, agriculture, gems and industrial raw materials.
Foreign investment has flowed more freely into the private sector.
The country enjoys a Free Trade Agreement (FTA) with both India and Pakistan, which provides distinct business opportunities. Investors can have the best of both worlds with, for example, access to India’s market and products and Sri Lanka’s advantageous location as a base.
Due to these reasons, the country has a reputation of being a strategic access point for other crucial markets as well.
The country’s environment also is a perfect fit for specialized industries such as electronics, light engineering, computer software with many new investors in these segments signing up with the BOI.
An often underrated investment opportunity is the agricultural prospects in Sri Lanka. The tropical climate and the renewed opportunities in foliage, cut flowers and exotic fruits and vegetables with an export-oriented market is paving the way for an influx of like minded investors into the country.
Specifically, the climate in the mountainous central district is deemed ideal for agricultural ventures.
The major factor that captures any investor’s eye is the phenomenal growth of stock market in the last five years as the market capitalization of the Colombo stock market improved from $5 billion to $20 billion.
The market capitalization and liquidity is expected to grow further in coming years with new listings and other forms of financing by existing listed entities.
With the expansion, integration and access of the northern areas, economic growth is expected to be at the range of 5 to 7 percent.
Interestingly, US Investment legend Jim Rogers has rated Sri Lanka and China with better investment opportunities than other countries in the region.
With security and stability assuring investors, the market has been on an all time high with returns far exceeding expectations.
The past year has seen a prolific increase in trade related visits by countries such as Belgium, the US, Iran and China.
China being a major partner, has stakes in developments of crucial areas such as power and energy (the Norichcholai Coal power plant is being commissioned by a prominent Chinese company).
Another sector experiencing a boom is the hotel and leisure industries, the recent signing of the Movenpick group to construct a star class hotel within the city is just one of many projects in the pipeline.
Catching onto the growing trend of eco-tourism, many groups are looking to initiate such tourism projects in the green zones.
The Cinnamon Lodge, Habarana and Heritance, Kandalama are two prime examples of successful star class hotels with every amenity and an eco-focused theme.
With tourist arrivals sky rocketing, this segment is proving to be a major money spinner.
Therefore, the country holds more space in one’s mind as the pearl of the Indian ocean (enchanting travelers from the time of Ibn Batuta) for its scenic beauty.
What truly sets apart Sri Lanka from other investment destinations is the efficiency and the smooth, streamlined processes that go with starting up a business in the country, and the lion’s share for this credo goes to the BOI that assists investors from the first boardroom discussion to the construction site.
Sri Lanka being ranked as one of the fastest growing trading hubs and an economy with the most liberal policies, investors to the country are provided with preferential tax rates, constitutional guarantees on investment agreements, exemptions from exchange control and 100 percent repatriation of profits and total foreign ownership available in most of the sectors.
With more concessions and specific benefits planned for foreign investors, the nation gears itself for another year with even greater growth in all key indicators.
So far as the manpower found on the island is concerned, the primary indicators are stronger than ever before. The literacy rate in the country is one of the highest in the world at 91.2 percent and most of the skilled labor have an apprenticeship or technical knowledge at the diploma level.
Ethical practices, which aim for the triple bottom line and ensuring the balance between employer and employee benefits, are maintained and form the foundation for a longstanding work force which rarely shifts organizations.
The government and subsidiary bodies conduct and encourage continuous training programs at specific industries aimed at sharpening the work force knowledge and vocational training.
Since the end of the civil war in May 2009 and prevalence of political and social stability, the country has bought itself onto the discussions of many global corporate giants across the world.
The country is one of the leading hubs for garment manufacturing.
Its companies have long-standing manufacturing contracts with brands like GAP and Victoria’s Secret.
When it comes to the FDI, BOI statistics show that Malaysian companies invested $150 million in the country in 2008-2009, making the country the biggest foreign direct investor in Sri Lanka during the fiscal year. India ranked second with $126 million as Bharti Airtel Ltd., the nation’s largest mobile-phone company, started operations in Sri Lanka. China was placed ninth with $27 million of investments.
With the current governments’ prudent investor friendly strategy, these figures are expected to soar in the future.
The end of the war also meant the channeling of the funds toward internal development such as highways and rebuilding or improving townships which in turn meant improved logistics and transportation capabilities.
Private sector prospers from free flow of FDI
Private sector prospers from free flow of FDI
UAE, Ukraine sign comprehensive economic partnership deal
JEDDAH: The UAE and Ukraine have signed a Comprehensive Economic Partnership Agreement, removing customs duties on 99 percent of Emirati goods and 97 percent of Ukrainian exports to boost trade and investment.
The agreement aims to unlock new trade and investment opportunities, fostering deeper economic ties between the countries, reported the Emirates News Agency.
The signing ceremony was attended by UAE President Sheikh Mohamed bin Zayed Al-Nahyan and Ukrainian President Volodymyr Zelenskyy, marking a major step in enhancing bilateral economic cooperation.
This follows the UAE’s signing of CEPAs since 2021 with countries like India, Indonesia, Turkiye, Israel, Malaysia, Jordan, and Morocco to boost trade, attract investments, and protect exports and intellectual property.
The UAE president emphasized the strategic importance of the CEPA, highlighting its role in boosting bilateral trade and advancing both nations' economic ambitions. He expressed confidence that the agreement would strengthen economic relations and contribute to sustainable development.
Zelenskyy echoed these sentiments, emphasizing that the agreement would benefit both Ukraine and the UAE, expanding economic cooperation and providing new opportunities for growth.
The CEPA agreement was signed in a formal ceremony at Qasr Al-Shati by UAE Minister of State for Foreign Trade Thani bin Ahmed Al-Zeyoudi and Ukraine’s First Deputy Prime Minister and Minister of Economy Yulia Svyrydenko.
The deal is projected to contribute $369 million to the UAE’s gross domestic product and $874 million to Ukraine’s by 2031. It is also expected to accelerate Ukraine’s economic recovery and create new opportunities in sectors such as infrastructure, heavy industry, and aviation, as well as aerospace, and information technology, according to WAM.
The deal was signed after the two countries expressed their intent to negotiate a CEPA in December 2022, following over $3 billion in trade and investment commitments made during Zelenskyy’s visit to the UAE in February 2021.
Bilateral trade between the UAE and Ukraine totaled $372.4 million in 2024, down from $385.8 million in 2023. Joint foreign direct investment reached $360 million by 2022, covering sectors like logistics, infrastructure, tourism, and advanced technology.
The CEPA aligns with the UAE’s broader strategy to expand its global trade partnerships and increase investment across various sectors. The country aims to grow its non-oil trade to 4 trillion dirhams ($1.1 trillion) by 2031, with international trade playing a central role in its economic vision.
Closing Bell: Saudi benchmark index edges down to close at 12,266
RIYADH: Saudi Arabia’s Tadawul All Share Index edged down on Monday, losing 105.61 points, or 0.85 percent, to close at 12,266.46.
The total trading turnover of the benchmark index was SR5.4 billion ($1.2 billion), as 41 stocks advanced, while 201 retreated.
The MSCI Tadawul Index also declined by 15.52 points, or 1.01 percent, to close at 1,521.64.
The Kingdom’s parallel market, Nomu, lost 92.37 points, or 0.29 percent, to close at 31,644.81. This comes as 30 stocks advanced while 52 retreated.
Arabian Internet and Communications Services Co. emerged as the best-performing stock, with its share price surging by 4.82 percent to SR355.
Other top performers included Al Hassan Ghazi Ibrahim Shaker Co., which saw its share price rise by 3.90 percent to SR29.30, and Shatirah House Restaurant Co., which saw a 3.65 percent increase to SR23.26.
Abdullah Saad Mohammed Abo Moati for Bookstores Co. rose 3.02 percent to SR42.70, while Jamjoom Pharmaceuticals Factory Co. gained 2.74 percent to SR164.80.
Anaam International Holding Group saw the steepest decline of the day, with its share price easing 5.80 percent to close at SR24.68.
Al Mawarid Manpower Co. fell 3.45 percent to SR134.20, while Al Majed Oud Co. dropped 3.28 percent to SR171.20.
Middle East Healthcare Co. also faced a loss in today’s session, with its share price dipping 2.99 percent to SR81.20, while Mutakamela Insurance Co. saw a 2.77 percent to settle at SR17.52.
On the announcements front, Dar Al Arkan Real Estate Development Co. has fully redeemed its $600 million sukuk from its 2025 Series 6 Medium-Term Note program.
In a bourse filing, the company confirmed that the sukuk was paid in full on its due date, with the principal amount transferred to the designated account.
The sukuk, valued at $600 million, was originally issued on Oct. 15, 2019, with a trading end date of Feb. 15.
Dar Al Arkan utilized its internal resources to meet the obligation, ensuring a smooth redemption process. HSBC Bank served as the transaction’s paying agent and sukuk holders’ agent.
A total of 3,000 sukuk units, each with a par value of $200,000, were redeemed, representing 100 percent of the issued amount.
Sukuk holders are scheduled to receive their respective amounts in their accounts on Feb. 17.
The financial impact of the redemption will be reflected in the company’s first-quarter 2025 results.
Dar Al Arkan acknowledged the role of its investors and sukuk holders in the transaction, emphasizing their continued trust in the company, its board, and its executive management.
Turkiye faces fiscal strain as earthquake reconstruction pushes spending, says minister
RIYADH: Turkiye’s efforts to tighten fiscal policy are being hampered by the financial burden of earthquake reconstruction, Finance Minister Mehmet Simsek said, as the government grapples with balancing spending and economic stability.
Speaking during a closing panel at the AlUla Conference for Emerging Market Economies, Simsek said the country’s fiscal position remains under pressure due to ongoing rebuilding efforts.
Turkiye was struck by a 7.8-magnitude earthquake and a powerful aftershock on Feb. 6, 2023, devastating 11 provinces, killing over 53,000, and causing $34.2 billion in damages — 4 percent of its 2021 gross domestic product, according to a World Bank rapid damage assessment report. The estimate covered direct physical damage but did not account for indirect or secondary economic impacts.
“We have spent about $74 billion over the past two years, which is equivalent to just over 6 percent of GDP on earthquake reconstruction because we are building cities from scratch. Currently, 450,000 units are under construction; it’s the whole infrastructure,” Simsek said.
“Last couple of years, fiscal deficit to GDP has been around 5 percent, which is relatively high by Turkish standards. This year, we aim to bring it down to about 3 percent, so fiscal adjustment is underway,” he added.
The fiscal challenges come as Turkiye’s government pledged in March to continue tightening policy to curb inflation. The same month, Fitch Ratings upgraded Turkiye’s credit rating to “B+” from “B,” citing a more disciplined approach to monetary policy.
Despite headwinds, Simsek said inflation expectations are improving, albeit slowly.
“Inflation expectations are improving, but it’s been sluggish, in particular among households and among, you know, corporates, while markets obviously tend to have a better reading of what we are saying,” he said.
He emphasized that there is no substitute for better policies, stressing that the key lies in sound policymaking and effective execution. “For this year, it’s a combination of tight monetary policy and tighter fiscal policy combined with a more supportive incomes policy,” he said, adding that these measures should help sustain disinflation, which is crucial for improving expectations.
Macroeconomic stability
During the panel, Egypt’s minister of planning, economic development, and international cooperation, Rania Al-Mashat, said investing in resilience is an investment in the future.
“There are first principles that we all agree on, macroeconomic stability, this is a necessary condition if we want to move forward on privatization, if we want to move forward on confidence and credibility internally and externally,” Al-Mashat said.
She pointed to recent reforms that have stabilized Egypt’s economy, particularly in the foreign exchange market, and noted a retrenchment in public investment. “Right after March, you can see the manufacturing non-oil sector moving forward. We can see more exports taking place once the intermediate inputs into production were actually pushed,” she added.
Pakistan’s Finance Minister Muhammad Aurangzeb echoed the emphasis on fiscal responsibility, saying the country has achieved a primary surplus through disciplined management.
“Our taxes to GDP ratio has been languishing between 9 to 10 percent. That sort of moved in the direction of 10.8 percent at the end of December. We have agreed to move it to 13.5 percent to join the committee of nations and to bring a certain level of sustainability to the primary surplus that we have,” Aurangzeb said.
“On the other side, it’s also discussion on the expenditures and making tough policy choices with respect to what is a good cost and bad cost,” he added.
Brazil’s economic outlook
Brazil’s Finance Minister Fernando Haddad said the country’s central bank has played a key role in bringing inflation under control while maintaining growth.
“We are growing in the last two years around 3.4 percent a year, contradicting all of the predictions both domestic and international,” Haddad said.
“And we understand that the fiscal adjustment that we’re doing is not recessive because we’re guaranteeing a growth rate of 3.4 percent around a decline in inflation,” he added.
Organized by the International Monetary Fund and Saudi Arabia, the first edition of the high-level annual conference in AlUla aimed to address global economic challenges. The two-day event brought together finance ministers, central bank governors, and policymakers, alongside leaders from the public and private sectors, international institutions, and academia.
Emerging economies must ‘punch their weight’ in global policy
RIYADH: Emerging economies must play a greater role in global economic discussions, Saudi Arabia’s Minister of Finance, Mohammed Al-Jadaan, said at the closing of the AlUla Conference for Emerging Market Economies.
Organized by the Saudi Ministry of Finance and the International Monetary Fund, the forum highlighted the need for developing nations to assert their global influence, focusing on economic diversification, deregulation, and digital transformation.
Al-Jadaan stressed that emerging markets play a crucial role in shaping international economic policies and must be confident in their contributions.
“Emerging economies will need to punch their weight. They need to gain more confidence, they need to acknowledge, understand—even with humbleness—that they have something to say to the world,” he said.
He also criticized the dominance of advanced economies in global decision-making forums, emphasizing that “advanced economies have a lot to say, but they cannot resolve a lot of the key global issues alone.”
IMF Managing Director Kristalina Georgieva echoed this sentiment, highlighting that economic growth and dynamism are increasingly driven by emerging markets.
“Where is the youth population? Where is the potential for high growth that benefits everybody? It also benefits advanced economies—it is in the emerging world,” she said.
Georgieva outlined three critical steps for emerging markets: diversification, deregulation, and digitalization.
“Diversify your economy, your trade relations, your engagement, your vision for how you move forward,” she urged.
She also emphasized the role of government in facilitating economic growth by reducing unnecessary regulations.
“The government should do that—give indication as to where, what is the direction to travel, and then get out of the way,” she said, calling for the removal of bureaucratic obstacles.
Finally, she stressed the necessity of embracing digital transformation, particularly in artificial intelligence and financial transparency, to ensure competitiveness in a rapidly evolving global economy.
The conference, described by Al-Jadaan as “possibly the first global forum” dedicated solely to the economic prospects of emerging markets, provided a platform for leaders to discuss pressing challenges and opportunities.
“Bringing experts and discussing issues, challenges, and means of actually cooperating and working together to improve the lives of the people and the emerging economies and the world at large” was a core objective, he said.
As the event concluded, Georgieva asked the audience if they would be interested in a second edition of the conference, receiving an enthusiastic applause.
She confirmed that the IMF and the Saudi Ministry of Finance would document key takeaways and begin preparations for future discussions.
“We will work with our regional office and the Ministry of Finance so we can publish proceedings from the conference. But also, we will start immediately on thinking about how we bring this forward,” she said, indicating prospects for another conference edition.
Georgieva expressed optimism about the future of emerging economies, stating her vision for a world where developing nations are no longer seen as “emerging” but as equal players in the global economy.
“My dream, by the time I finish my term, is that we retire the term ‘emerging’ because you will have fully emerged,” she said.
Dentsu CEO vows to help shape Saudi Arabia’s Vision 2030 through innovation
DUBAI: Japanese marketing and advertising firm Dentsu Group is expanding into Riyadh as it seeks to support the Kingdom’s transformation, according to its CEO.
Speaking to Arab News Japan, Hiroshi Igarashi said his firm is in alignment with Saudi Arabia’s Vision 2030 diversification initiative.
Through Dentsu Sports International in the Middle East, the company aims to reshape the Kingdom’s sports and entertainment landscape, delivering fan-centric experiences through sponsorships, digital engagement, and analytics.
“Saudi Arabia is positioning itself as a global hub for media, sports, and technology. Our ‘One Dentsu’ model aligns with Vision 2030’s focus on efficiency, innovation, and collaboration,” Igarashi said.
The ‘One Dentsu’ model, led by Deputy Global Chief Operating Officer Takeshi Sano, integrates media, creative and digital services for tailored business impact.
Igarashi told Arab News Japan that the company is a growth partner focused on digital transformation, not just acting as a service provider.
He said it was important to leverage global expertise in digital marketing, brand building and data solutions to empower local and international brands.
“Saudi Arabia is setting new standards, and we bring global best practices combined with local insights,” Igarashi said.
He highlighted how Dentsu’s Japanese roots, built on trust and precision, resonate with Middle Eastern business values: “We merge Japanese craftsmanship with global agility to drive lasting success.”
The CEO added: “We prioritize measurable results over media scale, offering clients a strategic edge in a fast-evolving market.”
