The Middle East investors, particularly in the six Gulf States, are increasingly positive about entering and investing into Sri Lanka, according to MTI’s ‘Market Pulse’.

MTI’s ‘Market Pulse’ is a qualitative research initiative that ‘senses’ corporate, high-net-worth individuals (HNI) and investor perceptions about investing in emerging markets.

“The last two years have seen increasing leisure travel into Sri Lanka by Arab and expat corporate executives, which has triggered interest in considering Sri Lanka for business investments and setting up operations.  

Rewind four to five years and this same group would not even have considered such pursuits, but today they are certainly open and positive about Sri Lanka as an attractive emerging market destination,” Bahrain-based MTI Consulting CEO Hilmy Cader with a network of associates that span the MENA region, said.

There have been several high-profile heads of state visits which has certainly improved optimism about Sri Lanka and trade delegations between the Gulf States. However, investment inflows into Sri Lanka are yet to pick up.

According to MTI Consulting, the reason for this could be two-fold i.e. Gulf Investors need a lot more ‘hand-holding’ in the initial market entry process (particularly in entering non-Arabic speaking emerging markets) and their inability (perception) to find suitable projects outside tourism.  

Taking a cue from Gulf investments into Lebanon after the war, the appeal of capital markets has been low, instead what the look for is ‘green field’ and ‘brown field’ projects to invest in.

Gulf Investors, unlike their Western European counterparts, are much more adaptable to the challenges of dealing in emerging markets.

Gulf investments into Sudan, Tunisia, Jordon and Pakistan prove the point. Sri Lanka could also take some learning from the success of Gulf investments into Malaysia vs. Indonesia, despite the untapped potential and much larger size of the latter.

MTI cautions that Sri Lanka is currently at a 'fertile for entry' stage but a lot needs to be done before this is converted into tangible investments