The economic landscape of South Asia is poised for a significant transformation as the United Arab Emirates and Sri Lanka move closer to finalising a landmark trade agreement. In a series of high-level discussions held recently in Dubai, officials from both nations expressed profound optimism regarding the imminent signing of a Comprehensive Economic Partnership Agreement (CEPA). This strategic pact is viewed as a cornerstone in Colombo’s broader efforts to revitalise its national economy and establish itself as a premier regional business hub, bridging the gap between Middle Eastern capital and South Asian markets.
A Transformative Economic Framework
The proposed CEPA represents more than a mere reduction in tariffs; it is a comprehensive framework designed to integrate the value chains of both nations. During a prominent investment conference titled ‘Recovery to Relevance: Sri Lanka’s Moment in the Evolving Global and Regional Economy’ held in Dubai on 11 June 2026, Hanif Yusoof, Sri Lanka’s Presidential Special Envoy for Foreign Investment, highlighted the transformative nature of this agreement. According to Mr Yusoof, the CEPA will provide the necessary legal and operational clarity to fast-track investment flows that have been building momentum since the signing of an initial investment protection treaty last year.
Ambassador Cooray, Hanif Yusoof, Alexi Gunasekera, Ghanim Al Falasi and other delegates at the Dubai conference.
The dialogue between the two nations is underpinned by a robust existing trade relationship. Prof. Arusha Cooray, the Sri Lankan Ambassador to the UAE, noted that bilateral trade has already reached a substantial $1.6 billion. Currently, the UAE stands as the sixth-largest investor in Sri Lanka, a position that both governments are eager to elevate. The institutional framework for this growth was further strengthened when chambers of commerce from both sides signed a Memorandum of Understanding (MOU) during a previous presidential visit, laying the groundwork for the private sector to lead the next phase of economic integration.
Port City Colombo: The Strategic Gateway
Central to Sri Lanka’s economic pitch is the ambitious $20 billion Port City Colombo project. This reclaimed land development is being marketed not as a competitor to regional hubs like Dubai, but as a complementary “extension” of the successful Middle Eastern model. Harsha Amarasekera, Chairman of the Colombo Port City Economic Commission, described the development as a catalyst for long-term national growth. Situated at the epicentre of the Indian Ocean, the Port City offers a strategic footprint for UAE-based companies looking to expand their reach into a market of over two billion people.
Harsha Amarasekera PC, Chairman of the Colombo Port City Economic Commission.
The project has already attracted more than 250 companies, establishing itself as a burgeoning logistics and services hub. The vision articulated by officials involves creating a low-cost, high-efficiency ancillary centre that supports the global logistics network already centred in Dubai. By leveraging Sri Lanka’s geographical advantages, the Port City is designed to provide a seamless transition for multinational corporations seeking to optimise their South Asian operations.
Synergies and Shared Visions
The relationship between the UAE and Sri Lanka is characterised by a spirit of collaboration rather than competition. Hanif Yusoof emphasised that Sri Lanka seeks to learn from and replicate the success of Dubai’s economic model. “For me, this is not a different project. This would be an extension of Dubai… we don’t want to be competitive with Dubai… as a complement to Dubai,” he stated. This sentiment was echoed by Ghanim Al Falasi, Senior Vice President at Dubai Silicon Oasis, who suggested that Dubai’s expertise in infrastructure, regulation, and investor confidence could provide invaluable lessons for Sri Lanka’s emerging free zones.
Ghanim Al Falasi, Senior Vice President/Director General’s Office for Dubai Silicon Oasis (DSO).
The potential for collaboration extends into the technology and innovation sectors. Dubai Silicon Oasis, known for its integrated ecosystem of technology and commerce, serves as a blueprint for the type of modern business environment Sri Lanka aims to foster. By combining Dubai’s global access to capital with Colombo’s strategic access to the South Asian hinterland, both cities can function as mutually beneficial platforms for international trade.
Energy and Sustainability: A $12 Billion Opportunity
Beyond logistics and trade, the renewable energy sector has emerged as a high-priority area for investment. Sri Lanka has set an ambitious target to achieve 70 per cent renewable energy by 2030. To reach this potential and modernise the national power grid, the country requires approximately $12 billion in investment over the next four to five years. This presents a unique opportunity for UAE energy firms, which have already demonstrated global leadership in sustainable technology and infrastructure development.
Hanif Yusoof, Sri Lanka’s Presidential Special Envoy for Foreign Investment.
The transition to a greener economy is not only an environmental necessity but a key component of Sri Lanka’s strategy to ensure long-term energy security and industrial competitiveness. The involvement of UAE-based investors in these projects would further solidify the economic bond between the two nations, providing Sri Lanka with the technical expertise and capital required to revolutionise its energy landscape.
The Global Sri Lankan Community in the UAE
A vital pillar of this bilateral relationship is the presence of over 250,000 Sri Lankans currently residing and working in the United Arab Emirates. This segment of the Global Sri Lankan community serves as a living bridge between the two cultures and economies. Their contributions to the UAE’s development, coupled with the remittances and expertise they provide back to Sri Lanka, are instrumental in maintaining the strong social ties that facilitate high-level diplomatic and economic negotiations.
Alexi Gunasekera, Consul General of Sri Lanka in Dubai and the Northern Emirates.
Alexi Gunasekera, Sri Lanka’s Consul General in Dubai, has been active in promoting the country’s potential to regional investors. His efforts to widen the interest of the Middle Eastern business community reflect the proactive stance the Sri Lankan government is taking to ensure that the country’s recovery is sustained by long-term, high-quality foreign direct investment.
Conclusion: A Moment of Relevance
As Sri Lanka emerges from a period of economic challenge, the focus has shifted from mere recovery to regional relevance. The impending CEPA with the UAE, the development of Port City Colombo, and the focus on renewable energy represent a coherent strategy to reposition the island nation in the global economy. By aligning itself with the success of the UAE, Sri Lanka is not only seeking to rebuild but to innovate and lead in the Indian Ocean region.
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