Middle East keen on investing in Lanka - MTI

According to MTI's 'Market Pulse', Middle East investors (particularly in the six Gulf States) are increasingly positive about investing in Sri Lanka.

MTI's 'Market Pulse' is a qualitative research initiative that 'senses' corporate, HNI and investor perceptions about investing in emerging markets.

"The last two years has seen increasing leisure travel to Sri Lanka by Arab and expatriate corporate executives which has triggered interest in considering Sri Lanka for investments and setting up operations," said CEO of Bahrain-based MTI Consulting, Hilmy Cader.

"Four to five years ago 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," he 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 to Sri Lanka is yet to pick up.

According to MTI Consulting sources 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-Arab speaking emerging markets) and their inability (perception) to find suitable projects outside tourism.

Taking a cue from Gulf investments to Lebanon after the war, the appeal of capital markets has been low. They look for '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 in Sudan, Tunisia, Jordon and Pakistan prove the point. Sri Lanka could also learn from the success of Gulf investments in Malaysia compared to Indonesia, despite its untapped potential and much larger size.

Sri Lanka is at a 'fertile for entry' stage but muchneeds to be done before this is converted to tangible investments, the sources said.