Sri Lanka’s Commercial and Economic Relations with KSA
Economic Ties
Economic ties between Sri Lanka and Saudi Arabia have a history of more than a millennia. These relations have evolved in modern times to establish formal trade agreements. The two countries at present share ten bilateral Agreements/ MoUs encompassing, air transport, Customs Duty, Manpower, Economic, Trade & Investment , Scientific, Technical, Culture, Double Taxation, Political Consultation, Skill Verification, Youth and Sports Co-operation and Bilateral Cooperation between Council of Saudi Chambers and Ceylon Chamber of Commerce. Several more agreements and MoUs are in the pipeline to be signed in near future.
Saudi Arabia is Sri Lanka’s 27th trading partner. First ever Saudi trade delegation visited Sri Lanka in January 1995. Since then exchange of trade delegations have taken place at numerous occasions.
Overview of Saudi’s Modern Economy
Saudi Arabia has an oil-based economy with strong government controls over major economic activities. It possesses about 16% of the world’s proven petroleum reserves, ranks as the largest exporter of petroleum, and plays a leading role in OPEC. The petroleum sector accounts for roughly 87% of budget revenues, 42% of GDP, and 90% of export earnings.
Although the Kingdom can finance high deficits for several years by drawing down its considerable foreign assets or by borrowing, it has cut capital spending and reduced subsidies on electricity, water, and petroleum products and have introduced a value-added tax (Currently 15%)
Saudi Aramco, one of the largest oil companies in the world, announced on Sunday 3 November 2019 its plan to list 1.5% of its value as an IPO as to reduce the cost to the government of running the company. On November 9, 2019, Saudi Aramco released a 600-page prospectus giving details of the IPO. According to the specifications provided, up to 0.5 percent of the shares were reserved for individual retail investors. On 4 December 2019, Saudi Aramco priced its initial offering at 32 Saudi Riyal (approximately $8.53) per share. The company generated subscriptions of total amount equals $119 billion representing 456% of total offer shares. The share sale is considered as a result of Crown Prince Mohammed bin Salman’s plans to modernize the Saudi economy and diversify the dependence on oil.
Increase of Customs Duty
Saudi Arabia enacted Cabinet Decision No. 559, on 28 April 2020, to amend the Harmonized Tariff Schedule (HTS) and has increased various customs duty rates.
The changes take effect from 10 June 2020 and certain rates are increased up to 25%.
Sri Lanka’s Trade with Saudi Arabia
Sri Lanka and Saudi Arabia Trade Relation 2013- 2022
Value in US $ Mn.
| Year | Exports | Imports | Total Trade Turnover | Balance of Trade |
| 2013 | 63.57 | 226.88 | 290.45 | -163.31 |
| 2014 | 73.28 | 142.67 | 215.95 | -69.39 |
| 2015 | 81.20 | 122.11 | 203.31 | -40.91 |
| 2016 | 74.58 | 135.94 | 210.52 | -61.36 |
| 2017 | 76.01 | 139.36 | 215.37 | -63.35 |
| 2018 | 71.91 | 255.86 | 327.77 | -183.95 |
| 2019 | 86.15 | 354.39 | 440.54 | -268.24 |
| 2020 | 75.63 | 187.61 | 263.25 | -111.98 |
| 2021 | 75.69 | 353.29 | 428.98 | -277.60 |
| 2022 | 97.89 | 228.83 | 326.72 | -130.93 |
Potential Products
- Industrial Gloves, Belts etc. of Leather
- Other Electrical & Electronic Products
- Pneumatic & Retreated Rubber Tyres & Tubes
- Woven fabric
Other High Potential Products
- Apparel
- Coco peat
- Foliage, branches and other parts of plants, without flowers or flower buds
- Solid/cushion tyres, interchangeable tyre treads & tyre flaps
- Food preparations
- Preparations used in animal feeding
- Vegetable products
- Coconut, abaca Manila hemp, ramie, agave & other vegetable fibres
- Activated carbon
- Boards & other bases for the goods of HS8537
- Nuts & other seeds, prepared or preserved
- Tea or mate extracts & preparations
- Coir Carpets And Other Rugs
- Essential Oils
- Gaskets, Washers, Seals etc. of Hard Rubber
- Industrial & Surgical Gloves of Rubber