Arugam Bay is a bay situated on the Indian Ocean in the dry zone of Sri Lanka's southeast coast. The bay is located 320 km due east of Colombo. It is a popular surfing and tourist destination. Many of the buildings were destroyed in the 2004 tsunami. Due to its popularity among tourists, the area has managed a slow recovery by private initiatives only. The main road through town has still not been repaved. By the end of 2008 no help has been received from any official source or international organizations. An exception is uncoordinated support for fishing folk as well as many school rebuilding programs, resulting in a continuation to provide only separatist schools for each community.

The bay hosts a large fleet of fishing boats which operate off the beach. Many organizations donated boats after the tsunami and as a result there are far more fishing boats than ever before. The main beach is a bit dirty as it is used as a garbage dump and a toilet by some locals. Nearby beaches are more esthetically pleasing and also have excellent waves. Arugam Surf Point has a very long, consistent, sectiony right hand break. Many organizations claim to have done extensive work in the area. No notable progress can be observed locally and on close inspection, as late as New Year's Day, 2009. The main road, shown below in 2004 still looks the very same early 2009. Despite calls for a walking street contractors have commenced construction of a fast trunk road through the hamlet. Repeating the mistakes made in other seaside tourist resorts such as Negombo and Hikkaduwa. US 'Mercy Corps' has been the most active of any organization. Funded by Oprah Winfrey's 'Angel Network', following a huge fund-raising TV series in the United States. Sadly, none of their projects survived the first year of operation. A new bridge has been constructed by USAID. It was opened for traffic in 2008. It replaced the 1960s, original landmark box girder construction linking Arugam Bay with Pottuvil. There is excellent elephant viewing nearby as well as two types of monkeys wandering around the area.