In The Press

Colombo Port City vs Dubai International Financial Centre


A comparison between Dubai’s and Colombo’s separate states in the horizon

By Madhusha Thavapalakumar

Consecutive Sri Lankan governments during their tenures have taken policy decisions that often have a prolonged impact on the country’s economy even after the end of the respective Government’s tenure. One such policy decision taken by a former Government is what lies on the Galle Face Green beach stretch with a picturesque yacht marina that is taking over the Instagram feeds of the elites and “influencers”, a massive golf course, and many more attractions to come which have apparently been turning heads of potential foreign investors. You know what it is by now and yes, it is Colombo Port City aka CHEC Port City Colombo.

The Colombo Port City faced and still faces wide criticism and compliments, both internationally and locally, from the Opposition to Advanced Level tuition teachers who conduct after-class TED Talks to local rickshaw drivers to ambassadors of foreign countries to Sri Lanka. With enough being said and discussed daily on the negative and positive impacts of Colombo Port City, the Market Mine after a long break decided to compare Colombo Port City with Dubai International Financial Centre.


The relationship between Sri Lanka and the United Arab Emirates (UAE) is over 2,000 years old, yet the diplomatic connection was formally established only in 1979. Since then, according to the UAE Embassy in Colombo, there has been “constant exchange of trade delegations and economic participation in forums and meetings, and discussion on trade and investment opportunities in both countries”. Both countries today share – or it is safe to say that they are set to share – one resembling infrastructure which is the International Financial Centres (IFCs) of both countries. They have Dubai IFC and we have Colombo IFC aka Colombo Port City.

Location and land area

The popular DIFC, a special Middle Eastern economic zone, founded in 2002, is a leading financial hub for the Middle East, Africa, and South Asia and as the name indicates, it is situated in Dubai, a city known for its ultramodern architecture, nights full of life, and luxurious shopping malls. DIFC is 110 hectares. Meanwhile, Colombo Port City is being constructed off the shores of Colombo as an annexure of the city, that is home to renowned hotels and shopping malls. Colombo Port City spans across 269 hectares of reclaimed land from the sea, more than double of DIFC’s land area. As of 2020, DIFC’s total land area stood as 4.83 million sq. ft. representing an year-on-year growth of 3%.

Investment, businesses, and employment

Over 27,000 professionals are working across DIFC while about 2,900 companies are registered in the centre which are actively operating. Foreign companies are permitted to have 100% ownership of the respective companies as well. In addition to this, the centre is said to have no restrictions of profit repatriation, foreign exchange, capital repatriation, and even operational support.

“Today, it offers one of the region’s most comprehensive fintech and venture capital environments, including cost-effective licensing solutions, fit-for-purpose regulation, innovative accelerator programmes, and funding for growth-stage startups,” according to reports.

According to the centre, DIFC had 2,347 active firms as of 2020, an increase of 14% from two years. The centre signed up 493 more firms in 2019, which according to the management of the centre, is a growth of about 19% from the previous year.

As of 2020, DIFC invested in about four startups through its $ 100 million Fintech Fund. According to DIFC CEO Ariff Amari “Access to capital is fundamental to the growth of any company, and especially so when it comes to growth-stage startups. The aim of the DIFC Fintech Fund is to bridge the funding gap in the region, whilst allowing selected firms to benefit from the broader fintech ecosystem available in the centre.”

Meanwhile, Colombo Port City is being built with an initial investment of $ 1.4 billion and is expected to attract a $ 15 billion overall investment when completed. As of June 2018, Colombo Port City was lining up $ 4 billion in investment. Colombo Port City, which is in its early development stage, received its first investment of $ 1 billion in December last year for a Colombo International Financial Centre (CIFC) mixed development project.

The project comprises a total land area of 6.8 hectares, implemented under two phases. The first phase of the CIFC Mixed Development Project, with an investment of $ 450 million and comprising a land area of 3.06 hectares, will consist of the incorporation of a Special Purpose Vehicle (SPV) company, jointly managed by Browns Investment and CHEC. In terms of residents and employment opportunities, Colombo Port City is expected to accommodate over 70,000 residents and 200,000 workers.


The judicial system at DIFC is governed by independent English language common law. The courts that began operations in 2006 govern civil and commercial disputes nationally, regionally, and worldwide. In the process of establishing an independent judiciary for the DIFC, the UAE had made an amendment to their Article 121 of the UAE Constitution which “deals with the division of powers between Federal and Emirati authorities” and which “allows the Federation to enact a Financial Free Zone Law which in turn allows an Emirati Government to create a Financial Free Zone within a particular Emirate”.

Further, Federal Law No. 8 of 2004 Regarding the Financial Free Zones in the United Arab Emirates (the Financial Free Zone Law), was gazetted on 27 March 2004. This law allows a Financial Free Zone to be established in any Emirate of the UAE, by Federal Decree. Importantly, it exempts Financial Free Zones from all federal civil and commercial laws within the UAE, although UAE criminal law still applies.

The DIFC is therefore empowered to create its own specific legal and regulatory framework for all civil and commercial matters. A Federal Decree then specifically established the DIFC as a Financial Free Zone in the Emirate of Dubai.

A resolution of the Federal Cabinet prescribes the geographical area and location of the DIFC in the heart of Dubai. It is an area of approximately 110 acres located beside Sheikh Zayed Road, marked by the DIFC headquarters “Gate” building. The area is designed as a self-contained and concentrated hub of financial activity. To allow for construction and a smooth transition for occupants, a further resolution of the Federal Cabinet permits DIFC participants to operate outside these physical boundaries for the first four years of the DIFC’s operation.

Meanwhile, the Port City Commission Bill is being challenged in Supreme Court at the moment. The Bill reportedly permits the setting up of a Colombo Port City Commission with five/seven members which will take decisions on all issues pertaining to the Special Economic Zone (SEZ) at Colombo Port City. The Commission will be vested with powers to clear individual applications for authorised people to conduct businesses at Colombo Port City, to decide export-import concessions for investors which include value-added tax (VAT), Customs concessions, and tax breaks.

According to reports, these concessions are not available to “domestic and foreign investors, who have been in the business longer and with greater commitment to the country”. There are uncertainties around this Bill given that it is being challenged.

Stock exchange

The DIFC is also home for a privately held financial exchange known as Dubai International Financial Exchange, which, after three years since its inception, rebranded as NASDAQ Dubai amending the trading hours from 6 to 10 a.m. GMT from Sunday to Thursday. NASDAQ Dubai is held by both the Dubai Financial Market and Borse Dubai, and is regulated by the Dubai Financial Services Authority.

In 2007, the exchange listed the largest IPO in the Middle East, when Dubai Ports World raised $ 4.96 billion. In 2008, NASDAQ Dubai launched the first equity derivatives market in the UAE. In 2012, the exchange reduced the minimum market capitalisation for companies to list to $ 10 million, from $ 50 million previously. This change has opened the door to listings by small and medium-sized enterprises, including family-owned businesses. In October 2013, the Bank of London and the Middle East (BLME) listed its shares on the exchange.

In April 2014, Emirates REIT listed its shares following its initial public offering (IPO), in the first listing of a Real Estate Investment Trust (REIT) on an exchange in the Gulf Co-operation Council (GCC). Emirates REIT raised $ 201 million and was 3.5 times oversubscribed.

On the other hand, Port City is also gearing up to establish its own Stock Exchange but the regulators are yet to decide how it will operate and on the regulations that will govern the exchange.

Tax concessions and other benefits

In 2004, the DIFC began operations with an impressive tax-friendly regime. The centre offers a 50-year guarantee of zero taxes which exempts corporate income and profit from Dubai’s taxes.

In the meantime, Colombo Port City too has set to provide attractive tax concessions for investors which at one point made the American Ambassador to Sri Lanka raise questions over Colombo Port City becoming a potential money laundering haven.

Colombo Port City is expected to give its own tax breaks running up to 40 years and exempt businesses from a number of laws including an exchange control law in its area of authority.

According to reports, for an enterprise defined as a “Business of Strategic Importance” up to 40 years in tax incentives could be given by the Commission. The Commission could give exemptions to businesses from income tax, VAT, excise tax, debit tax, Customs duties, ports and airport levy, Sri Lanka Export Development Act levies, betting and gaming casino laws, and labour laws.

Profit and income

“The centre’s 2019 operating and net profit remained flat year-on-year at roughly $ 139 million and $ 119 million, respectively. Its consolidated revenue stood at $ 228 million, which is a slight 2% increase from 2018,” the centre’s management told international news reports.

Overall, the DIFC stands today as a massive success than it predicted to be originally with its potentials being unleashed annually with increased registration of firms and profits.

As Colombo Port City is much far away from being completed, the operating profit and income of Colombo Port City still cannot be predicted; yet, what we can hope is that it will reap similar or more economic benefits than DIFC is reaping for the UAE’s economy.


The comparison done here provides a brief picture of DIFC, a massive success of the UAE, and compares it by slowly unwrapping Colombo’s very own Port City. While the comparison might not have captured the full picture of DIFC and Colombo Port City as the city is still in its early development stage, there is a massive potential for Colombo Port City to become a local DIFC which is rolling in billions of foreign investments and profits annually.Not only DIFC, but also Hong Kong and Singapore, the very own Asian treasures today, shine brightly as globally renowned IFCs and as a result, the countries have developed significantly through creation of wealth and employment. Hong Kong’s financial markets operate under effective and transparent regulations that are in line with international standards.

In terms of Singapore, from a business perspective, Singapore’s attractiveness lies in its transparent and sound legal framework complementing its economic and political stability. The small island located in the South East Asia region has emerged as one of the Four Asian Tigers and established itself as a major financial centre.

Meanwhile, Japan Prime Minister Yoshihide Suga recently announced a plan to reinvent Tokyo as a global financial hub by lowering tax rates and providing various administrative support in English to attract top foreign talent.

If Sri Lanka is to keep up with its regional peers, Colombo Port City is an obvious requirement to do that.