Established in 1990, Labaun is one of the youngest international offshore centres, and although it has seen substantial growth in company registrations in recent years in sectors such as banking and insurance and fiduciary services, it remains relatively anonymous in comparison to the likes of the Cayman Islands, the British Virgin Islands and the Channel Islands.

However, speaking at the Lofsa-organised 'Investment Opportunities through Labuan IOFC' forum recently, the regulator's Director-general, Datuk Azizan Abdul Rahman, spoke of new initiatives in 2008 to catalyze Labaun's development, including the rebranding exercise due to begin in January.

“The re-branding exercise is undertaken in order to constantly benchmark and re-evaluate ourselves with other offshore centres," he explained.

“Labuan needs to be more visible not only to international investors, but also to Malaysian companies that have financial operations overseas. We will be launching a new Labuan IOFC by end of January next year,” he added.

There are more than 6,000 companies registered in Labuan, about 900 of which are Malaysian owned. However, over the next five years, Azizan outlined an ambitious proposal to increase the number of entities registered in Labuan to 50,000.

The growth plans are backed by the Malaysian government, which has allocated RM120 million (US$36 million) in the Ninth Malaysia Plan for investment in its future development, and has already announced that improvements to Labuan's legal regime will be put in place.

In September, Prime Minister Datuk Seri Abdullah Ahmad Badawi stated in his 2008 budget speech that in future, companies registering in the Labuan offshore sector will have the option of having their offshore business income taxed under the Income Tax Act 1967, in addition to under the Labuan Offshore Business Activity Tax Act 1990.

"In the light of greater global competition, we need to ensure that Labuan remains competitive as an international offshore financial centre. Given that investors in Labuan undertake a wide range of financial services, a flexible tax regime is necessary," the Prime Minister explained at the time.

The Labuan Offshore Business Activity Tax Act 1990 (as amended 2004) provides for the reduction or complete exemption of income tax in respect of certain business activities carried on by offshore companies in Labuan. Chargeable profits derived by an offshore company from an offshore trading activity are subject to tax at a rate of 3%. An offshore company which carries on an offshore non-trading activity is exempt from income tax altogether.

The Income Tax Act 1967 applies to any activity other than offshore business activity carried on by an offshore company, meaning that they pay normal taxes.

Among other projects to help attract international investors, improvements will also be made to Labuan's telecommunications infrastructure, and there will be consultations with international experts to increase the profile of the Labuan International Financial Exchange (LFX), where 44 companies are currently listed.