The Labuan Offshore Financial Services Authority (LOFSA) released its 2007
Annual Report last week, highlighting the development and progress of the
Labuan International Business and Financial Centre (IBFC) and financial performance
of LOFSA.
According to LOFSA, a strategic milestone was achieved in 2007, with the repositioning and rebranding
of Labuan IOFC as Labuan International Business and Financial Centre (IBFC).
It observed that: "The new brand name of Labuan IBFC marks its greater focus and its continuous
progress towards a vibrant and progressive international business and financial
centre."
"Labuan IBFC has shown its agility to build new strengths, leveraging
on its comparative advantages, to meet the emerging and more sophisticated demand
in the region."
The report revealed that the Labuan IBFC continued to record double-digit growth in the number of new offshore companies,
which totalled 6,297 in 2007.
The availability of expertise and quality service providers and the wide spectrum
of products and services has made the Labuan IBFC an increasing attractive domicile
for investors, LOFSA suggested.
The offshore banking industry reported an expansion in the loan assets, complemented
by an improvement in the asset quality.
The total assets of offshore banks increased by 27.8% from USD21.1bn in
2006, to USD 27bn in 2007. The gross non- performing loans indicator also improved
further, from 2.8% in 2006 to 2.0% in 2007.
The offshore leasing business continued as one of the main offshore financial
activities, to
become one of the highest growing financial industry in Labuan IBFC in 2007.
Total new lease financing increased by 18.7%, resulting in a cumulative
financing of USD14.1bn. This has been boosted by strong activities in the
oil and gas sectors, as well as increased shipping activities in the region.
The report went on to reveal that the offshore insurance industry continued to expand, particularly in the reinsurance
business sector, which grew by 40.3% to USD919.2mn in 2007, of which 62.0% were non-
Malaysian premiums, signalling its growing role as a reinsurance centre.
This is also reflected by the increasing amount of re-takaful contributions, amounting
to USD108.4mn, an increase of 42.8% from 2006.
For the year 2007, Islamic-based assets in the Labuan IBFC continued to grow, to USD1.2bn, representing an increase of 36.9% as compared to
2006. There was strong interest from investors from the Middle-East seeking
to invest in the Asian region.
The position of Malaysia as an International Islamic Financial Centre (MIFC)
has further enhanced Labuan’s effort to promote Shariah compliant trusts
and foundations, as these products complement the Islamic financial products
and services that are already available onshore.
The Labuan International Financial Exchange (LFX) also recorded four new
listings, bringing the total number to 31, with total market capitalisation of
USD15.1bn.
One of the major listings was the Sukuk issuance of USD1bn by Saudi Arabia
based Dar Al-Arkan International Sukuk Company.
Going forward, LOFSA has identified several key strategic programmes to advance
Labuan as an International Business and Financial Centre.
One such initiatives is to elevate Labuan IBFC‘s status to being the
“gold standard for holding company
jurisdiction”.
Malaysia’s extensive tax treaty network with more
than 60 countries and the introduction of a more flexible tax framework supports
this initiative.
LOFSA is in the process of streamlining all aspects of the existing legal framework
covering both conventional and Islamic businesses to create a more "facilitative,
flexible and frictionless business environment", according to LOFSA.
The revised legislation and regulations involve rationalising and improving
the provisions to further enhance the development of business and financial
activities in Labuan.
The long-term development of Labuan IBFC aims at building a strong and sound
financial centre that is effectively regulated, vibrant and active, the Authority concluded.
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