Labuan has joined the ranks of those offshore financial centres hoping to build up a substantial captive insurance industry. The Labuan Offshore Financial Services Authority (Lofsa) has said that in order to further its ambitions in this area, it plans to adopt the protected cell company (PCC) structure.
Speaking at an international conference on emerging markets in the global economy in Kuala Lumpur earlier this week, Lofsa director general Mohd Razif Abdul Kadir said that bringing in the PCC structure will 'add variety to the existing rent-a-captive facility in Labuan and would enhance Labuan as the premier captive centre'.
Mr Razif noted that apart from a risk management strategy, captives were increasingly being formed as part of efficient tax planning. He said that a Labuan-based captive could choose to pay either 3 per cent of net profits or a fixed rate of RM20,000 per annum. He also highlighted what he said was the competitive cost of setting up a captive in Labuan - 50 per cent below the average due to the absence of stamp duty while the related management fees are estimated at 30 per cent below average.
The captive industry in Labuan has been growing steadily. In 1996 there was only one captive, but this number had increased to 17 by the end of 2000.
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