PRESS
RELEASE
The 2005 Labuan Offshore Financial
Services Authority Annual Report
KUALA
LUMPUR, 28 April 2006 – The
Labuan Offshore Financial Services Authority (LOFSA) released its
2005 Annual Report today (www.lofsa.gov.my).
The Annual Report provides
a review of the progress and development of the Labuan
International Offshore Financial Centre (IOFC) and financial
performance of LOFSA.
Overview
Labuan IOFC recorded another year of strong performance with
expansion in all sectors in 2005.
It is well-positioned to become a successful international
offshore financial centre, offering a diverse range of innovative
and high quality offshore products and services. The thrust of
policies have been directed at further strengthening Labuan’s
capacity and diversity of business activities to enhance its
global stature and competitiveness. Another priority is to
preserve Labuan’s reputation as a credible offshore centre for
quality and genuine institutions. Measures implemented by LOFSA
have therefore been aimed at maintaining a market-oriented and
investor-friendly environment within a pragmatic legislative
framework and competitive taxation structure.
Business
Activities of Labuan IOFC
In
2005, the number of offshore companies registered in Labuan IOFC
rose by 532 bringing the total of registered offshore companies to
5,152 as at end-December 2005. Out of this, 3,067 were operating
companies. The offshore companies originated from almost 80
countries, reflecting the international stature of the Labuan IOFC.
Offshore
insurance activities continued to be a key business activity in
Labuan IOFC. A total of 12 new licences were approved in 2005,
bringing the total number of licencees to 112. There was also
progress in captive insurance, an area of focus for LOFSA, with
the approval of eight new captive insurers in 2005, bringing the
total number to 29. Shares held by foreigners increased from
USD105.9 million in 2004 to USD134.4 million in 2005, in line with
LOFSA’s objective of attracting more foreign investments as a
strategy towards enhancing the capacity of the insurance industry
in Labuan.
The
offshore banking industry in Labuan IOFC remained vibrant with a
total of 59 offshore banks operating during the year under review.
Out of this, ten are investment banks. The offshore banking
industry recorded profit before tax of USD241.5 million for the
year under review. There
was greater participation of non-residents businesses in both
deposits and loans, in line with LOFSA’s efforts of encouraging
more “out-out” business in the Labuan IOFC.
There was also expansion in other offshore business
activities. The establishment of nine new offshore leasing
companies in 2005 brought the total number of offshore leasing
companies to 69, whose transactions mainly emanated from the
leasing of aircrafts, vessels and equipment relating to oil and
gas. In offshore fund management, in 2005 three new private funds
were given consent and one was revoked due to non-compliance,
bringing the total number of registered private funds to 18.
Two of these funds are Shariah-compliant. The fund
management industry was serviced by 17 fund managers.
Eleven
offshore companies were incorporated in Labuan in 2005 to raise
foreign debt. Of these, eight were listed on the Labuan
International Financial Exchange (LFX) with a cumulative market
capitalisation of USD2.4 billion, which brought the total number
of listings on the LFX to 31 with an aggregate market
capitalisation of USD12.5 billion. Listings for the year under
review included debt and equity-linked instruments and Islamic
debt certificates (Sukuk), as well as first preference shares. The
Malaysian Government and domestic corporations, including
Government-Linked Companies, formed the major group of issuers.
Efforts
continued to be directed at further developing Islamic banking in
Labuan IOFC, in line with the strategic move to promote Islamic
finance in the Labuan IOFC to strengthen Malaysia’s position as
an international Islamic financial hub. In 2005, there were three
full-fledged Islamic offshore banks and three Islamic investment
banks operating in Labuan. As at end-2005, the total Islamic
banking assets of the industry, including those of conventional
offshore banks with Islamic windows, accounted to USD708.9 million
(2004: USD678.7 million), and represented 3.9% of the total assets
of the offshore banking industry (2004: 3.4%).
Twenty
trust companies operated in Labuan during the year under review to
provide registration, secretarial and other services to the
offshore companies.
Financial
Performance
LOFSA recorded a total income of RM18.5 million for the year
ended 31 December 2005 (2004: RM17.7 million). The surplus
recorded was RM3.3 million (2004: RM3.8 million).
Significant
Achievements of Labuan IOFC since 1996
2006 marks the tenth year of the establishment of LOFSA.
Initiatives undertaken and measures implemented thus far
have positioned Labuan IOFC as a leading offshore financial centre
in the Asia-Pacific region.
The growth of offshore companies has been steady since 1996
with a continuous inflow of approximately 500-600 companies being
incorporated annually. Labuan IOFC has consistently ensured that
the quality of companies admitted into the Labuan IOFC are
maintained. This has led to Labuan being recognised as a reputable
and credible IOFC, home to top-ranked financial institutions.
As
an integrated IOFC, Labuan offers a wide range of financial
products and services, ranging from offshore commercial banking,
investment banking, insurance and insurance-related services,
investment holding, trust, fund management, leasing and factoring.
Labuan IOFC is also emerging as an important regional Islamic
financial centre.
Moving
Forward
In attracting more institutions into Labuan IOFC, LOFSA will
focus further attention on developing greater depth and breadth in
selected portfolios, business segments and geographical markets.
Highly targeted incentives will be introduced for areas that are
identified with strong growth potential for Labuan IOFC and
obstacles that impede development will be removed.
For
the next five years till 2010, LOFSA’s broad goal is to develop
Labuan IOFC as an ‘out-out’ regional offshore financial centre.
The focus is to increase the percentage of non-resident ownership
of offshore companies and non-resident business to 70% from the
present 50%. The
number of offshore companies operating in Labuan IOFC is expected
to grow at least 10% per annum.
The
general objective to be a regional financial centre will be
supported by several underlying targets. By 2010, total loans and
deposits in the offshore banking sector is targeted to increase by
15%. Gross premiums for offshore insurance and assets leased are
expected to increase by the same quantum.
Capital
market activities will also be further encouraged. Growth in
corporate advisory services for cross-border merger and
acquisition exercises and passive investment transactions and its
ancillary funding requirements will be given emphasis. To increase
the aggregate size of assets under management (AUM) domiciled in
Labuan IOFC, the various forms of fund management such as fund of
funds, and private equity will be encouraged together with the
introduction of innovative asset classes derived from the various
regional markets.
Promotion
of Islamic finance will remain a core agenda, to support the
overall effort to develop a comprehensive Islamic financial system
in Malaysia and to position itself as an international Islamic
financial centre. It
is targeted that the share of offshore Islamic assets will
increase to 10% of the total market assets.
The
Labuan IOFC will continue to play an important role in
complementing the Malaysian onshore financial sector and LOFSA, as
the authority entrusted with the development and administration of
Labuan IOFC remain committed towards providing a conducive
regulatory and operating to develop Labuan into a successful
offshore centre.
_____________________________________________________________________________
FOR
MORE INFORMATION, PLEASE CONTACT:
Corporate
Communication & Customer Services
Telephone
:
087-591200
Fax :
087-411496
Email :
communication@lofsa.gov.my
