PRESS
RELEASE
The 2006 Labuan Offshore Financial
Services Authority Annual Report
KUALA LUMPUR,
30 April 2007 – The Labuan Offshore Financial Services Authority
(LOFSA) released its 2006 Annual Report today (www.lofsa.gov.my),
which reviews the progress and development of the Labuan
International Offshore Financial Centre (IOFC) and financial
performance of LOFSA.
With
another strong year of performance in 2006, the Labuan IOFC
continues to offer the international investment community
innovative and high quality offshore products and services,
including in Islamic finance, within a market-oriented and
investor-friendly environment. The year 2006 marks an important
milestone as it celebrated its 10th anniversary.
Business
Activities of Labuan IOFC
The Labuan IOFC is today home to over
300 financial institutions that provides a comprehensive range of
financial services, both conventional and Islamic, including
offshore banking, investment banking, insurance and
insurance-related activities, investment holding, trust, fund
management and leasing. These institutions serve more than 5,500
offshore companies registered in the Labuan IOFC. The ability to
attract established and reputable international financial
institutions to the IOFC has been one of the critical success
factors in LOFSA’s development roadmap for the IOFC. In
addition, the Labuan International Financial Exchange (LFX)
further complements capital-raising activities in the IOFC,
allowing for listing and trading of financial instruments by
international issuers, especially from the Asia-Pacific region.
More
recently, the Labuan IOFC has developed into an active
international centre for Islamic finance, regionally and
worldwide, supported by an infrastructure that provides the
foundation for the promotion of Islamic financial services. Part
of this infrastructure is the Shariah Advisory Council, which
advises LOFSA on issues relating to Shariah-approved financial
instruments in Labuan IOFC. This has paved the way for a more
efficient and effective introduction of innovative and new Islamic
financial instruments.
The
Labuan IOFC has therefore come to the forefront of Islamic product
development with the issuance of the first global sukuk by a
Malaysian corporation and the sovereign sukuk by the Government of
Malaysia, both of which are listed on the LFX. In October 2006,
the Labuan IOFC achieved another milestone with the primary
listing of the world's first exchangeable and equity-linked sukuk
issued on the LFX. The USD750.0 million sukuk brought the
exchange's Islamic capital market capitalisation to USD2.8
billion, representing 18.5% of the total market capitalisation of
USD15.1 billion.
The
Malaysia International Islamic Financial Centre (MIFC), a
concerted effort by the country's financial and market regulators,
i.e. Bank Negara Malaysia, the Securities Commission, LOFSA and
Bursa Malaysia, was launched in August 2006. It will bring the
development of Labuan IOFC and the dynamism of its players to a
potentially higher level.
This
initiative aims to position Malaysia as a leading centre for the
offering of Islamic financial products and services in
international currencies to the global and domestic financial
community. The MIFC seeks to attract global investors and
strengthen integration with the international financial system.
Through this initiative, Islamic offshore banks, Islamic divisions
of offshore banks, offshore takaful operators and offshore
retakaful operators in Labuan IOFC are able to expand their
physical operations beyond Labuan island to operate on the
mainland and conduct foreign currency business, whilst enjoying
the full benefits of the IOFC.
The
recent liberalisation of the exchange control administration rules
by Malaysia will also benefit players in Labuan IOFC. Increased
investments in ringgit assets for non-resident investors should
translate into greater opportunities for product enhancements.
Offshore players are also expected to take advantage of
opportunities emerging due to growing trade linkages with regional
economies and other parts of the world, facilitated by the more
flexible exchange control regime.
LOFSA’s Financial Performance
For the year ended 31 December 2006, LOFSA’s total revenue
increased to RM19.8 million (2005: RM17.6 million), with a surplus
of RM2.0 million (2005: RM3.3 million). This in turn increased
LOFSA’s cumulative reserves to RM24.9 million as at 31 December
2006.
Looking Ahead
As competition, driven largely by the more discerning
requirements of investors, intensifies amongst the many offshore
financial centres, Labuan IOFC is repositioning itself through the
identification of niche businesses, looking beyond traditional
products and services and capitalising on its strengths.
With
its conducive legal, tax and regulatory framework and proximity to
the Asian region, Labuan IOFC is well positioned to take advantage
of the increases in the momentum of foreign direct investments as
well as outward investments from high growth countries in the
region. Malaysian companies investing abroad are opening up
significant opportunities for Labuan financial institutions. In
addition, the Labuan IOFC is also able to leverage on the tax
treaties signed with 63 countries and its tax legislation to
attract new players and increase business activity, particularly
the out-out and non-resident business.
LOFSA
plans to leverage on multiple channels to elevate awareness of
Labuan IOFC and its value proposition to attract new businesses.
The Labuan IOFC has a robust yet facilitative regulatory
framework, strong infrastructure, and efficient and effective
delivery systems. In order not to compromise on the resilience and
stability of the offshore financial system, LOFSA has introduced a
modified risk-based supervisory framework to evaluate and monitor
the financial strength and soundness of licensed institutions on a
continuing basis.
A
review of the entire legislation pertaining to Labuan IOFC and an
increased range of products and services is currently underway.
New company structures will be introduced to cater for the demands
of users in the offshore environment.
The
new businesses are envisioned to be the catalyst to spur demand
for the services of professionals, including financial, legal,
accounting, tax and other ancillary service providers. This will
provide further support for the overall development of offshore
financial services in Labuan IOFC.
______________________________________________________________________________
For
more information, please contact:
Corporate
Communication & Customer Services
Tel: 087 591200
Fax: 087 428200
Email: communication@lofsa.gov.my
Get
Full Version of Annual Report 2006 here
