PRESS
RELEASE
KUALA
LUMPUR, 25 April 2008
– The Labuan Offshore Financial Services Authority (LOFSA)
released its 2007 Annual Report today which highlights the
development and progress of the Labuan International Business and
Financial Centre (IBFC) and financial performance of LOFSA.
A strategic milestone was achieved in 2007 with the
repositioning and rebranding of Labuan IOFC as Labuan
International Business and Financial Centre (IBFC). 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.
Business
Activities of
Labuan
IBFC
Labuan
IBFC as an international financial centre in the Asia-Pacific
region continued to record double-digit growth in the number of
new offshore companies that now totalled 6,297 in 2007. The
availability of expertise and quality service providers and wide
spectrum of products and services has made the Labuan IBFC an
increasing attractive domicile for investors.
The offshore banking industry reported an expansion in the
loan assets, complemented by an improvement in the asset quality.
The total assets of the offshore banks increased by 27.8% from
USD21.1 billion in 2006 to USD 27.0 billion in 2007. The gross
non-performing loans indicator has 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. The total new lease
financing increased by 18.7% resulting in a cumulative financing
of USD14.1 billion. This has been boosted by the strong activities
in the oil and gas as well as shipping activities in the region.
The offshore insurance industry continued to expand
particularly in the reinsurance business which grew by 40.3% to
USD919.2 million in 2007, of which 62.0% were non-Malaysian
premiums, signalling its growing position as a reinsurance centre.
This is also reflected by the growing amount of retakaful
contributions amounting to USD108.4 milllion, an increase of 42.8%
from 2006.
For the year 2007, Islamic-based assets of the Labuan IBFC
continued to grow. The total Islamic assets was USD1.2 billion or
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.
In tandem with the increase in the number of debt issuance
out of Labuan IBFC in 2007, the Labuan International Financial
Exchange (LFX) recorded four new listings, bringing the total
number to 31 with total market capitalisation of USD15.1 billion.
One of the major listings was the Sukuk issuance of USD1.0 billion
by
Saudi Arabia
based Dar Al-Arkan International Sukuk Company.
Strategic Initiatives in 2007
Labuan
IBFC has implemented or in the process of implementing nine key
initiatives to efficiently serve the offshore financial services
players and investors in the region.
(i)
A
more flexible tax framework
Labuan
Offshore Companies (LOCs) are given the option to be taxed under
the Income Tax Act 1967 or the Labuan Offshore Business Activity
Tax Act 1990 (LOBATA). This
has provided flexibility for LOCs to structure their business
transactions efficiently and creates a more favourable tax
environment in Labuan IBFC for investors.
(ii)
A more
conducive legal framework
Enhancements
are being made to the legislation to create a more facilitative
and flexible regulatory environment to ensure that Labuan IBFC
remains competitive in the evolving global market landscape in
addition to allowing for new opportunities and activities to be
tapped in Labuan IBFC.
(iii)
A
more competitive pricing structure
The
current incorporation and maintenance fees charged for offshore
companies will be revised to be competitive with other offshore
financial centres’ pricing structures.
(iv)
A
new marketing focus for Labuan IBFC
To
ensure that the targeted investors are effectively reached, Labuan
IBFC has undertaken more focused promotion efforts.
(v)
A
niche in holding company business
Labuan
IBFC is positioning itself to become a leading holding company
jurisdiction of choice in the
Asia
region.
(vi)
Stronger
commitment to facilitating captive insurance business
Labuan
IBFC continues to pursue more institutions to establish their
captive insurance operations in Labuan IBFC given the growth of
captive insurance industry in
Labuan
.
(vii)
Enhancement
to key processes to improve efficiency and effectiveness in the
overall operations of LOFSA
LOFSA’s
efficiency and response to market key processes would be
reengineered and technology enhancements is being implemented.
In this regard, LOFSA has implemented a single electronic
payment platform using an integrated cash management structure
that links to the trust companies in Labuan, thus providing for a
truly “hub and spoke” approach.
This allows for a more efficient registration process.
In relation to this, LOFSA received an award for “Best
Idea” for the implementation of this electronic platform.
(viii)
An
opportunity to promote Shariah-compliant trust and foundations
Labuan
IBFC will leverage on the national strategy of Malaysian
International Islamic Financial Center (MIFC) by promoting Shariah-compliant
trusts and foundations. These
products are unique to Labuan IBFC and will complement the
initiatives of other governmental agencies to promote Islamic
financial products and services in
Malaysia
.
(ix)
Commitment to enhancing customer service
As
part of its continuing emphasis on improving its customer service,
LOFSA would continue to improve its client charter by benchmarking
against other jurisdictions. The
charter which aims to cultivate a culture of customer oriented
service and enhance the LOFSA delivery system to increase Labuan
IBFC’s overall competitiveness.
Continuous Supervisory Efforts
The
regulatory and supervisory framework has been strengthened further
with the more robust Risk Management Framework and Risk Based
Supervisory Framework. Nevertheless, broad prudential guidelines
and principles adopted will continue to allow for flexibility to
financial institutions to formulate their own strategies and
market niches.
Looking Ahead
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. 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.
LOFSA’s
Financial Performance
For
the year ended 31 December 2007, LOFSA recorded a total revenue of
RM22.4 million (2006: RM20.1 million), with a surplus of RM2.2
million (2006: RM2.0 million). Total reserves increased from
RM24.7 million in 2006 to RM27.0 million in 2007.
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 2007 here
