Labuan IBFC's success due to sound policies – DG
LABUAN: The success of the Labuan International Business Financial Centre (IBFC) stems from the Labuan Financial Services Authority's (Labuan FSA) sound business policies, as well as regulatory and fiscal regimes that have served the island well over the years.
Labuan FSA Director-General Danial Mah Abdullah said company formation grew by an average of seven per cent per annum in Labuan to reach more than 14,200 companies to date.
He said banks remained profitable and well-capitalised, with a total loan size of about US$30 billion, while insurance premiums flows continued to surpass US$1 billion and proudly, Labuan IBFC was awarded as the number one captive insurance domicile in Asia.
Mah said leasing business is now the biggest financial sector in the IBFC in terms of number of players (more than 350) and size of financial assets (more than US$48 billion worth of leased assets) and the pace of business expansion is expected to continue.
Labuan IBFC has made a significant contribution to the island by becoming its biggest employer, providing jobs to 5, 583 people, he said, adding that more jobs would be created as substance requirements were fully implemented.
“We are also seeing an increase in the number of Labuan institutions providing services such as back office processing for global clients and this will increase the demand for human resources,” he said at the annual Labuan Industrial Dinner here on Friday.
He said many Labuan IBFC institutions were also fulfilling corporate social responsibility by making positive contributions in many areas that have benefited the local community.
“While we can stand proud of the achievements, more can and needs to be done including the challenges ahead in terms of competition, new regulatory requirements, political and business uncertainties are many.
“As such, we must remain vigilant and agile so that Labuan IBFC adapt to the changes to remain competitive, relevant and sustainable and this can only be achieved with strong cooperation and commitment of all of us, the government, the regulator and the players,” he said.
Mah said through the 28-year journey that has shaped Labuan as an IBFC for the Asia-Pacific region, it has made changes a decade ago by rebranding itself as international business and financial centre rather than as offshore centre through a holistic strategic business model assessment and review its value propositions.
He said Labuan IBFC has made changes to the regulatory regime that subscribed to international best practices and put in place relevant legislation and mechanism for the exchange of information with enforcement and tax agencies.
To eliminate the so-called harmful tax practices in the financial centre, he said in the immediate or near future, the tax regime of Labuan IBFC would need to be modernised.