LABUAN: The Labuan International Business and Financial Centre (Labuan IBFC) remained resilient in the face of global market challenges last year.
Labuan IBFC not only maintained its growth in key business sectors but also saw a surge in innovative business ventures in tandem with the financial centre’s progressive shift towards more digital-based financial business.
In its Market Report 2019 today, among notable achievements listed by Labuan IBFC’s business sectors are continued growth in new company incorporation, albeit at a slower pace with 981 new incorporations in 2019.
Companies from the Far East showed a positive trend over the last three years with an increase of 33.3% in 2019.
The positive trend in company incorporations was in tandem with the increase in Labuan trust companies, with five new licenses issued in 2019, bringing the total number of trust companies to 61.
Among watershed events last year was the rollout of the new tax framework, which in many ways has changed the business landscape of Labuan IBFC.
The salient features of the new framework include the removal of the RM20,000 tax option, removal of ring-fencing elements and the introduction of substance requirements that further enhance contributions by market players towards the island’s economy.
The report also disclosed that the Labuan banking industry remained financially strong to support their businesses in the region.
Labuan’s strategic position in the Asian region, sharing a similar time zone with major cities and its broad-based financial players, had given Labuan IBFC the edge to continue providing effective financial intermediation in Asia.
This is reflected by the 80.9% of the banks’ total financing being channelled to the region and 26.9% growth in the industry’s profitability to US$634.8 mil (RM2.77 bil).
Meanwhile, the Labuan insurance industry showed a modest topline growth but recorded higher profitability in 2019.
Total gross premiums transacted were US$1.5 bil with 89% originating from the Asian market.
The industry’s profitability grew by 43.7% to US$190.5 mil, mainly due to the improved underwriting performance and better cost management.
Labuan IBFC is the second-largest captive market in Asia with 52 captives operating in the centre.
Increasingly, Asian companies are embracing the use of captive as an alternative risk management.
Labuan IBFC said it will will continue to tap on this potential with suitable captive structures supported by a strong pool of intermediaries and insurers.
It will also continue to attract digital financial services (DFS) setups with 28 new licences being approved.
The report also stated that Labuan IBFC has a total of 34 DFS providing digital-based services including insurance technology (insurtech), payment services and digital exchange.
It also said that the Labuan wealth management business continued to trend upward with a 36.8% increase in new foundations registration, bringing the total number of active foundations to 192 with the majority being vehicles for private wealth management.
While 2019 had been a year of sustained growth for Labuan IBFC, the report anticipates a challenging start this year due to impacts arising from the Covid-19 pandemic and depressed global oil prices. – May 28, 2020, Bernama
