IBFC’s growth driven by uptick in non-resident biz
Published on: Tuesday, March 26, 2019
By: Iffah Dilaney

LABUAN: The Labuan International Business and Financial Centre’s (Labuan IBFC) growth over the year has been driven by the uptick in non-resident businesses, entrenching the Centre’s role as Asia’s Financial Intermediation Centre.

The inaugural Market Report 2018 issued by Labuan IBFC highlighted the Centre’s continued growth with non-resident businesses driving the expansion in business conducted via the centre.

The Report was presented by Labuan FSA Director General Danial Mah Abdullah at Labuan IBFC’s 2018 Industry Performance briefing here on Monday.

Fuelled by robust business policies, the expansion and deepening of Labuan IBFC’s intermediation role enabled Asian businesses to continue tapping into opportunities in the region. The overarching growth in 2018 underscores Labuan IBFC’s growing prominence as a regional financial hub, facilitating intra-Asian trade, investments and asset intermediation.

The Centre’s notable achievements in 2018 included new company incorporation registered double-digit growth of 12.5 per cent or 1059 incorporations, mainly from the Far East region, with a majority from Japan, China and South Korea.

The increased company incorporation has also boosted the growth of trust and corporate service providers, with a total of 58 trust companies, including the granting of six new licenses. This is an increase of 11.5 per cent year on year providing value-added services to Labuan corporate entities and expanding on the reach of Labuan IBFC across Asia.

The Report stated that Labuan insurance sector remained strong with total gross written premiums posting a significant increase to USD1.7 billion, rising 19.1 per cent from the previous year. Foreign insurance business accounted for 64.7 per cent of the total premiums underwritten.

The captive insurance business too continues its growth in 2018, with a total gross premium up by 11 per cent to USD400.5 million, with six new all Asian-based captives set up last year.

Labuan’s banking sector maintained its business momentum with a steady level of earnings, positive liquidity and quality assets. The total assets increased by 8.4 per cent to USD55 billion, while total loans rose by 19.1 per cent to USD33.2 billion. Loans granted to non-residents accounted for 59.7 per cent, with most from the Asia Pacific region.

Meanwhile, the Report also revealed that the Islamic banking business continued growth in financing and customer deposits, with total assets up by 2.4 per cent to USD3.2 biliion, and total financing up by 8.4 per cent from USD2.7 billion.

The Labuan international commodity trading companies (LITCS) performed well in tandem with global oil prices recovery in 2018. This led to a significant improvement in the sector’s profitability by 63.2 per cent to USD1.2 billion. For 2018, the operating LITCS spent a total expenditure of USD177 million domestically which is in line with the requirement on minimum annual business spending in Malaysia.

Leasing companies rationalised their business operations in 2018 to comply with the global change in economic substance requirements. Despite this, the cumulative value of assets leased expanded by 10.2 per cent to USD53.8 billion with oil and gas and aviation sectors contributing 61.3 per cent and 37.9 per cent respectively, of the assets leased.

The Centre also saw many FinTech start-ups establishing innovative financial services-related businesses in 2018, offering a ready suite of structures and solutions in the areas of money-broking, capital market and wealth management business.

A strong outlook in the Asian wealth management sector presented opportunities for Labuan IBFC’s service providers to continue to offer wealth management solutions in the form of Labuan’s trusts and foundations, for private or charitable purposes.

The Report stated in 2018, 38 new foundations were registered, bringing the total number of active foundations to 162 which represents an increase of 31 per cent in new registration, with the total number of registered trusts in 2018 at 14.

The results show that despite challenges and changes in global operating environments, investors’ trust and confidence in Labuan IBFC remains intact.

Moving forward, the Centre is expected to benefit from international regulatory changes introduced to ensure substance and transparency in all cross-border transactions.  Also present were Chairman Datuk Oh Chong Peng and Authority Member Datuk Ali Abdul Kadir.


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