Labuan IBFC stays resilient in 2019
Published on: Friday, May 29, 2020
By: Bernama
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The Aerial view around the Labuan Finance Complex.
LABUAN: The Labuan International Business and Financial Centre (Labuan IBFC) remained resilient in the face of global market challenges last year.

Labuan IBFC has maintained its growth in key business sectors and witnessed a surge in innovative business ventures in tandem with the financial centre’s progressive shift towards more digital-based financial business.

Unveiling its Market Report 2019 Thursday, among notable achievements listed by Labuan IBFC’s business sectors includes continued growth in new company incorporation, albeit at a slower place with 981 new incorporations in 2019.

Companies from the Far East region showed positive trending over the last three years with an increase of 33.3 per cent growth 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 Labuan IBFC 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 Labuan banking industry remained financially strong to support their businesses in the region.

Labuan’s strategic position in the Asian region sharing similar time zone with major cities and its broad-based financial players have given Labuan IBFC the edge to continue providing effective financial intermediation in Asia.

This is reflected by the 80.9 per cent of the banks’ total financing being channelled to the region and 26.9 per cent growth in the industry’s profitability to US$634.8 million.

Meanwhile, Labuan insurance industry showed a modest topline growth but recorded higher profitability in 2019.

Total gross premiums transacted were US$1.5 billion with 89 per cent originated from the Asian market.

Industry’s profitability grew by 43.7 per cent to US$190.5 million, 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 alternative risk management.

Labuan IBFC 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 licenses have been approved.

The report also stated that Labuan IBFC has a total of 34 DFS provide digital-based services including insurance technology (insurtech), payment services and digital exchange.

It also said Labuan wealth management business continued to trend upward with a 36.8 per cent increase in new foundations registration, bringing the total number of active foundations to 192 with the majority are 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 Covid-19 pandemic and depressed global oil prices. 


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