Labuan IBFC achieves marginal growth via robust business policies

KUCHING: Amidst a modest global economic recovery, the Labuan International Business and Financial Centre (IBFC) has achieved another year of growth last year, albeit at a lower growth rate, fuelled by robust business policies and continued intermediation.

The Labuan Financial Services Authority (FSA) in a statement yesterday said those factors have enables investors to tap into the business opportunities in the Southeast Asia (Asean) market, strategically positioning Labuan as the investment gateway to the region.

In conjunction with Labuan FSA’s 2015 Annual Report yesterday, it inveiled an increase in operating income to RM53.9 million compared with RM52.7 million in 2014, while its total reserves also increased to RM59.6 million from RM52.4 million.

It also noted the centre has achieved several milestones last year.

“A total of 836 new companies were incorporated for the year under review,” it explained. “More than 70 per cent of the companies originated from Asia reflecting that Labuan IBFC remains a favorable destination for multinational companies looking to expand into the Asia-Pacific markets.

“Two new banking licences were granted in 2015. The banks’ total deposit rose 17.9 per cent to US$10.8 billion, signifying investors’ greater confidence in placing funds in Labuan IBFC while Islamic financing increased significantly by 55 per cent to US$1.8 billion compared to US$993.3 million a year before.

“Non-residents dominated 77.3 per cent of total Islamic financing.  The banking sector boosted its profit before tax to US$620.6 million, an increase of 34.6 per cent from 2014,” it said.

Meanwhile, a total of 16 new insurance and insurance-related licences were approved, including entrance of insurance entities from the Middle Eastern countries of Qatar and United Arab Emirates, as well as Switzerland.

“Overall, the Labuan insurance sector has a strong margin of solvency of 5.7 times above the minimum regulatory requirement and the industry capitalisation also increased to US$832.3 million from US$783.3 million with 74 per cent dominated by foreign entities,” it said.

Labuan FSA observed that the capital market sector continued to grow with private fund size increased by 0.9 per cent to US$12.3 billion.

In geographical distribution, 58.5 per cent of the private funds originated from the Asean region.

Apart from that, Labuan FSA said the Labuan International Commodity Trading Companies (LITCs) sector fared well with eight new approvals granted, bringing the total to 43.

It said about 79 per cent of those companies originated from the Asean region.

“For Labuan’s leasing business, 45 new companies and 60 subsequent leasing transactions were granted approval.

“Total assets leased grew to US$51.8 billion where 73 per cent derived from the oil and gas industry and 25.2 per cent from aviation sector.

“Wealth management remains one of the high growth sectors in Labuan IBFC with nearly 28 per cent increase in the number of Labuan foundations, bringing the total to 166.

“The growing trend shows that Labuan’s comprehensive wealth management instruments continue to entice the interest of high net-worth individuals,” the centre said.

It added more than 77 per cent of Labuan foundations originated from Asia and the Pacific region.

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