BANGKOK: Efforts to correct the misperception of Labuan as a tax haven will be ongoing to ensure that the people have the right understanding about the true value of the Labuan International Business and Financial Centre (Labuan IBFC).
Labuan IBFC Inc Sdn Bhd chief executive officer, Farah Jaafar-Crossby, said the financial centre, established in 1990, was not only about tax but was a legitimate jurisdiction set up by the Malaysian government for businesses to intermediate their trade.
“This misperception is not something ideal, so we have to go out.The onus is on us and explain about it better. We accept the challenge and we will do it so that people really understand the value of Labuan, not only for Malaysia but regionally,” she told Bernama.
Farah was met here recently after attending a forum titled, “Malaysia as an Intermediating Hub: A Tax Neutral, Islamic Approach”, organised by Labuan IBFC, Lee Hishammuddin Allen and Gledhill and Tilleke and Gibbins.
She said if more people understood about Labuan IBFC, there would be less issue of misperception.
Since its inception nearly 28 years ago, Labuan has grown by leaps and bounds as a financial centre, with the number of companies operating in the island having grown exponentially by more than 100 per cent over the past 10 years.
“We have continued to grow. We have quality companies. The number of companies (in Labuan IBFC) grow between six and seven per cent every year and that is a very respectable number,” she said, adding that other similar financial centres had seen a decline in the number of companies.
Labuan not only offered low tax for companies but many more in terms of business and financial services, she added.
Two weeks ago, on January 18, Prime Minister Datuk Seri Najib Tun Razak launched the Labuan Development Blueprint 2030 that sets the direction for the holistic development of the duty-free island.
Under the blueprint, Labuan would undergo total transformation with focus on economic, social and physical development.
Farah said one of the sectors that Labuan IBFC is focusing on right now is captive insurance, which according to her, represented huge opportunities due to its current low penetration especially among Asian companies.
Citing a study, she said there were some 6,000 captive companies worldwide but only two per cent were Asian.
“Asian companies on a global scale are growing by leaps and bounds every year. The economy is growing. Why is it that Asian companies do not use captives,” she asked, adding there are currently more than 50 captive companies operating in Labuan IBFC and the numbers are growing.
Captive insurance, she said, was very unique because companies could have their own insurance, which reduced the cost of doing business, thus making them more profitable.
She said Labuan IBFC planned to talk to businesses in Thailand about captive insurance and enticed them to look at the alternative risk management offered by the financial centre, which included insurance, re-insurance, takaful, re-takaful, broker and captive.
“Labuan is a key player in this area (risk management), we have licensed more than 230 global entities in the risk management space,” said Farah.
Labuan IBFC had also been very successful in Islamic financial services, she said, alluding to the world’s first private sukuk by Kumpulan Guthrie in 2001 which was domiciled in the island, and other innovative Islamic financial services offered by the centre.
“We have been at the forefront of Islamic financial services in a lot of ways and Labuan has been the test bed. When it grows in Labuan and becomes successful, we will move it to Malaysia,” she added. — Bernama