Notable achievements in the centre’s business sectors included the 12.5 per cent growth – 1,059 incorporations – in new company incorporation, mainly from the Far East region, with the majority from Japan, China and South Korea.
LABUAN: The Labuan International Business and Financial Centre (Labuan IBFC) continued to grow last year, with non-resident businesses driving the expansion in business conducted via the centre.
This was revealed in Labuan IBFC’s inaugural Market Report 2018 issued yesterday, which also said the expansion and deepening of the centre’s intermediation role, fuelled by robust business policies, enabled Asian businesses to continue tapping into opportunities in the region.
“The overarching growth last year underscored Labuan IBFC’s growing prominence as a regional financial hub, facilitating intra-Asian trade, investments and asset intermediation,” the report said.
Notable achievements in the centre’s business sectors included the 12.5 per cent growth – 1,059 incorporations – in new company incorporation, mainly from the Far East region, with the majority from Japan, China and South Korea.
Increased company incorporation boosted the growth of trust and corporate service providers.
There were 58 trust companies providing value-added services to Labuan corporate entities and expanding the reach of Labuan IBFC across Asia with the granting of six new licenses – an increase of 11.5 per cent year-on-year.
The report said 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 US$55 billion, while total loans rose by 19.1 per cent to US$33.2 billion.
Loans granted to non-residents accounted for 59.7 per cent, with most from the Asia Pacific region.
Islamic banking business also continued to grow in financing and customer deposits, with total assets up by 2.4 per cent to US$3.2 billion, and total financing up by 8.4 per cent from US$2.7 billion.
Meanwhile, Labuan’s insurance sector remained strong with total gross written premiums posting a significant increase of 19.1 per cent to US$1.7 billion from the previous year.
Foreign insurance business accounted for 64.7 per cent of the total premiums underwritten.
The captive insurance business continued its growth in 2018, with total gross premium up by 11 per cent to US$400.5 million. A total of 67.4 per cent of premiums came from foreign business.
Six new captive insurers were set up in 2018, all of which were Asia-based.
The report said Labuan international commodity trading companies (LITCs) also 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 US$1.2 billion.
For 2018, the operating LITCs recorded a total expenditure of US$177 million domestically, in line with the requirement on minimum annual business spending in Malaysia.
Leasing companies, the report noted, rationalised their business operations last year 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 US$53.8 billion with oil and gas and aviation sectors contributing 61.3 per cent and 37.9 per cent, respectively, of the total assets leased.
The IBFC saw many financial technology 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 trusts and foundations, for private or charitable purposes.
In 2018, 38 new foundations were registered, bringing the total number of active foundations to 162. This represented an increase of 31 per cent in new registrations. The total number of registered trusts stood at 14.
Labuan Financial Services Authority (Labuan FSA) director-general Danial Mah Abdullah presented the report to industry players today, witnessed by Labuan FSA chairman Datuk Oh Chong Peng, board member Datuk Ali Abdul Kadir, and Labuan Trust Association chairman Datuk Chin Chee Kee.
“The results show that despite challenges and changes in global operating environment, investors’ trust and confidence in Labuan IBFC remains intact; and moving forward the Labuan IBFC is expected to benefit from international regulatory changes introduced to ensure substance and transparency in all cross-border transactions,” Danial said. — Bernama