Labuan: Country and Foreign Investment
Under the guidance of LOFSA (the Labuan Offshore Financial Services Authority) the Malaysian authorities have poured hundreds of millions of dollars into improvement of Labuan's physical infrastructure, which is now fully up to modern standards. Excellent office and light-industrial premises are available, and state-of-the-art telecommunications include an Internet Gateway which provides a e-commerce platform.
Professional support for offshore development is well developed in Labuan: most of the top accounting and consultancy practices have offices there, along with a good range of lawyers. Malaysian accounting standards approved by the local accounting bodies are adaptations of the international accounting standards approved by the International Accounting Standards Committee.
Compared with some other regional financial centres, Labuan is comparatively cheap. This is both in terms of cost of physical facilities such as rentals as well as the rate of professional fees charged by accountants, lawyers and other professional service providers.
A strategic milestone was achieved in 2007, with the repositioning and rebranding of Labuan IOFC as Labuan International Business and Financial Centre (IBFC).
According to LOFSA, the new brand name of Labuan IBFC "marks its greater focus and its continuous progress towards a vibrant and progressive international business and financial centre."
"Labuan IBFC has shown its agility to build new strengths, leveraging on its comparative advantages, to meet the emerging and more sophisticated demand in the region," LOFSA stated.
There has been strong growth in the number of offshore companies registering in Labuan in spite of the global financial crisis. Labuan is especially popular as a place to locate lease financing activities, while offshore banking and Islamic finance activities have also recorded marked growth. Labuan is also becoming a popular domicile for offshore insurance operations, especially in the area of captive insurance.
The position of Malaysia as an International Islamic Financial Centre (MIFC) has further enhanced Labuan’s effort to promote Shariah compliant trusts and foundations, as these products complemented the Islamic financial products and services that were already available onshore.
LOFSA has identified several key strategic programmes to advance Labuan as an International Business and Financial Centre.
One such initiative was to elevate Labuan IBFC's status to being the “gold standard for holding company jurisdiction”.
LOFSA has also streamlined the existing legal framework covering both conventional and Islamic businesses to create a more "facilitative, flexible and frictionless business environment".
Labuan IBFC Incorporated Sdn Bhd, (Labuan IBFC Inc), which is fully-owned by LOFSA, is responsible for promoting Labuan as an International Business and Financial Centre.
The main function of the Labuan IBFC Inc is to drive market development, as well as to act as a facilitator for investors seeking to participate in Labuan IBFC. It also undertakes "targeted and focused interface with potential investors".