LABUAN: The Labuan International Business and Financial Centre (Labuan IBFC) remained resilient in the face of global market challenges last year.
Labuan IBFC maintained its growth in key business sectors and witnessed a surge in innovative business ventures in tandem with Labuan IBFC’s progressive shift towards more digital-based financial business.
Unveiling its Market Report 2019 today, it revealed for the year under review, notable achievements in Labuan IBFC’s business sectors included new company incorporations continued to grow albeit at a slower place with 981 new incorporations in 2019.
Companies hailing from the Far East region remained to show positive trending over the last three years with a significant 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.
In 2019, one of the watershed events was the rollout of the new Labuan IBFC tax framework, which had in many ways changed the Labuan IBFC’s business landscape.
The salient features of the new framework included the removal of the RM20,000 tax option, removal of ring-fencing elements and the introduction of substance requirements that further enhance market players contributions 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 market 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 channeled to the region and profitability of the industry grew by 26.9 per cent to USD634.8 million.
Labuan insurance industry showed a modest topline growth but higher profitability performance for 2019.
Total gross premiums were transacted at USD1.5 billion with 89 per cent of the total premiums originating from the Asian market.
The industry’s profitability grew by 43.7 per cent to USD190.5 million mainly due to 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.
Meanwhile, Labuan IBFC continued to attract digital financial services (DFS) setups with its facilitative regulation with 28 new licenses being approved.
A total of 34 DFS provide digital-based services including insurance technology (insurtech), payment services, and digital exchange in Labuan IBFC.
The report also stated the Labuan wealth management business continued to trend upward with registration of new foundations increasing by 36.8 per cent bringing the total number of active foundations to 192 and majority of these are vehicles for private wealth management.
While 2019 had been a year of sustained growth for Labuan IBFC, it had been a challenging start for 2020 as global markets being impacted by the Covid-19 pandemic and distressed oil prices.