Malaysia: Labuan FSA Annual Report 2016 - Resilience And Growth In A Challenging Global Environment
Last Updated: 3 May 2017

Labuan, 28 April 2017 – In 2016, the global economy grew at a moderate pace, with slower growth in most advanced and emerging economies. The uncertainties surrounding geopolitical events, the economic and monetary policies of the US and continued volatility of crude oil and commodity prices set the backdrop for a challenging operating environment. Despite the challenging environment, Labuan International Business and Financial Centre (IBFC) continued to register positive growth in its key business areas of banking, reinsurance and wealth management.

The IBFC remained resilient, with sustained financial stability and integrity. Importantly, investor confidence and business prospects remained strong.

Performance of Key Business Areas

Labuan is now home to more than 13,260 companies with diverse geographic origins. Its position as Asia's business and financial gateway is underlined by the composition of companies, with 70% of the establishments originating from within the region. Consistent with global trends, the growth of Labuan companies incorporated in the IBFC moderated to 6.3% in 2016 compared to 7.2% in 2015.

The Labuan banking sector continued to support financial intermediation in the region. This sector registered a steady growth of assets of 7.6% to USD51.0 billion in 2016. Total loans outstanding stood at USD31.8 billion with non-residents accounting for 62.4% of total loans. Borrowers from ASEAN countries made up the largest share, with total outstanding loans of USD22.8 billion. Transportation, storage and communications were the major business lines funded by Labuan banks, contributing about 18% of total loans. While the sector's profit before tax moderated to USD551.5 million, balance sheets remained healthy with further improvements in asset quality and adequate capital buffers.

The Labuan insurance industry recorded positive growth in 2016. Total insurance and reinsurance business registered an increase in gross premiums written of 3.3% to USD1.4 billion. In an environment of volatile oil prices, the insurers and reinsurers successfully shifted focus from engineering and marine classes that correlate to oil price developments towards other specialised lines. The IBFC recorded an increase in premium retention, reflecting the internal capacity of Labuan's insurance industry to underwrite more business, particularly business from non-residents which contributed 57.9% of total premiums. The year 2016 also recorded the highest underwriting margin since 2012 due to higher earned premiums written and lower claims during the year. Overall, the sector remained strong and sound, registering profit before tax that grew significantly by 52.4% to USD387.0 million and a margin of solvency of more than six times above the minimum regulatory requirement.

Wealth management solutions continued to be offered by Labuan IBFC to meet the needs of high-net-worth individuals in the Asia Pacific, a region of significant wealth creation over the last decade. In 2016, there was a 13.2% increase in the establishment of Labuan foundations to 188, of which 78.2% originated from the Asia Pacific region. These foundations were established for philanthropic purposes, private wealth preservation and estate planning.

The number of Labuan leasing companies stood at 383 in 2016. However, this sector was affected by the global trend of low oil prices. For the year under review, there was a 20% decline in new leasing companies compared to the previous year and total assets leased declined slightly by 2.3% to USD50.6 billion.

The Global Incentives for Trading programme continues to attract the establishment of Labuan international commodity trading companies (LITCs). The total number of LITCs grew by 16.2% to 50 companies. In 2016, more were established for the trading of base mineral and refined raw material instead of petroleum and petroleum-related products for which LITCs are typically established. Total income generated from trading and non-trading activities amounted to USD16.5 billion in 2016.

Policy Development to Strengthen Resilience and Investor Confidence

The Labuan Financial Services Authority (Labuan FSA) continued to strengthen its regulatory regime and institutional foundations. Such efforts included the introduction of regulatory policies to strengthen financial capacity, enhance disclosure and transparency levels, and promote effective corporate governance and sound market practices.

Labuan FSA strengthened the IBFC's emphasis on anti-money laundering and counter financing of terrorism (AML/CFT), in line with heightened global advocacy for improved transparency and stricter anti-money laundering regulations. A dedicated AML/CFT policy and supervision unit was formed to ensure greater vigilance in meeting global standards. At the national level, the Authority is actively involved in the refinement of the National Risk Assessment for AML/CFT. Investigation and enforcement practices are also continuously improved to safeguard market integrity. These efforts resulted in a 25.5% decline in the total number of non-compliance cases for the year.

Labuan FSA remains committed towards supporting global initiatives to promote financial stability, and strengthening the collective voice of the Pacific region in international affairs. There were continuous engagements with other regulatory bodies to enhance global and regional collaboration through exchange of information and supervisory cooperation. In 2016, four new Memoranda of Understanding were signed, namely with Isle of Man Financial Services Authority, Astana International Financial Centre, Bank Negara Malaysia and Sabah Economic Development and Investment Authority.

Moving Forward

Labuan IBFC will be strategically repositioned to strengthen its position as a destination for international business and finance. Labuan FSA will continue to enhance IBFC'slegal and regulatory framework to remain efficient and agile, with policies and regulations that promote strengthened resilience, and sustainable business growth and market innovation.

In responding to global forces of change and to stay ahead of the competition, a strategic review is currently being undertaken to ensure the sustainable development of the Island's economy. This review aims to build and deepen value propositions for investors and to expand Labuan's contribution to the Malaysian economy.

Financial Position of Labuan FSA Group

For the financial year ending 31 December 2016, Labuan FSA Group recorded an increase in operating revenue of RM59.9 million compared to RM56.1 million in 2015, while its total reserves also increased to RM67.5 million from RM64.3 million.

Labuan FSA Annual Report 2016 can be viewed here.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

 
In association with
Press Releases from this Firm
Recent Content from this Firm
By Labuan IBFC Inc.
By Labuan IBFC Inc.
By Labuan IBFC Inc.
By Labuan IBFC Inc.
By Labuan IBFC Inc.
By Labuan IBFC Inc.
By Labuan IBFC Inc.
By Labuan IBFC Inc.
By Labuan IBFC Inc.
By Labuan IBFC Inc.
Tools
Print
Font Size:
Translation
Channels
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions