LABUAN INTERNATIONAL BUSINESS AND FINANCIAL CENTRE “Labuan IBFC’s Shariah- Compliant Products & Solutions” 8 th May 2018 Aderi Adnan Director, Business Development, Labuan IBFC Inc.
Where is Labuan? Off the coast of Sabah, East Malaysia Federal Territory Common time zone with major Asian cities Where business meets leisure 2
What is Labuan IBFC? • International business and financial centre. • A tax-efficient jurisdiction to facilitate business, trading, investments and etc, through financial services and legal structures. • Well-balanced legal and regulatory framework. Our Vision To be Asia Pacific’s leading midshore international business and financial centre Striking an ideal balance between client confidentiality and international best standards
Internationally Recognised Group of International Finance Centre Supervisors (GIFCS) Member since 1999 International Organisation of Securities Commissions (IOSCO) Member since 2003 Group of International Insurance Centre Supervisors (GIICS) Member since 1999 International Association of Insurance Supervisors (IAIS) Member since 1998 Islamic Financial Services Board (IFSB) Member since 1998 International Islamic Financial Market (IIFM) Member since 2002 Asia/Pacific Group on Money Laundering (APG) Member since 2000 Labuan IBFC Adheres to OECD’s International Standards and Best Practices
Connecting Asia’s Economies 70% of Labuan Companies are Asian-based (as at 2015)
Comprehensive Legislation Labuan Financial Services and Securities Act Labuan Business Activity Tax Act 1990 2010 Labuan Islamic Financial Services and Securities Labuan Financial Services Authority Act 1996 Act 2010 Labuan Foundations Act 2010 Labuan Trusts Act 1996 Labuan Limited Partnerships and Limited Labuan Companies Act 1990 Liability Partnerships Act 2010
Labuan IBFC’s Islamic Infrastructure Labuan Islamic Double tax treaties – Financial Services & More than Securities Act 80 nations Removed points Shariah of friction Supervisory - tax, stamp duty Council Labuan’s Islamic One-stop Talent infrastructure regulator pool Service providers - lawyers Clear laws & - accountants arbitration process - trust companies Founding Islamic Banks & Financial membership Institutions of IFSB, IIFM
Flexible Tax Regime Labuan Business Activity Non-Labuan Business Activity • Trading income taxed under Labuan Business Activity Tax Act 1990 • Income taxed under Income Tax Act • Non-trading income, not taxable 1967 • Investment income, not taxable • Tax rate at 25%* on Malaysian • 3% per annum or maximum of source income MYR20,000 per annum • Applicable for all domestic trade • Tax efficiency via yearly election • Tax certainty via statutory perpetuity • Irrevocable election provided (* YA 2016)
Wide Array of Solutions Labuan Asset Labuan Specialised Labuan Companies Protection and Wealth Entities Management • Company limited by • Holding company • Trust guarantee • Trading company • Special trust • Limited partnership • Banking, • Purpose trust • Limited liability insurance/takaful, • Charitable trust leasing and other partnership • Waqf Foundation licensed companies, i.e. • Private trust company • Foundation captives • Private funds • Protected cell companies Available in Shariah-compliant forms Marketing offices may be located in Kuala Lumpur or Iskandar Malaysia (north of Singapore)
Business Activities Companies Banking Insurance Leasing Trust Cos. (13,260) (51) (204) (383) (47) • Investment • Wholesale banking • Life/general • Company • Aviation incorporation holding • Investment banking • Broking • Shipping • Trading • Company • Loans/deposit • Captives • Heavy machinery administration • Financial guarantees • Re-insurance • Corporate • Trade finance • Management secretarial • Trustee services Wealth Management Commodity Trading (240) (50) • Trust • Oil and gas • Foundations • Agriculture • Private Trust Companies • Minerals 10 Source: Statistics from Labuan FSA’s Annual Report 2016
LIWF Structure LABUAN INTERNATIONAL WAQF FOUNDATION Governed by Shariah principles on Waqf Founder LIWF (acts as Trustee/ Beneficiaries (Waqif) Nazir/Mutawalli) Endow Distribution Charter (Waqfiyyah) assets of income/ Shariah Adviser through usufruct Supervisory person Waqf Council Officer Secretary Governance and management of Waqf foundation and assets
Why Labuan IBFC for Islamic Finance? • World’s first exchangeable SUKUK listed on LFX in 2006. • World’s first omnibus legislation (Labuan Islamic Financial Services and Securities Act 2010). • Commitment of Regulators both onshore (e.g. MIFC initiative) and offshore (LFSA). • International Financial Centre with a strong focus on Islamic Finance that enables unique solutions and innovations – an ideal platform as the world’s Islamic Financial “Test B ed” . • Shariah Supervisory Council for Shariah guidance and reference point.
Key Islamic Finance Numbers in Labuan IBFC Average 2014 2016 Growth p/a Islamic Bank 3 3 - Islamic Investment Bank 2 2 - Islamic Window Operator 10 11 5.0% Full- Fledged Retakaful, Family and Takaful Operators 9 8 - Retakaful Window Operators 16 21 15.6% Islamic Notes Listed on LFX 11 12 4.5% Total Capitalisation of Islamic Notes USD7.6 bil USD8.1 bil 3.3% Total Islamic Banking Assets USD1.6 bil USD1.9 bil 9.4% Total Gross Contribution by Retakaful USD38.1 mil USD54.7 mil 21.8% 1 Source: Statistics from Labuan FSA’s Annual Report 2016
For Inquiries.. Aderi Adnan aderiadnan@libfc.com +603 2773 8985 14
Thank You This presentation should not be regarded as offering a complete explanation of the matters referred to and is subject to changes in law. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Labuan IBFC cannot accept any responsibility for loss occasional to any person acting or refraining from action as a result of any material in this presentation.
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