LABUAN INTERNATIONAL
BUSINESS AND FINANCIAL CENTRE
“Labuan IBFC’s Shariah-Compliant Products & Solutions”
8th May 2018 Aderi Adnan
Director, Business Development, Labuan IBFC Inc.
Where is Labuan?
2
Off the coast of Sabah, East Malaysia Federal Territory Common time zone with major Asian cities Where business meets leisure
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
Asia/Pacific Group on Money Laundering (APG) Member since 2000
Labuan IBFC Adheres to OECD’s International Standards and Best Practices
International Islamic Financial Market (IIFM) Member since 2002
Connecting Asia’s Economies
70% of
Labuan Companies are Asian-based
(as at 2015)
Comprehensive Legislation
Labuan Financial Services and Securities Act 2010
Labuan Islamic Financial Services and Securities Act 2010
Labuan Foundations Act 2010
Labuan Limited Partnerships and Limited Liability Partnerships Act 2010
Labuan Business Activity Tax Act 1990
Labuan Financial Services Authority Act 1996
Labuan Trusts Act 1996
Labuan Companies Act 1990
Labuan IBFC’s Islamic Infrastructure
Labuan’s Islamic infrastructure
Double tax treaties – More than 80 nations
Shariah Supervisory
Council
Talent pool
Service providers - lawyers
- accountants - trust companies
Islamic Banks & Financial
Institutions
Labuan Islamic Financial Services &
Securities Act
Removed points of friction
- tax, stamp duty
One-stop regulator
Clear laws & arbitration process
Founding membership of IFSB, IIFM
Flexible Tax Regime
Labuan Business Activity
• Trading income taxed under Labuan Business Activity Tax Act 1990
• Non-trading income, not taxable
• Investment income, not taxable
• 3% per annum or maximum of MYR20,000 per annum
• Tax efficiency via yearly election
• Tax certainty via statutory perpetuity
• Irrevocable election provided
Non-Labuan Business Activity
• Income taxed under Income Tax Act 1967
• Tax rate at 25%* on Malaysian source income
• Applicable for all domestic trade
(* YA 2016)
Wide Array of Solutions
Labuan Companies
• Holding company
• Trading company
• Banking, insurance/takaful, leasing and other licensed companies, i.e. captives
• Protected cell companies
Labuan Specialised Entities
• Company limited by guarantee
• Limited partnership
• Limited liability partnership
• Private trust company
Labuan Asset Protection and Wealth
Management
• Trust
• Special trust
• Purpose trust
• Charitable trust
• Waqf Foundation
• Foundation
• Private funds
Available in Shariah-compliant forms
Marketing offices may be located in Kuala Lumpur or Iskandar Malaysia (north of Singapore)
Business Activities
10
Banking (51)
• Wholesale banking
• Investment banking
• Loans/deposit
• Financial guarantees
• Trade finance
Leasing (383)
Companies (13,260)
• Investment
holding
• Trading
• Life/general
• Broking
• Captives
• Re-insurance
• Management
Insurance (204)
• Company incorporation
• Company administration
• Corporate secretarial
• Trustee services
Trust Cos. (47)
• Aviation
• Shipping
• Heavy machinery
Wealth Management (240)
Commodity Trading (50)
• Trust
• Foundations
• Private Trust Companies
• Oil and gas
• Agriculture
• Minerals
Source: Statistics from Labuan FSA’s Annual Report 2016
LIWF Structure
LABUAN INTERNATIONAL WAQF FOUNDATION
Founder (Waqif)
LIWF (acts as Trustee/ Nazir/Mutawalli)
Charter (Waqfiyyah) Shariah Adviser Supervisory person Council Officer Secretary
Endow assets through Waqf
Distribution of income/
usufruct
Beneficiaries
Governance and
management of Waqf
foundation and assets
Governed by Shariah principles on Waqf
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 Bed”.
• Shariah Supervisory Council for Shariah guidance and reference point.
Key Islamic Finance Numbers in Labuan IBFC
1
2014 2016 Average
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%
Source: Statistics from Labuan FSA’s Annual Report 2016
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.