1. Overview of
Labuan IBFC
Banking Business
May 2012
Labuan Federal Territory, Malaysia.

2. Contents of Presentation
1 Role of Labuan FSA
2 Overview of Labuan IBFC Business
3 Q&A

3. Labuan FSA: Objective
Labuan Financial Services Authority (Labuan FSA), formerly known as Labuan
Offshore Financial Services Authority (LOFSA), was established on 15
February 1996 under the Labuan Financial Services Authority Act 1996.
• Labuan FSA is the statutory body responsible for the development and
administration of the Labuan International Business and Financial Centre
(Labuan IBFC).
• Under the government’s vision to position Labuan as a progressive
and an integrated financial centre catering for the Asia-Pacific market, the
activities of the Labuan FSA are guided by the following objectives:-
 to promote and develop Labuan as an international centre for
business and financial services;
 to develop national objectives, policies and priorities for the
orderly development and administration of the international
business and financial services in Labuan; and
 to act as the central regulatory, supervisory and enforcement
authority of the international business and financial services
industry in Labuan.

4. Labuan FSA: One-stop Regulatory Agency
 Incorporate/  License &  License &
register Labuan supervise Labuan supervise fund
Since 1996
companies banks managers
 License and  License &  Register funds
supervise trust supervise Labuan  Approval of
& management insurance & bonds issuance
companies insurance related  Regulate LFX
companies
Labuan FSA (established in 1996)
Companies Bank Negara Securities
Prior to 1996
Commission of Malaysia Commission
Malaysia

5. Labuan FSA : Members of Authority
i. Representing Regulatory Authorities
Tan Sri Dato’ Sri Dr. Zeti Akhtar Aziz
Governor, Central Bank of Malaysia
(Chairman)
Datuk Ranjit Ajit Singh Y. Bhg. Dato’ Siti Halimah bt.
Chairman, Ismail
Securities Commission Ministry of Finance Malaysia
Encik Ahmad Hizzad Baharuddin Encik Zainal Abidin Abdullah
Director-General of Labuan FSA CEO,
Labuan Corporation
Encik Mohd Naim Daruwish
CEO,
Companies Commission of
Malaysia

6. Labuan FSA: Members of Authority …..contd
ii. Representing Private Sector
Datuk Ali Abdul Kadir
Chairman,
Jobstreet Corp, Milux Corp, Microlink
Solution, Privisia Technology Bhd &
Financial Reporting Foundation
Dato’ Mohammed Azlan Hashim
Chairman,
D & O Green Technologies Bhd, SILK
Holdings Bhd and Labuan IBFC Inc Sdn
Bhd
Datuk Oh Chong Peng
Chairman,
Alliance Financial Group Bhd

7. Labuan FSA:
International Advisory Panel (IAP)
Dato’ Mohammed Azlan Hashim Iqbal Khan
Chairman of IAP Founding Director & CEO of Fajr Capital
Dato’ Seri Ahmad Johan Mohammad Raslan
Tan Sri Dato’ Megat Zaharuddin Megat
Executive Chairman of Mohd Nor
PricewaterhouseCoopers, Malaysia
Chairman of Malayan Banking Bhd
Anthony Neoh
Senior Member of the Hong Kong Bar Michael Troth
Region Head, Citi Trust in Asia Pacific
Datuk George Ratilal Other IAP members:
Executive Vice President (Finance) of • Mr Baron Frederik van Tuyll, MD of Equity Trust
PETRONAS • Datuk Wira Jalilah Baba, Group Chairman of PKT Logistics
Group S/B, Former DG of Malaysia Investment
Development Authority (MIDA)
• Mr Frank McInerney, GM of General Reinsurance AG’s
Singapore

8. Labuan FSA:
The Shariah Supervisory Council
Dr. Mohd Daud Bakar (Chairman)
President/Chief Executive Office Dr. Hussain Hamed Hassan
International Institute of Islamic Finance Chairman of Dubai Islamic Bank’s Fatwa
Inc. and Chairman of the SAC of BNM & & Shariah Supervision Board, UAE
SC of Malaysia
Dato’ Dr. Abdul Halim Haji Ismail (Deputy Dr. Mohamed Ali Elgari
Chairman)
Former Professor of Islamic Economics
Member of Shariah Councils of BNM and
King Abdul Aziz University, Jeddah
SC of Malaysia
Professor Madya Dr. Ahmad Shahbari @ Dr. Engku Rabiah Adawiah Engku Ali
Sobri Salamon Associate Professor
Chairman of the Shariah Advisory Board International Islamic University, Malaysia
of Syarikat Takaful Malaysia Berhad.

9. Labuan FSA: Organisation Structure
Ministry of Finance
Audit and Risk
Advisory Committee Members of Authority
Management Committee
•International Advisory Panel (IAP)
•Shariah Supervisory Council (SSC)
Director-General Audit Department
Deputy Director-General Risk Management Unit
Corporate Business Supervision and Corporate Strategic
Affairs Management Enforcement Services Development
Department Department Department Department Department
•Corporate •Business • Banking •Finance •Policy and
Communication Operations •Facility Business
and Event •Insurance Management Development
Management •ROC
•Capital Market •ICT •Tax Strategy
•External •Market
Relations Surveillance •Anti-Money •Labuan
and Laundering and International
•Corporate Compliance Prosecution School and
Secretarial and Subsidiaries
Performance •Legal Services •Industry
Management Reporting
•HR

10. Overview of Labuan IBFC Business

11. Labuan : As an IOFC on 1 Oct 1990…
Labuan IOFC
Established In Oct 1990 Rebranded in Jan 2008
Complement Develop economy of
Kuala Lumpur as Labuan and contribution
a regional to the growth of the
financial centre nation
Focus area since 2011 – 2020 - Strengthening regional and international
financial integration

12. International Financial Centre
Definition
An offshore financial centre (or OFC), although not precisely defined,
is usually a low-tax, lightly regulated jurisdiction which specializes in
providing the corporate and commercial infrastructure to facilitate the
use of that jurisdiction for the formation of offshore companies and for
the investment of offshore funds.
From Wikipedia

13. Why International Financial Centre?
1. Cost effective and most efficient mean of doing business
2. Product innovation to enhance return of investments
3. Well-regulated and comply with international standard
and best practices
4. Niche products not available in domestic market

14. Labuan is one of more than 70 International
Financial Centres in the World
Irish
Republic Dubai
Isle of
Alderney
Ireland Man
Guernsey Netherlands Thailand
Dublin
Labuan
Jersey Luxembourg Hong Kong
Liechtenstein
Austria
Switzerland
Cyprus
Andorra
Israel
Bermuda
Gibraltar Bahrain
Bahamas Madeira Marshall Islands
Turks & Caicos Is. Canary
Is. Nauru
Cayman Is.
Belize Vanuatu
Aruba Liberia Qatar
Costa Monaco Western Samoa
Rica
Malta Singapore Cook
Island
Panama Jordan
Antigua
Uruguay Antilles
British Virgin Djibouti
Is. Seychelles
Anguilla
St. Kitts
St. Vincent & Mauritius
Nevis Grenadines
Barbados

15. Labuan IBFC : Labuan vs Domestic Cos
Labuan Companies Domestic
Companies
Labuan FSA Regulatory Body SSM
Labuan Companies Governing Law Companies Act of
Act 1990 Malaysia 1965
100% non-resident At least 30%
allowed Ownership bumiputera (applicable
Min 1 shareholder for government project only )
No min capital Min 2 shareholders
Min RM2 capital
LBATA : 3% or Taxation ITA : 25%
RM20,000
Non-ringgit Currency Ringgit

16. Labuan IBFC : Business Activities
Labuan Labuan Trust Capital Labuan
Banking Insurance Companies Market Companies
•Life/General •Trustee •Labuan •Registration of
•Wholesale
International Companies
Banking •Broking •Administrator Financial •Investment
•Loans/Deposit •Underwriting •Secretarial Exchange (LFX) Holding
•Trading
•Guarantees •Captives • Private/Public - Listing /
•SPVs
Trust Trading
•Investment •Re-Insurance •MISR
Banking •Fund •LITC under
Management GIFT
- Fund Programme
Administrator •Labuan
Limited
•Mutual Funds Partnership &
Limited
- Private/Public
Liability
Partnership
•Protected
Cell
Company
•Foundations
……the above are offered in conventional and Islamic principles •Leasing
16

17. Labuan IBFC : Distinct Capabilities
Advantages

18. The Outline of the changes on the Legal Framework
1. Deletion of the word “offshore” to reflect the rebranding of Labuan IBFC.
2. LOFSA renamed as Labuan Financial Services Authority (‘Labuan FSA’).
• Labuan Financial Services Authority Act
Four Acts has been • Labuan Companies Act
retained with
amendments • Labuan Trust Act
• Labuan Business Activity Tax Act
• Labuan Financial Services and Securities Act
• Labuan Foundations Act
Promulgate four new • Labuan Limited Partnerships & Limited Liability
legislation Partnerships Act
• Labuan Islamic Financial Services and Securities
Act

19. Administer & Enforce Legislation
The scope and functions of the Labuan IBFC business are provided
and administrated as follows …..
Acts of General Application in
IBFC Regulatory Malaysia
Labuan Financial Services
Authority
Authority Act 1996 i. Anti-Money Laundering and
Anti Terrorism Financing Act
2001
ii. Mutual Assistance in Criminal
Matters Act 2002
Labuan Financial Services Authority Inland Revenue Board
i. Labuan Business Activity Tax Act
i. Labuan Companies Act 1990
1990
ii. Labuan Trusts Act 1996 ii. Exemption Order of Income Tax Act
1967
iii. Labuan Financial Services and Securities Act 2010 iii. Exemption order of Stamp Act 1949
iv. Labuan Foundation Act 2010
v. Labuan Limited Partnerships & Limited Liability
Partnership Act 2010
vi. Labuan Islamic Financial Services and Securities Act
2010

20. Tax Framework
• Taxation under the Labuan Business Activity Tax Act (LBATA)
Labuan trading activities 3% on audited net profits, or flat
rate of RM20,000
Labuan non-trading activities 0% tax
• No stamp duties on:-
• Instruments executed by a Labuan Company (LC) in
connection with Labuan business activity
• M & A of an LC
• Instruments of transfer of shares between LCs

21. International Affiliation
Name of Organisation Objectives
Group of International Finance Supervision of banking related in cross border activities
Centre Supervisors (GIFCS)
Offshore Group of Insurance Supervision of international insurance business
Supervisors (OGIS)
International Organisation of Cooperative forum for securities regulatory agencies
Securities Commissions (IOSCO)
International Association of Forum of insurance regulators to promote financial stability and
Insurance Supervisors (IAIS) international standard setting body
Asia/Pacific Group on Money Collaborative platform for technical assistance and training to
Laundering (APG) improve compliance with AML/CFT standards
Islamic Financial Standards Board Standard setting body to ensure sound and stable Islamic financial
(IFSB) systems
International Islamic Financial Standard-setting body for establishment, development, self
Market (IIFM) regulation and promotion of Islamic capital and money market

22. Labuan FSA : Client Charter
One of the key success factors of Labuan IBFC is effectiveness and
efficiency of delivering its mandated functions.

23. Islamic Finance
The wide range of Islamic financial products and services
available in Labuan IBFC includes Islamic banking, Islamic
capital market, Islamic insurance (takaful), Islamic
reinsurance (retakaful), Islamic funds, waqf and Islamic
trusts administration. The products and services are
offered under various Shariah-compliant schemes by
Islamic financial institutions in Labuan.
The Labuan Islamic Financial Services and Securities Act
2010 streamlines procedures and requirements for all
Shariah-related activities in Labuan IBFC with Labuan FSA
as the licensing authority.

24. Annual Fees
Labuan IBFC fees are amongst the most competitive
Type of Company RM Type of Company RM
Labuan Companies 1,500 Labuan Foundation 750
Foreign Labuan Company (Branch Labuan Securities Licensee 5,000
5,300
Operations) Protecting Cell Company (PCC) Licensee –
30,000
Labuan Bank / Labuan Investment Bank PCC (Core)
80,000
Licensee Protecting Cell Company (PCC) Licensee –
10,000
Leasing 40,000 PCC (Each Cell)
Labuan Insurance Companies Licensee: Labuan Limited Partnerships & Labuan
1,000
Limited Liability Partnerships
• General/Life 30,000
Auditors 1,000
• Captive / Insurance Manager,
Underwriting Manager and 10,000 Liquidator 1,000
Insurance Broker Fund Manager (outside Labuan) 10,000
• Master-Rent-A-Captive 13,000 Fund Manager (Inside Labuan) 5,000
• Subsidiary-Rent-A-Captive 3,000 Fund Administrator (outside Labuan) 5,000
Trust Company Licensee 8,000 Fund Administrator (inside Labuan) 2,000
Private Trust Company 5,000 Public Fund 2,000

25. Operational requirements on
Labuan banking

26. Labuan Banks
Banking Licence
Govern by Labuan Financial Services and
Securities Act (LFSSA) effective 11 Feb 2010
Dealing in Non Ringgit Malaysia & Non-Malaysian
Permitted Dealings with Malaysian Residents
Full Banking License Investment Banking License
 providing credit facilities;  Providing credit facilities
 Labuan investment banking service;  Providing consultancy/advisory services
 Islamic banking business; relating to corporate & investment
 building credit business; matters or making investments on behalf
 credit token business; of any person
 development finance business;  Undertaking foreign exchange
 leasing business or such other transactions, interest rate swaps,
activities dealings in derivative instruments or
 receiving deposits, derivative financial instruments or any
 Other business approved by the other similar risk management activities
Authority  Other business approved by the
Authority
 Not allowed to accept deposits.

27. Labuan Banks : Eligibility
Eligibility
Full Banking License Investment Banking License
 An investment bank or group
 Must be a licensed bank or financial
engaging in investment banking
institution supervised by competent
activities licensed by the regulatory
authority
authority in the country of origin
 Possess sound track record
 A licensed bank or an established
 Accorded a good credit rating by
financial institution or financial
acceptable rating agencies
service provider supervised by
 Supervised by a competent regulatory
competent authority
authority
 Possess sound track record
 Conform to generally accepted
 Any licensed institutions under
standards of international banking
approval of Bank Negara Malaysia
practices or BIS, as the case may be.
 Any person(s) with the necessary
expertise and experience in
investment banking industry.

28. Labuan Banks : Requirements/Applications
Capital
 RM10 mil – unimpaired by loss / RM10 mil – branch net working funds
Annual Fees
RM80,000 per annum
Physical Presence
Sufficient staff maintained in Labuan
Dealings through Labuan office
Marketing offices in Kuala Lumpur or Johor Bharu (max 4 staff) allowed
Allow co-location anywhere in Malaysia
Branches/full operational office allowed anywhere in Malaysia for Islamic banks
Application
undertaking letter – Head office/parent
3 years business plan
3 years audited annual accounts for the immediately preceding application
letter of consent - home regulatory authority (where applicable)
fit and proper persons:
 controller or director or CEO ;
 board of directors of a subsidiary
sound track record, experience, expertise in similar undertaking.
Note : For Islamic Banks – to appoint Shariah Supervisory Council / Advisor

29. Labuan Banks :
International presence in Labuan
include...
Bank Country
Barclays PLC UK
Goldman Sachs USA
UBS AG Switzerland
BNP Paribas SA France
The Royal Bank of Scotland Group plc UK
Deutsche Bank AG Germany
Bank of America NA USA
Credit Suisse Group Switzerland
JPMorgan Chase Bank National Association USA
Kuwait Finance Kuwait

30. Global Incentive For Trading (GIFT)

31. Background of GIFT Programme
 Collaboration between Labuan FSA with Performance
Management and Delivery Unit (PEMANDU) and Malaysia
Petroleum Resources Corporation (MPRC).
 Facilitating the implementation of Oil & Gas Trading Incentive in
Malaysia using a Labuan structure under NKEA-OGE
 Emulating Singapore’s Global Trading Programme
31

32. GIFT : Status
 Endorsed by the Authority on 6 Sept 2011
 Endorsed by Bahagian Analisa Cukai, Kementerian
Kewangan on 20 Sept 2011
 Endorsed by NKEA Steering Committee on Oil, Gas and
Energy, Chaired by YAB Prime Minister on 22 Sept
2011
 Approved by YAB MOF on 26 Oct 2011
 Launched on 31 Oct 2011
 Five companies: Petronas, Dialog Group Bhd, YTL
Power International Bhd , UK-based BB Energy and
Rotterdam group, Vitol Trading, were awarded a
trading license each.
32

33. Global Incentive for Trading (GIFT)
 A GIFT of incentives for traders, of specified commodities, to
use Malaysia as their international trading base generating
substantial tax revenues
 To enjoy GIFT, use Labuan IBFC structure to be known as
Labuan International Commodity Trading Company (LITC)
 Why Labuan – ready incentive and tax framework, ease of
establishment, financial infrastructure, and cost
effectiveness
33

34. GIFT
 Structure
 Specified as a Labuan financial business under Section 86 of the LFSSA Act 2010
(LFSSA)
 Licensed by Labuan FSA under section 92 of the LFSSA and shall be referred to as
Labuan International Commodity Trading Company (LITC)
 The licence is valid for a period of five years from the date of approval and may
be reviewed for renewal
 Existing Labuan companies currently undertaking LITC business are required to
be licensed as LITC by January 2013 (Thru Labuan FSA’s Directive under section
4B LFSA Act 1996)
 Activity
 The LITC business is the trading, in any currency other than Ringgit, of:–
 Petroleum and petroleum related products;
 Minerals;
 Carbon credits; and
 Any other commodities as may be approved by Labuan FSA

35. GIFT
 Tax Incentives
 Corporate tax rate of 3% of chargeable profits, or at the rate of 10% in the case
where the LITC does not comply with qualifying criteria.
 Other tax benefits e.g stamp duty, withholding taxes, personal taxes
 50% exemption on gross employment income of Non-Malaysian professional,
managerial staff including trader with the LITC who earn more than RM15,000
per month
 The LITC shall be subject to the rate of 10% in the case where the LITC does not
comply with the qualifying criteria.
 Qualifying Criteria
 Minimum company revenue of USD 100 Million per year
 Local expenses of at least RM 3 Million per year
 No of start up staff: 3 professional traders
 Location Incentive
 Registered office in Labuan, operational office anywhere in Malaysia

36. Performance
of Financial Industries

37. Performance of Labuan IBFC
SECTOR 2009 2010 2011 ** GROWTH (%)
Companies 7, 423 8,004 8,655 8.1
Banks
• No of Banks 59 61 60 -1.6
• Loans (USD) 18.5b 19.8b 24.6b 24.2
• Deposits (USD) 10.2b 11.6B 9.5b -15.8
• PBT (USD) 249.7m 536.4m 404.9m -24.5
Insurance
• No of Companies 149 169 181 7.1
• Premiums (USD) 1.1b 1.2b 1.6b 33.3
Leasing
• No of Companies 136 176 227 29.0
• Assets Leased (USD) 21.9b 25.0b 27.6b 10.4
LFX
• Market Cap (USD) 16.6b 17.1b 17.1b 0
Funds
• Size (USD) 9.6b 9.6b 9.4b -2.1
Takaful / Retakaful
• Gross Contributions (USD) 234.1m 296.7m 459.5m 54.9
Note : ** The numbers are subject to changes

38. Labuan IBFC : Social & Economic Contribution
DIRECT INDIRECT
• Complement domestic
financial sector through its • Hotels
offer of products and services • Restaurants
• Regional integration through • Education
trade and financing • Tourism and recreation
• Critical mass of business • Residential properties
stimulates economic activities
• Transportation
– Creation of Employment in
• Services sector, eg
Labuan – Direct and
Legal, accounting and
Indirect
management services
– Demand for household
products and services
– Catalyst for specialized
industries which leverages
on Labuan‘s natural
advantages eg MISR. Oil
and Gas
38

39. Q&A
Contact Us
Labuan Office
Labuan Financial Services Authority,
Level 17, Main Office Tower,
Financial Park Complex,
Jalan Merdeka, Labuan IBFC Inc. Sdn. Bhd.
87000 Labuan F.T., Malaysia. Suite 3A-2, Plaza Sentral,
t. +6 087 591200 Jalan Stesen Sentral, KL Sentral
50470 Kuala Lumpur, Malaysia
f. +6087 428200 t. +603 2773 8977
e. communication@labuanfsa.gov.my f. +603 2780 2077
e. info@LabuanIBFC.my
KL Facilities Office • Hong Kong representative office
Suite 2A-06-01, Level 6 Block 2A, Suite 1102 11/F
Plaza Sentral, KL Sentral, Malaysia Building
50470 Kuala Lumpur F.T., Malaysia. No. 50 Gloucester Road
Hong Kong, SAR
t. +6 03 2273 8200 t: +852 2527 2318
f. +6 03 2274 8200 f: +852 2520 2938