Kuala Lumpur, 26 May 2015 – The Labuan Financial Services Authority (Labuan FSA) is pleased to announce the release of its Annual Report for 2014 (AR2014), ‘Labuan: Connecting Asia’s Economies’ being the underlying theme of the report. The AR2014 covers the Labuan International Business and Financial Centre (Labuan IBFC) industry’s performance for 2014, Labuan FSA’s financial performance and the strategies undertaken to develop the Labuan IBFC. In addition, the report also provides insights of the Labuan FSA’s corporate action plan 2015-2017. The action plan, which is in line with the Financial Sector Blueprint issued by Bank Negara Malaysia, charts the key strategies to preserve financial soundness and to strengthen financial linkages among the Asia’s economies.

The highlights of the AR2014 are:

• Commendable growth rate with increasing linkages within Asia 
  
• 12.3% growth in new Labuan companies registration and 70% of the companies originated from Asia; 
• Two new banking licences were granted, one to a bank from United Arab Emirates and the other from China;
• Labuan banks’ cross-border lending grew to USD32 billion with 76% of the total loans and advances contributed by foreign borrowers from ASEAN countries. Overall, the Labuan banks remained strong, financially stable and adequately capitalized with an industry average risk weighted capital ratio at 31.6%.
• The increasing demand for Islamic finance in Labuan generated the total Islamic financing growth by 28%, from USD775.6 million to USD993.3 million;
• 18 new insurance and insurance-related licences was approved with the majority of the licensees originated from Asia. The Labuan insurance sector has a strong margin of solvency of 5.7 times above the minimum regulatory requirement;
• 70% increase in the number of Labuan oil trading companies participating in the Global Incentive For Trading (GIFT) programme from 23 to 39;
• Labuan leasing assets also increased to USD45.5 billion where 73% was from the oil and gas industry, reflecting Labuan’s strategic location as a financing hub for the business;
• Labuan’s comprehensive range of wealth management instruments for investment and protection continued to draw interests from regional high net-worth individuals. An almost 40% increase in the number of Labuan foundations that were established in 2014 with 73% of the total 130 Labuan foundations originating from Asia; and
• In 2014, the Labuan IBFC continued to achieve a commendable growth trajectory driven by its network advantage which puts Labuan in a strong position to facilitate trade and investment through the international and regional intermediaries that are present in the Labuan IBFC. The value propositions remain attractive to new investors to establish operations in Labuan IBFC.
• Labuan IBFC upholds high standards with a robust regulatory and supervisory regime and strengthened regional and international cooperation with home-host authorities
  
• Labuan FSA continues to take significant steps to further strengthen its supervisory and regulatory regime in line with global standards. This includes strengthening of prudential standards with focus on corporate governance and risk management. Regulatory and prudential standards on anti-money laundering and counter terrorism financing continued to be enhanced;
• Labuan FSA made significant strides to conform to international standards. The OECD Global Forum has accorded Malaysia (including Labuan IBFC) a rating of “Largely Compliant” under the Global Forum Phase II Peer Review on transparency and exchange of information. This reflects commitment of Labuan FSA towards collaboration in international tax policies and developments; and
• Labuan FSA continues to expand supervisory cooperation with international regulatory authorities. Three new MoUs were sealed with Jersey Financial Services Commission, Gibraltar Financial Commission and the Financial Supervisory Commission of Taiwan, to strengthen cross-border supervisory oversight.
• Continued investment in knowledge management to build talent pipelines for the Labuan financial industry
  
• Labuan FSA progressed to enhance stakeholder benefits by investing in capability building programmes and upgrading of skills and knowledge in the Labuan IBFC, with focus on talent acquisition, retention and industry’s competency and knowledge development. This is to ensure the Labuan IBFC industry is well-equipped in facing new challenges in the global financial markets; and
• Commitment to education excellence to benefit the local Labuan and the IBFC community with the upgrading of the infrastructure of the Labuan International School to provide a conducive learning environment for the community.

The Labuan IBFC, established in 1990, is celebrating its silver jubilee this year. During the 25-year journey, the Labuan IBFC has demonstrated its resilience and ability to navigate through the many challenges including episodes of financial turmoil in the international environment. Moving forward, Labuan IBFC will continue to be shaped by the shifting global and regional financial market dynamics and financial regulation developments. The three strategic directions for Labuan FSA from 2015-2017 are expected to continue providing the synergies for cooperation and financial linkages with Asia, enhance development in Islamic finance and strengthen the legal and regulatory landscape in Labuan IBFC. As the Labuan IBFC has the potential to meet the financial and business needs of ASEAN and the greater Asia Pacific Region, the Labuan FSA will also continue to strengthen its regulatory and supervisory regime and enhance operational excellence of the Labuan IBFC.

For the financial year ending 31 December 2014, Labuan FSA recorded an increase in operating income to RM52.7 million compared to RM39.9 million in 2013, while its total reserves also increased from RM39.2 to RM52.4 million.

The Labuan FSA Annual Report for 2014 can be downloaded here.