Bismillahhirohmannirrohim

Y. Bhg. Datuk Chin Chee Kee,

Chairman of the Association of Labuan Trust Companies

CEO, Labuan IBFC Inc

 

Guest Speakers

Good Morning. 

Firstly, allow me to convey my appreciation to the organisers, both Labuan IBFC Inc and the Association of Labuan Trust Companies (ALTC), for inviting me to this Symposium; and on behalf of the Labuan IBFC (LIBFC), to welcome you to this intellectual discourse on the prospects and developments of the leasing industry in the LIBFC against a background of competitive global financial settings.

This symposium themed, “Leasing for Growth”, represents one of the many collaborations between the LIBFC and one of its key stakeholders, the Asociation of Labuan Trust Companies. The symposium is organized to enhance the level of awareness and highlight the exciting prospects offered by the LIBFC's legal and taxation framework for leasing structures, to meet the financial needs of regional and international businesses. Against this objective, today's deliberation is expected to highlight the leasing business oportunities faciltated through the operating environment in the LIBFC, in our pursuit to advance regional financial interlinkages going forward. 

Indeed, the demand for leasing has created an industry of imposing scope and size with annual worldwide revenue of more than USD500 billion. According to the 2012 edition of the Global Leasing Report, the volume of leasing business after 2 catastrophic years has increased by 10.7% to the tune of USD616.8 billon. Companies worldwide are exploring the business case of leasing not only as an alternative form of financing but also to comlement their revenue sources to meet various business needs. In the Islamic finance world, leasing or Ijarah forms a major and common financing structure that is well accepted by international syariah scholars as leasing has its roots in early Islamic economics and practices.

Todays's highly competitive world economy demand greater capacity and performance, engineered through increasing productivity and reduction in operating costs. Businesses today therefore would need to continually examine their operating and capacity optimisation strategies, leveraging on active resource management as well as the spectrum of financing solutions. Against this business imperative, leasing may offer greater operational, strategic and financial benefits than an outright ownership. Leasing further allows businesses to expand assets utilisation and monetise idle physical assets investments while generating cash flows for more strategic business uses. Leasing thus undeniably provides companies with many opportunities to realize operational savings and enhanced capacity, which therefore require a great deal of strategic considerations and familiarity with the specialised business arrangements. Full understanding of the potential and material issues covering taxes, legal obligations and treatment of accounting and finance, as well as addressing them early could well negate some, if not all, of the operational challenges such as unanticipated costs that stifle business expansion and rationalisation.

For the last couple of years, the Labuan leasing continues to be one of the fast growing and vibrant sectors in the LIBFC. This is reflected by the presence of 250 leasing companies and acumulative assets leased up to USD31 billion in September 2012, comprising both conventional and Syariah compliant leasing arangements.

Labuan’s advantage in terms of low start-up costs, existence of a broad range of products and services, and service providers that are enabled by the modern regulatory framework and facilitative tax structure bodes well with the vision of the jurisdiction to become the preferred IBFC in the Asia Pacific region. Additionally, businesses in the LIBFC gain further advantage through the access to over 70 of Malaysia’s double taxation agreements allowing investors to enjoy optimum opportunities to maximize their business.

The leasing companies in LIBFC, which mainly focus on highly specialized areas in aviation and oil and gas, not only provide cost-effective financing infrastructure but gives impetus to the growth and development of the aviation and oil and gas sectors, locally as well as in other parts of ASEAN. The presence of many of the top 50 global aircraft leasing companies and multinational companies such as those from the United States, Europe, India and the neighbouring economies are indeed testimonies of the LIBFC’s strategic and comparative advantage, which effectively facilitate the companies to expand their business outreach in the region.

Apart from the leasing companies, the LIBFC is also home to 60 banks, 194 insurance and insurance-related licensees, 37 trust companies and other professional service providers offering international business advisory covering accounting, tax and legal services. While the banks are able to assist companies to raise financing via loans or issuance of notes/bonds for financial lease, Labuan insurance and insurance-related entities provide the companies the risk mitigants and asset protection. Additionally, Labuan trust companies are established and designed to provide a wide range of services, playing a major role as the resident secretary to Labuan entities. The existence of the broad range of services and in recent time, the legal, regulatory and business framework represents an integrated efforts by the Authority to nurture a conducive financial ecosystem to improve the services and product offerings in the LIBFC, making Labuan a strong and competitive international business and financial centre.

We are fortunate today to have speakers, who are experts from the various field and industries investing their time to share the aspects of leasing business and their own unique experience in using the LIBFC. I trust that the experience and case studies, which will be presented based on the user’s perspectives will further provide you with insights on the operational flexibility offered by the Labuan leasing. Your participation today in turn opens to us an opportunity to explore and understand your business requirements, in your quest to leverage on the LIBFC enablers to maximise your local and regional investments as well as the potential of your business operations.

In closing, I would like to wish everyone of you here the best and hope that we could continue to expand this knowledge sharing and deliberation to benefit from the growing leasing business in Labuan IBFC. Lets us walk away today from this venue with a greater appreciation of the possible business potentials and perhaps work towards crystalising leasing transactions that serve your diverse business needs. On that note, I thank you again for your presence and look forward to your active participation.

 

Thank you.