2. In developing this 5-year Roadmap, the minds and experiences of our key stakeholders were brought together to brainstorm and chart the future direction of Labuan IBFC. In view of emerging challenges, changing market trends, and the need to remain innovative and competitive, a clear strategic plan is important to lay out the game plan and align all those involved, from the Government and regulators to IBFC players and international investors. With clarity of vision and purpose, Labuan IBFC will be able to make great strides for the benefit of all participants, strengthening established market sectors whilst creating new niches and opportunities.

3. The Labuan IBFC Roadmap will be launched today against the backdrop of a challenging yet reinvigorating international business and financial markets of the post-pandemic era. The Market Report 2021 for Labuan IBFC shows that the past one year continued to be a challenging period with the continuing effects of the pandemic on the global economy. Travel restrictions and an uninspiring investment climate dampened further the recovery of international business which in turn impacted Labuan IBFC’s market and business vibrancy. However, with the adoption of new norms and a series of regulatory reliefs, Labuan players have modified their business operating models to ensure their service to clients remained uninterrupted.

Labuan IBFC Industry Performance and Achievements for 2021

4. Notwithstanding the pandemic, the business and financial services sectors in the Labuan IBFC have recorded positive growth in 2021 with sustained profitability seen in key business sectors. As one of the core businesses of the Centre, the banking industry achieved significant growth of 128 per cent in profits for the year 2021, an increase from USD120 million the year before to USD274 million. The industry continued to be resilient and financially sound with ample liquidity. As the regional economic recovery sets in, the Labuan banking industry has begun to show growing vibrancy of late as reflected in the increasing financing and investment activities.

5. Aside from the banking industry, the insurance industry has also developed over the past 30 years into a key sector of the Labuan IBFC. The Centre is now domicile to some of the top global insurance and insurance-related companies. The market continued to grow in the number of new licences. Last year, 21 new insurance licences were issued and 13 were for Labuan captives, which further expanded the multi-national diversity of Labuan insurance market. This positive market growth provides additional capacity for the Centre to meet the region’s and Labuan Island’s growing reinsurance needs.

6. The performance of international commodity trading activities in Labuan IBFC has also rebounded in tandem with the recovery in global oil prices. The higher oil prices have lifted the profitability of Labuan International Commodity Trading Companies by 315 percent to USD3.5 billion for the year 2021. The leasing business in Labuan continued to be impacted in 2021 by the movement and travel restrictions as well as the transition to the Economic Substance Requirement regulations. However, the aircraft leasing business prospects remain optimistic as travel and tourism activities are resuming now, while the changes to the Economic Substance requirement in 2021 will gradually stabilise the industry. Furthermore, the boost in oil and gas related leasing business will also be driven by improved oil prices.

7. There has also been surging interest in Labuan’s capital market and exchanges segment especially with more digital financial services providers utilising Labuan. In this context, for the fund management industry, 13 new fund managers and four securities licensees were approved in 2021, bringing the total fund managers and securities licensees to 40 and 17, respectively. Labuan IBFC has also two digital exchanges to complement the traditional exchange platforms, for listing and trading of digital assets in the regional and global market.

8. In relation to this, the Labuan IBFC's comprehensive ecosystem which includes clear legislation and facilitative requirements, continued to be conducive for the wealth management business, particularly for High-Net Worth individuals. The Centre's legal framework that covers both trusts and foundations, offers prospects with comprehensive options in structuring the appropriate instruments for their estate planning needs. With the dual-financial system, prospects can also opt for either conventional or Shariah-compliant structures based on their personal preferences.

9. In 2021, the business operations of Labuan trust companies continued to be impacted by the uncertainties due to the COVID-19 pandemic and revised Labuan tax requirements. In tandem with the lower number of company incorporations, profitability of the industry had moderated to USD7.8 million in 2021 from USD8.5 million in the previous year.

10. Throughout 2021, Labuan FSA took great strides to improve its supervisory capability with the objective of further promoting the soundness and stability of the financial industry. Complementing its supervisory activities, Labuan FSA remained steadfast in enhancing its AML/CFT efforts i.e the anti-money laundering and combating the financing of terrorism efforts in Labuan in tandem with the Malaysian Government’s agenda of strengthening the national AML/CFT regime. I am pleased to inform that two AML/CFT risk assessments, namely, the Sectorial Risk Assessment and Labuan Risk Assessment undertaken on Labuan IBFC and coordinated by the National Coordination Committee to Counter Money Laundering (NCC), have classified Labuan IBFC as a “low risk” jurisdiction in terms of money laundering or terrorism financing threats. Needless to say, this should bode well with market acceptance of, and investors’ confidence in, Labuan IBFC. Copies of the Market Report 2021 for the Labuan IBFC is available to ensure that you are kept informed of the positive developments that are taking place in the Centre.

11. Before we continue with our event today, I would like to once again thank all of you and express my sincere appreciation to the Labuan IBFC industry, and all those who have contributed to the formulation of the Strategic Roadmap. Looking ahead, I believe that the prospects of Labuan IBFC will remain favourable and yet challenging. With the continuous support of the Government, in particular the Ministry of Finance, Central Bank of Malaysia, Securities Commission Malaysia, Companies Commission of Malaysia, Attorney General’s Chambers, Inland Revenue Board and Labuan’s financial community, we are confident that the future will see further expansion in the activities of the Labuan IBFC.

12. On a lighter note, I would like to invite you to visit Labuan, either for business or for leisure, and see for yourself the development that has taken place in Labuan. Besides the IBFC and the emerging development, I would regard Labuan as a well kept secret, or like a hidden gem, a getaway for those who are so used to working in the hustle and bustle of city dwelling. Labuan presents itself as a leisure island to those wishing to holiday and bask on the beach front, and the luxury of a working environment without the traffic jams.

13. On that note, once again, on behalf of Labuan FSA, I would like to extend our deepest appreciation to Yang Berhormat Senator Tengku Datuk Seri Utama Zafrul for your presence to unveil the 5-Year Strategic Roadmap of Labuan IBFC. We believe that this important milestone will set forth a new and exciting chapter in the Labuan IBFC’s journey and we are happy to share this historic event in the development of the Labuan IBFC, with you.


Thank you.
Wabillahi taufiq wal hidayah. Wassalamualaikum wbt