Labuan IBFC offers competitive packages

The maritime industry should be made more aware and take advantage of the Labuan International Business and Financial Centre (Labuan IBFC) with its complete and competitive shipping packages for the industry.
Labuan IBFC Inc Sdn Bhd chief executive officer David Kinloch said they offered a complete package or a one-stop centre with banking, leasing, ship registry and insurance services.
“Additionally, the products and services here are very competitive in terms of cost structure, which is expected to benefit shipping companies especially those that are doing international voyages,” he told StarBiz.
These benefits are results of four new Acts that became the law since Feb 11. These comprehensive amendments were made to four existing laws which changed financial services and businesses conducted in Labuan.
Labuan IBFC, established about 20 years ago, has also been through a re-branding exercise that saw the establishment of Labuan Inc that is responsible to promote Labuan as a business and financial centre.
Labuan Financial Services Authority (Labuan FSA), on the other hand, focuses on its regulatory functions.
“There are very significant improvements in legislation and financial services in Labuan over the last two years,” he said.
Kinloch said with the new Acts and the setting up of a new Malaysian International Ship Registry, Malaysian shipping companies could now enjoy the competitive tax benefits by registering operating ships out of Labuan provided that the operations were carried out outside Malaysia or in Labuan.
“Both foreign and Malaysia-based shipping companies can enjoy tax benefits such as to opt for 3% of net audited profit or a flat rate of RM20,000 instead of the usual 25%.
“Furthermore, under Malaysia’s double tax agreement and limited shipping agreements, Labuan-registered vessels may benefit from paying reduced or even no tax in the jurisdictions they visit,” he said.
In terms of leasing, Kinloch said Labuan had an interesting structure. In many other countries, leasing was only subjected to ships and aircraft but in Labuan, leasing was also open for other types of heavy equipment (including offshore oil and gas structures).
According to Bank Negara, the leasing sector would continue to be the strong driver of the Labuan IBFC which saw in its financial year ended Dec 31, assets leased under the offshore jurisdiction grow by 23.9% to RM69.8bil from a year ago with the increase in the number of leasing companies by 13.3% to 136 companies.
Kinloch said the change in the onshore insurance Act in April last year also allowed shipping and airlines that carried goods out and into Malaysia (international freight movement) to insure directly with Labuan insurance companies.
Previously, these shipping lines and airlines had to insure with a Malaysian onshore insurer.
Kinloch said Labuan was also an ideal location to set up a captive insurance business for both local and overseas corporate groups.
Captive insurance companies are established with the objective of financing risks emanating from their parent groups.
Labuan’s captive insurance business refers to when the insured party is a related corporation or associate corporation of the Labuan insurer or the insured party is any other person whom the Labuan FSA authorises to provide insurance or reinsurance.
Captive housed in Labuan can also enjoy minimum tax. Kinloch said Labuan IBFC Inc was working hard to carve its name internationally.
“Last year, we did about 100 seminars and about the same this year so far. We have some incredible advantages that we are bringing to the market,” he said, adding that there were about 92 countries that claimed to have international business and financial sector jurisdictions.(Source: The star)

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