Labuan, a federal territory of Malaysia off the coast of Borneo, has been host to a growing financial services sector for over 25 years. A sector that has continued to steadily and assuredly grow despite the global economic turmoil of the last decade, and that is carving itself an important niche in the Asian Pacific financial market.
The Labuan International Business and Financial Centre (Labuan IBFC) was established in 1990 as a route to economic growth. It was envisaged as a centre that would complement the activities of the domestic Malaysian financial market in Kuala Lumpur. The sector has now become fundamental to the Labuan economy and hugely important to Malaysia generally. As Malaysia enhances its trade and investment linkages with the region and other parts of the world, the financial services sector has a crucial role to play in supporting the expansion of Malaysian corporations, intermediating surplus funds from the region to productive investments, and facilitating cross-border capital flows. As individual wealth grows in the region, increasing consumer demand from a larger middle-income population has inspired a raft of more sophisticated and comprehensive wealth management services.
Beginning life as an 'offshore' centre, Labuan IBFC now identifies itself as a 'midshore' financial centre, providing the perfect balance between client confidentiality and stringent regulatory requirements. It is the only international business and financial centre servicing Asia Pacific, and sees itself as the perfect complement to the established financial centres in Asia Pacific, such as Singapore and Hong Kong.
Mr Mah explains that the IBFC's modus operandi was to offer "holistic wealth management options ... both conventional and Islamic wealth management solutions in one convenient location."
He acknowledges the importance of stalwart centres like Hong Kong and Singapore in the global financial arena and therefore is not trying to compete with these established titans of finance. Rather, Labuan IBFC wants to offer a more cost-efficient place to do business in the region and aims to identify gaps in the offerings from the established centres that it can fill.
For example, Labuan IBFC can offer a more cost-efficient place for back office services while also providing more specialist solutions that other IFCs do not provide.
In fact, Labuan IBFC is the only common law jurisdiction in the ASEAN region to offer private foundations - a civil law...