LABUAN, Oct 7 — Labuan has transformed and diversified into a regional business and financial centre with substance from an international offshore financial centre in the 1990s, Labuan Financial Services Authority (Labuan FSA) director-general Nik Mohamed Din Nik Musa said.
“The combination of a strong leadership team with experienced supervisory and regulatory knowledge and the extensive industry experience has given the strength for Labuan IBFC to remain steadfast, continue to grow and gain traction in the international financial business arena,” he told Bernama in an interview in conjunction with Labuan FSA 25th Anniversary this year.
He said this was also mainly attributable to the consistent pursuit by Labuan FSA to maintain the financial stability and pro-growth policies through the development and implementation of various initiatives to further enhance the value propositions and to maintain the status of Labuan as a well-regulated financial centre.
Nik Mohamed Din said several significant milestones and achievements have been achieved over the past 25 years with the key ones were conformity to international standards of which, Labuan FSA has taken a bold step to reposition Labuan IBFC.
He said the first one was in 2008 to transform the traditional offshore financial centre to become a vibrant international business and financial centre and to enhance its competitive edge.
“A holistic review of the legislation and tax framework was undertaken to enhance the competitiveness of Labuan IBFC and to strengthen the centre with a sound and solid legal framework in line with international standards on transparency and supervisory cooperation,” he said.
He said the second one on the new tax changes in 2019, including the abolishment of RM20,000 tax election by Labuan entities, the taxing of trading activities at the preferential rate of three per cent of the net audited profits and the requirement of Labuan entities to have substantial activities in the island in order to avail to the Labuan tax incentives, was to ensure the long-term sustainability of Labuan IBFC.
“With the amendments made to Labuan legislations, Labuan is complying to the international standards as set by Organisation for Economic Co-operation and Development’s (OECD) FHTP (Forum on Harmful Tax Practices),” he said.
Nik Mohamed Din said Labuan FSA and the industry had undergone several international assessments on Labuan IBFC in the last 25 years including the International Monetary Fund’s (IMF) Financial Sector Assessment Programme in 2002 and 2012-strong legal and regulatory framework, and OECD FHTP in 2017-not harmful.
He said other assessments were Peer Review Assessment under Global Forum on Tax Transparency and Exchange of Information in 2011 (Phase 1), 2014 (Phase 2) and 2019 (Phase 2-Second Round)-largely compliant, and Asia/Pacific Group on Money Laundering (APG) and Financial Action Task Force (FATF) Assessment in 2007 and 2014-low risk jurisdiction and Accepted into FATF Membership.
“The recognition by international regulatory bodies such as IMF/World Bank, APG, FATF and OECD with a positive rating signify Labuan IBFC as in among the ranks of other major business centres in the region,” he said.
He said Labuan FSA is now a member of eight international organisations that promoted high regulatory standards among international financial centres and has signed 23 memorandums of understanding with peer regulators across six regions to foster closer co-operation and collaboration in regulatory and supervisory areas. — Bernama