Malaysia's Labuan International Business and Financial Centre (Labuan IBFC) freezone has announced a 50% increase in licensing application approvals for the first half of 2020, making a total of more than 800 licensed entities currently operating in Labuan IBFC.
"Notwithstanding the challenges and movement restrictions due to the covid-19 outbreak, we are glad to continue to have growth, an increase in licenses approved during the first half of 2020," said Danial Mah Abdullah, director-general of Labuan FSA in his welcome speech at the third Asian Captive Conference (ACC) today.
"Having said that, we remain cautious on the outcome in the second half of the year but am optimistic that we will pull through this covid-19 rollercoaster year on a positive note," he went on to say.
We remain cautious on the outcome in the second half of the year but am optimistic that we will pull through this covid-19 rollercoaster year on a positive note."
He added, "We in Labuan FSA are cognisant of the covid-19 situation. Other than the safety precautionary measures, we have provided Regulatory Reliefs aimed at alleviating the operational difficulties of the market. We will continue to support the market players during this difficult and challenging time as we navigate the "new normal" together. We are always engaging with our players on this."
Mah said that Labuan IBFC as a midshore jurisdiction takes the approach of proportionality in regulation and market engagement, noting this philosophy is appropriate during these times of change and uncertainty, and will serve the jurisdiction well moving forward.
Labuan IBFC is a "whitelisted" jurisdiction by the EU and deemed largely compliant by the Organisation for Economic Co-operation and Development (OECD). With this, coupled with Labuan FSA's continued commitment to adhere to the highest regulatory and supervisory standards, Mah is confident that the global financial services industry will continue to regard Labuan IBFC positively even during these unprecedented times.
Meanwhile, Labuan IBFC's CEO, Farah Jaafar-Crossby, said, "The growth in licensed entities definitely evidences Labuan IBFC's relevance as intermediaries continue to look for safe harbour jurisdictions, that are well regulated to international standards set by global multilateral organisations."
Specifically in reinsurance, Labuan IBFC continued to see growth in the insurance industry with 11 new licensed being approved of which seven were captive insurance entities, reinforcing its jurisdictional reign in the Asia captive market.
"Captive insurance is certainly growing in size as it now attributes 31.4% of total gross premiums underwritten in Labuan IBFC, amounting to $267.9m with 72.8% of the total captive premiums from international markets," Mah said.
He added: "This is in line with the status of Labuan IBFC as a regional wholesale risk intermediating centre. In fact, for the first half of 2020, 64.5% of total gross written premiums of the reinsurance industry originated from international markets."
"We expect this percentage to increase as we develop Labuan even further as a centre of risk management and reinsurance through innovation. For instance, Labuan IBFC is the only jurisdiction in Asia that offers protected cell companies (PCC)" Mah noted.
He also added that it is a natural progression that as the Labuan community of financial institutions continue to grow, more intra Labuan IBFC trade is effected.
"This is a natural progression of a jurisdiction with more than 800 licensees, with the insurance market representing nearly 30% or 220. As we mature as a financial centre, cross-pollination of businesses is part of a natural development cycle that reinforces a vibrant intra-Labuan business ecosystem for all institutions to partake in," Mah said.