Labuan International Business and Financial Centre (Labuan IBFC) is now repositioning itself as a midshore centre amid further increasing its presence in the region.
Chief Executive Officer, Mr Saiful Bahari Baharom said there has been a lot of bad press about offshore centres on tax evaders and related activities.
As a midshore centre, barriers for entry into Labuan was lower, but once the companies get in, they have a robust regulatory framework, bidding to international best practices and standards which include anti-money laundering and anti-terrorism, he said.
“So, basically, if you want to get into Labuan is easy, but once you are in, you have to maintain your integrity and your legitimacy, almost the same with onshore (monitored by the central bank). That is why we consider ourself as as midshore.
“We are not a place for you to escape tax, not a place for you to do hanky panky. We are here to facilitate your businesses. We are here to facilitate how you manage your wealth but not to run (away) from taxes,” he told Bernama.
There has been a rise in midshore jurisdictions around the world, which incorporates elements of both onshore and offshore jurisdictions, reflecting a dire need for transparency in these centres.
For this year, Labuan IBFC has been focusing on wealth management products and services as it recognised the potential growth in this sector, with the rising of high networth individuals (HNIs) in Malaysia over the years, Saiful said.
“I believe the domestic market is now ready. The demand for wealth management services is there. There is enough HNIs to enable a sustainable market through various products and services,” he said.
It is estimated that the number of Malaysian HNIs will double from its current 32,000 to 68,000 people in 2015; with their net worth increasing in tandem from US$140 billion to US$330 billion.
The demand will not only come from Malaysia but also from the region, especially from Asean countries, in the process of integrating towards a single economy in 2015.
“If you look at the entire 600 million population in Asean, if five per cent of them become millionaires, can you imagine the numbers.
“So, the rising economy, the increase in gross domestic product and the rising mass affluent of the population in Asean, they are the biggest drivers for this wealth management business,” he said.
Saiful said the Asean integration would bolster economic activities across the Southeast Asia region and the people need a vehicle to facilitate all the businesses in the region.
“For example, you are rich and your businesses are all around Asean. Tou have an office block in Hanoi, your headquarters is in Singapore, your factory is in Indonesia and your accountants and information technology department are in Cyberjaya.
“Let’s say a company in Labuan oversees all these properties and your wealth is controlled by a Labuan foundation, it will all be centralised,” he said.
As of last year, Labuan foundations increased by 62.5 per cent to 65 foundations from 40 in 2011.
During the year, registration of companies there also recorded a growth of 8.9 per cent or 779 companies, bringing the total number of companies to 9,487 as at December 2012.
As at May 31, 2013, there are 9,811 Labuan-based companies, 60 banks, 206 insurance firms, 38 trust companies, 280 leasing companies, 81 foundations and 15 Labuan International Trading Companies.
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