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LabuanLabuan As an International Offshore Financial CentreAs an International Offshore Financial Centre

DANIAL MAH ABDULLAHDANIAL MAH ABDULLAHDIRECTOR, LOFSADIRECTOR, LOFSA

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Location – Proximity to key Asian capitals

MALAYSIA

SOUTHSOUTHCHINACHINASEASEA

Labuan

East Malaysia

INDONESIINDONESIAA

JAPANJAPAN

SOUTHSOUTHKOREAKOREA

Hong Hong KONGKONG

TAIWANTAIWANCHINACHINA

INDIAINDIA

AUSTRALIAAUSTRALIA

West CoastSabah

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History

•Labuan is not a sovereign state

•Part of Sabah

•Declared as F.T. on 16 April 1984

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Labuan IOFC

Established as an IOFC by the Malaysian Government in 1990Objectives

Complement Kuala Lumpur to turn Malaysia into a regional financial centrePromote the economic development of Labuan and its vicinity

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Offshore Jurisdictions

Western Samoa

Vanuatu

Nauru

Cook Island

Western Samoa

Vanuatu

Nauru

Marshall Islands

Hong Kong

Singapore

Seychelles

Mauritius

Oman

Bahrain

Israel

Cyprus

Austria

Liechtenstein

Netherlands

Luxembourg

Isle of ManIrish RepublicIreland

Jersey

Alderney

Switzerland

Andorra

Gibraltar

Madeira

Canary Is.

Liberia

Monaco

Malta

Jordan

British Virgin Is.AnguillaSt. KittsNevisSt. Vincent & GrenadinesBarbados

Uruguay

Belize

Aruba

Bahamas

Berda

Turks & Caicos Is.

Cayman Is.

Costa Rica

Panama

Antilles

Dublin

Antigua

Labuan

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LOFSA

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Ministry of Finance

OffshoreDomestic

BNM SC LOFSA

BankingInsuranceCapital MarketsRegistrar

BankingInsurance

Capital Markets

R O C

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Labuan Offshore Financial Services Authority (LOFSA)

Established on 15 February 1996 Responsible for:

developing national objectives, policies and sets prioritiesdeveloping and promoting offshore business in Labuanadministering and enforcing legislationsincorporating and registering companies

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LOFSA

Prior to LOFSA, offshore activities managed and supervised by government agencies –

BNM - Banking & insurance

SC - Management of fund related activities

ROC - Registration of offshore companies/ trust companies

IRB - Tax

MIDA - Promotions

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Mission Statement

LOFSA shall act as a one-stop agency to realize the Government’s vision to develop Labuan as a premier IOFC by ensuring the highest level of integrity, commitment and professionalism

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Organisation Chart

MINISTER OF FINANCE

MEMBERS OF AUTHORITY

DIRECTOR-GENERAL

RESEARCH &STRATEGIC PLANNING

DEPARTMENT

CORPORATE SERVICES

DEPARTMENT

REGULATION DEPARTMENT

LEGAL &COMPLIANCEDEPARTMENT

CORPORATE AFFAIRS

DEPARTMENT

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THE BUSINESSES

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CHARACTERISTICS OF LABUAN IOFCCHARACTERISTICS OF LABUAN IOFC

INDEPENDENT LEGAL FRAMEWORK

INTEGRATED OFFSHORE FINANCIAL SERVICES

OFFERS BOTH CONVENTIONAL AND ISLAMIC PRODUCTS

MOSTLY NON-RINGGIT BUSINESS, RINGGIT?

DEALS MAINLY WITH NON-RESIDENTS

EXCHANGE CONTROL FOR DEALINGS WITH RESIDENTS

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Regulatory Framework

Offshore Companies Act 1990Labuan Trust Companies Act 1990Offshore Banking Act 1990Offshore Insurance Act 1990Labuan Offshore Business Activity Tax Act 1990Labuan Offshore Financial Services Authority Act 1996Labuan Offshore Trust Act 1996Labuan Offshore Limited Partnerships Act 1997Labuan Offshore Securities Industry Act 1998

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Business in Labuan

BankingOBA

BankingOBA

SecuritiesLOSIA

SecuritiesLOSIA

Trust CoLTCA

Trust CoLTCA

Purpose VehiclesOCA, LOLPA,

LOTA

Purpose VehiclesOCA, LOLPA,

LOTAInsurance

OIAInsurance

OIA

CompaniesLimited PartnershipTrusts

LifeGeneralBrokersManagerUnderwritersCaptivesRe-insurer

CommercialInvestmentCreditsDepositsCustodialTransfers

Trust ComTrusteesSecretarial & Accounting

LFX

Funds Mgmt.

Islamic Element

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Business in Labuan

Offshore CompaniesInvestment holdingsTrading

BankingCredit facilitiesInternational trade financeAdvisory servicesCapital market activities

Capital marketIssuances

InsuranceReinsuranceCaptive insuranceTakaful

LeasingOperational leaseFinancial lease

Fund Management Overseas investments

Tax planningIslamic FinanceInternational Shipping Registry (ISR)

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Progress of Labuan IOFC

40

20

3,842

14

45

107

56

As at 31 July 2003

39

18

3,426

12

34

100

54

2002

32

20

1,748

3

6

35

62

1998

17Trust Companies

873Other Trading & Non-Trading Companies

25Auditors and Liquidators

3Fund Managers

-Leasing

9Insurance & Insurance Related

52Banking

1996Year

Activities

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Banks By Origin of Country

Malaysia (14)

Japan (4)UK (5)Belgium (1)Canada (1)

Aust (4)

France (6)

USA (4)

Germany (4)S'pore (3)

Swiss (2)Nederland (2)

Hong Kong (2)S Arabia (2) Taiwan (2)

15 CountriesJuly 03Loan 9.3bDep 3.4 b

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Insurance Companies by Country of Origin

Malaysia (29)

Australia (6)Bermuda (5)

S'pore (7)Sweden (5)

BVI (5)

UK (18)USA (4) Japan (4)

Denmark (2)

H Kong (6)

Ireland (2)

Indo (2)

Others (7)France (2)

Germany (3)

22 Countries ReinsuranceDec 02: 253m

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Labuan International Financial Exchange (LFX)

Launched in Nov 2000

Listing and trading of wide range of financial instruments

Window for foreign investment

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LabuanLabuan International Financial Exchange (LFX)International Financial Exchange (LFX)Progress for LFX Progress for LFX ……

2001 2002 2003(Aug)

Total No. of Listings

1

10

12

2001 2002 2003(Aug)

Market Capitalisation(US Billion)

250 m

1.654

1.920

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LFX - listings today

Serial Islamic Lease Sukuk - First Global Sukuk Inc. (2004)Serial Islamic Lease Sukuk - First Global Sukuk Inc. (2006)Sukuk Al-Ijarah Trust Certificates - Malaysia Global Sukuk Inc. (2007)

SyariahCompliant Instruments

Debt Instruments

Floating Rate Notes - 1st Silicon (Labuan) Inc. (2008)Guaranteed Exchangeable Bonds - TNB Capital (Labuan) Ltd. (2007)RHB BOND - Rashid Hussein Berhad (2007)

Mutual Funds

IDB European Bond Class BIDB Multi-Manager Asia Ex-JapanIDB Multi-Manager Balanced AIDB Multi-Manager Equity AInsinger De Beaufort Zeus (OS)Am-Macquarie Sovereign Plus Fund

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International Stature

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On Par With Best Practices

Member of Offshore Group of Banking Supervisors Member of Offshore Group of Insurance SupervisorsMember of International Association of Insurance SupervisorsAsia-Pacific Group on Anti-Money LaunderingIOSCO

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ISLAMIC BANKING & FINANCE

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A more significant Islamic banking and takaful industry with greater global orientation, and Malaysia/Labuan as regional Islamic financial centre

Domestic Regional International

IIFMAdvisoryBodies

LegislationPlayers

Business, ProductsRe/takaful

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INTERNATIONAL ISLAMIC FINANCIAL DEVELOPMENTS(IIFM)

The International Islamic Financial Market (IIFM)…The International Islamic Financial Market (IIFM)…

Money and capital Money and capital marketsmarkets

ShariahShariahcompliantcompliant

ProductsProducts Match assets Match assets and liabilitiesand liabilities

Improve Improve cooperative cooperative frameworkframework

IIFMIIFM

LiquidityLiquidity

Serves to enhance liquidity on the global front …

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Labuan IOFC – Islamic FinanceIslamic Finance

2001 2002 2003(June)

Offshore Banks - Islamic Assets (US Million)

376.9

465.4

500.9

•• LabuanLabuan IOFC IOFC offers dual banking offers dual banking facilityfacility

•• 2 2 Islamic Banks and 3 Islamic Banks and 3 Islamic InvestmentIslamic InvestmentBanksBanks

Issue of worldIssue of world’’s first:s first:

•• USD600 millionUSD600 millionIslamic sovereign Islamic sovereign SukukSukuk

•• ShariahShariah--compliant compliant international international investmentinvestment-- linked linked takafultakaful productproduct

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INTERNATIONAL ISLAMIC FINANCIAL DEVELOPMENTS(MALAYSIA ISLAMIC GLOBAL BOND)

Issuance of the First Sovereign Global Islamic Bond… Issuance of the First Sovereign Global Islamic Bond…

Federal Land Commissioner SPV

Government

Trust Certificate

IssueFederal Land

Commissioner

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GLOBAL RECOGNITION

Best Asian Sovereign Bond of Year 2002 Best Asian Sovereign Bond of Year 2002 -- EuromoneyEuromoney

Deal of the Year 2002 Deal of the Year 2002 –– Institutional InvestorInstitutional Investor

Most Innovative Capital Market Transaction 2002 Most Innovative Capital Market Transaction 2002 –– Finance AsiaFinance Asia

Most Innovative Bond Deal 2002 Most Innovative Bond Deal 2002 AsiamoneyAsiamoney

Best Structured Islamic Financial Instrument Best Structured Islamic Financial Instrument –– Islamic BankerIslamic Banker

Most Innovative Bond Issue Most Innovative Bond Issue –– The AssetThe Asset

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Other AttractionsOther Attractions

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Outdoor ActivitiesOutdoor Activities

ApproachApproach

Long term agenda

Reputation and Credibility

Consultative and pro-active

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VISIT LABUAN IOFCwww.www.lofsalofsa..govgov.my.my