The jurisdiction's key focus areas of Islamic finance, captives and digital financial services record significant achievements

KUALA LUMPUR, Malaysia, April 18, 2023 /PRNewswire/ -- The Labuan International Business and Financial Centre (Labuan IBFC) Market Report 2022 was unveiled at Sasana Kijang, Bank Negara on 14 April 2023. The report provides an in-depth analysis of key business sectors for the year under review and highlights key business trends in the international business and financial centre.

Labuan IBFC Market Report 2022

We are pleased to note a significant increase in the incorporation of Labuan companies, with a 17% y-o-y increase to 532 from 455 previously. This double-digit growth in the jurisdiction's standard barometer for business activity signifies market recovery for Labuan IBFC as a whole.

The Labuan insurance industry experienced a rally, with underwritten premiums recording a five-year high of USD1.7 billion and underwriting margin rebounding by 19.5%. This contributed to the sector's profitability growing by 6% to USD216 million.

Banking remains the mainstay of Labuan IBFC, which has evolved accordingly to cater to increased regulatory requirements and digitalisation. As such, we are pleased to report that the Labuan banking industry grew in 2022, as three new banking licences were approved, including two for digital banking, bringing the total number of banks to 68.

A focus sector of the jurisdiction, Islamic financing, performed outstandingly. Labuan Islamic bank financing, which constitutes 10% of Labuan bank financing, grew by 25% to USD 2.1 billion. Islamic assets also increased considerably by 21% to USD2.3 billion.

Digital financial services (DFS) continued to record rapid expansion with a 20% growth. During the year, 29 approvals were granted to conduct DFS business. These included approvals to operate digital banking businesses, exchanges, digital currency trading platforms, credit token businesses and e-payment systems.   

Labuan captives experienced growth, with five new entrants approved to underwrite agricultural risks and fire-related perils, bringing the total number of captives to 67. Total gross premiums for the captive sector recorded an increase to USD570.9 million.

Labuan international commodity trading companies emerged as a sector to watch, having recorded its largest-ever trading amount of USD51.1 billion, a significant growth of 31%. This is largely due to the consistently high prices of global oil and liquefied natural gas in recent times.  

The reopening of international borders post pandemic lead to a revival of the leasing and capital market sectors.  Seven new entities were approved for fund managers and securities licenses, bringing the total number to 45 and 23 respectively, while 18 new leasing companies were approved, involving 144 new leasing transactions.

Datuk Iskandar Mohd Nuli, Executive Chairman cum CEO of Labuan IBFC Incorporated Sdn Bhd (Labuan IBFC Inc.), the official promotional and marketing arm for the jurisdiction, commented, "Labuan IBFC Inc. will continue promoting the jurisdiction's key propositions as outlined in the Labuan IBFC Strategic Roadmap 2022-2026 via masterclasses, briefings and seminars. We will also continue to ensure our presence at key regional marketing events as well as sign MoUs with select partners for market development purposes."  

Labuan IBFC has built a solid foundation based on its banking and insurance expertise, as well as the provisioning of end-to-end professional services. As the jurisdiction enters its third decade of operations, it has pivoted towards newer focus areas such as Islamic finance and digital financial services while further identifying emerging sectors. This will enable the jurisdiction to meet the multifaceted demands of an increasingly complex and connected business world.  

For further details, the Labuan IBFC Market Report 2022 can be accessed here.