2006 - Labuan International Financial Exchange

Transcription

Labuan IOFC
Capturing Global Capital Flows
annual report 2006
Mission Statement
LOFSA shall act as a one-stop agency to realise the Government’s vision to develop
Labuan as a premier IOFC by ensuring the highest level of integrity, commitment
and professionalism.
Contents
Chairman’s Statement
Developmental Review
2
64
Corporate Profile
Box Article
8
72
Capturing Global Capital Flows
In 2006, the significant financial structures and transactions conducted out of Labuan IOFC include:
•
Listing of USD750 million world first exchangeable equity-linked sukuk
•
USD505 million finance for purchase of aircrafts by a regional airline
•
USD2.6 billion private funds for investments in the region
•
USD1.1 billion lease structures for financing capital goods in the oil and gas, and aviation industries
•
USD3.5 billion debt securities issuance by corporations
•
USD1.1 billion investments through Labuan companies into various countries
•
USD3.4 billion capital (non-securities) raised through Labuan companies
Business Activities of Labuan IOFC
32
Supervision of Offshore Financial Institutions
Financial Statements
78
Appendices
58
102
The year 2006 marks the Labuan Offshore Financial Services
In the more recent years, the Labuan IOFC has developed into
Authority’s (LOFSA) tenth year anniversary. The establishment
an active international centre for Islamic finance, regionally and
of LOFSA 10 years ago was a strategic move by the Government
worldwide and is now home for innovative Islamic financial
to streamline the administration and supervision of the Labuan
solutions. This development is supported by the necessary
International Offshore Financial Centre (IOFC). Its establishment
financial infrastructure that provides the foundation for the
has not only significantly expedited the administrative processes
development of Islamic financial services. The establishment of
in the IOFC, but has also contributed towards the significant
the Shariah Advisory Council to advise LOFSA on issues relating
development and growth of the centre. Today, Labuan IOFC is home
to the development of Shariah-approved financial instruments
to over 300 financial institutions, that provide a comprehensive
in Labuan IOFC has paved the way for more efficient and
range of financial services, both conventional and Islamic,
effective introduction of innovative and new Islamic financial
including offshore banking, investment banking, insurance and
instruments. Labuan IOFC also came to the forefront in Islamic
insurance-related activities, investment holding, trust, fund
product development with the issuance of the first global sukuk
management and leasing. These institutions serve more than
by a Malaysian corporation and the sovereign sukuk by the
5,500 offshore companies registered in Labuan IOFC. The
Government of Malaysia, both of which are listed on the LFX. In
ability to attract well-established and reputable international
October 2006, Labuan IOFC achieved another major milestone
financial institutions to the IOFC has been one of the critical
with the primary listing of the world’s first exchangeable and
success factors in LOFSA’s development roadmap for the IOFC.
equity-linked sukuk on the LFX. The USD750.0 million sukuk
In addition, the Labuan International Financial Exchange (LFX)
increased the exchange’s Islamic capital market capitalisation
has further complemented the capital raising activities in the
to USD2.8 billion, representing 18.5% of the total market
IOFC, allowing for listing and trading of financial instruments by
capitalisation of USD15.1 billion.
international issuers especially from the Asia-Pacific region.
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LOFSA ANNUAL REPORT 2006
Today, Labuan IOFC is home to over 300 financial
institutions, that provide a comprehensive range of
financial sevices, both conventional and Islamic...
The success of Labuan IOFC over the last decade is attributed to
in both the onshore and offshore financial markets. Over the
a number of key factors. The conducive business environment
years, the efforts on strengthening and diversifying the financial
and tax regime, the efficient and competitive cost of doing
sector have yielded significant results. In particular, with the
business coupled with the political stability in Malaysia, have
expansion of new areas of activities in the financial services
contributed towards positioning Labuan IOFC as an internationally
sector, it has become an important source of growth and
recognised centre. LOFSA has also put in place a comprehensive
employment opportunities. Labuan IOFC has a complementary
legislative framework, reinforced by strong regulatory regime
role to strengthen the contribution of the overall financial services
and supervisory systems to maintain confidence and preserve
sector to the overall economic performance of Malaysia by
the reputation of the IOFC. The legal infrastructure in Labuan
providing access to a broader and more sophisticated range of
is separate and independent of the Malaysian domestic laws
offshore products and services. Towards achieving this, Labuan
and is comprehensive to deal with all aspects of financial
IOFC is well-positioned to play a bigger role in the area of fund
activities. Labuan IOFC is also endowed with a relatively well-
management and Islamic finance.
developed physical infrastructure and amenities, providing a
strong foundation not only for the development of the IOFC
The development of Labuan IOFC and the dynamism of its
industry but also for the tourism industry and other commercial
players would potentially move to a much higher level with the
activities, in particular the oil and gas industry, in Labuan.
launching of the Malaysia International Islamic Financial Centre
(MIFC) initiative by the Malaysian Government in August 2006.
In an environment of increasing international trade and global
The initiative aims to position Malaysia as a leading centre for the
investment flows, the growth potential of Asia offers investment
offering of Islamic financial products and services in international
opportunities that are manifold. Malaysia’s strategic location
currencies to the global and domestic financial community. The
between the growing economies of China and India, proximity
growth potential of the Labuan IOFC is expected to be further
to regional financial centres as well as close ties with the Gulf
enhanced with the MIFC initiative that seeks to attract global
Cooperation Countries, contributes towards positioning Labuan
investors and strengthen the integration with the international
as a gateway for tapping investment opportunities in the rapidly
financial system. This is demonstrated by the ability for Islamic
growing Asia-Pacific region. Coupled with low operational cost
offshore banks, Islamic divisions of offshore banks, offshore
of doing business and world-class infrastructure, Labuan has the
takaful operators and offshore retakaful operators in the Labuan
potential to become one of the established offshore financial
IOFC to expand their physical operations beyond the Labuan
centres of the Asia-Pacific region.
island to operate on the mainland and conduct foreign currency
business, whilst enjoying the full benefits of the IOFC.
Given the internationalisation of financial activities in the more
globalised and integrated global economy, the transformation of
As competition intensifies amongst the many offshore financial
the Malaysian financial sector has been driven by developments
centres driven largely by the more discerning requirements
of investors, Labuan IOFC has repositioned itself to thrive in
to prompt the appropriate response measures to preserve
this more competitive and dynamic environment through the
stability of Labuan IOFC.
identification of niche businesses, looking beyond traditional
products and services and capitalising on its strengths. Labuan
Players in the Labuan IOFC are well-positioned to reap the
with the conducive legal, tax and regulatory framework and its
benefits from the recent liberalisation of the exchange control
close proximity to the Asian region is well-positioned to take
administration
advantage of the high growth potential of the region which
opportunities in ringgit assets for non-resident investors would
is resulting in increases in the momentum of foreign direct
translate into greater opportunities for product enhancements
investments into the region as well as outward investments
by the offshore players. The combination of global network and
from high growth countries in the region. Malaysian companies
better knowledge of domestic markets of the offshore players
investing abroad are also opening up tremendous opportunities
would naturally strengthen their competitive positions. Efficiency
for Labuan financial institutions. In addition, the Labuan IOFC
gains would also be achieved through greater operational
can leverage on tax treaties signed with 63 countries and its
flexibility for offshore players to facilitate transactions involving
efficient tax legislation to attract the participation of new players
ringgit financial products by non-resident investors. Offshore
and increase the volume of business, in particular the out-out
players are also expected to take advantage of the opportunities
and non-resident business.
emerging as a result of growing trade linkages with the regional
rules
by
Malaysia.
Increased
investment
more flexible exchange control regime. These would emanate
the awareness of Labuan IOFC and its value proposition to
amongst others from the increased flexibility on rules governing
attract new businesses. Towards this end, efforts have been
investment abroad by Malaysian residents and higher limits for
made to enhance the attractiveness of Labuan via a more robust
their foreign currency borrowings.
yet facilitative regulatory framework, strong infrastructure
and efficient and effective delivery systems. A facilitative and
In advancing forward, Labuan IOFC will continue to be transformed.
conducive regulatory and legislative framework will encourage
There will be thorough review of the entire legislation pertaining
the proactive expansion of the breadth and scope of products
to Labuan IOFC to ensure that it is robust and dynamic aligned
and services, whilst ensuring the resilience and stability of the
with the developments and challenges that globalisation brings.
offshore financial system is not compromised to sustain investor
As part of the business review, LOFSA would be expanding the
confidence in the market. As part of this process, LOFSA has
range of products and services available in the Labuan IOFC.
introduced a modified risk-based supervisory framework as an
This entails the introduction of new company structures to
effective mechanism of oversight to evaluate and monitor the
cater for the demands of users in the offshore environment.
financial strength and soundness of the licensed institutions on
The next challenge would also be to capture a greater level
a continuing basis. This will provide an early trigger mechanism
of economic throughput from the business activities facilitated
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economies and with other parts of the world, facilitated by the
LOFSA would also be leveraging on multiple channels to elevate
44
through the IOFC gateway. The new business niches are
envisioned to be the catalyst to spur demand for the services
of professionals including financial, legal, accounting, tax and
other ancillary service providers. This would augurs well for the
future development of offshore financial services.
In conclusion, on behalf of the Members of the Authority, I would
like to thank Members of LOFSA’s International Advisory Panel,
the Shariah Advisory Council and the Task Force for Islamic
Finance, all Government departments and agencies, the offshore
financial institutions, relevant professional service providers
and investors for making 2006 yet another successful year. I
wish to extend our appreciation to Tan Sri Dato’ Md Nor Md
Yusof and Tuan Haji Abidin Arshad whose terms as a Member
of the Authority ended on 22 May 2006 and 1 September 2006
respectively.
I am also pleased to welcome the Authority’s
new members, Dato’ Zarinah Anwar and Dato’ Basiran Saban,
whose terms commenced on 1 June 2006 and 1 February 2007
respectively.
On behalf of Members of the Authority, I would like to thank
LOFSA’s management and staff for their contribution, dedication
and commitment.
Zeti Akhtar Aziz
Chairman
30 April 2007
Corporate Profile
8 Objectives of LOFSA
8 The Authority and its Members
16 Functions of LOFSA
16 International Memberships
17 Organisation Structure
18 International Advisory Panel
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20 Shariah Advisory Council
22 Senior Management
7
Corporate Profile
Established on 15 February 1996 under section 3 of the Labuan Offshore Financial Services Authority Act 1996 (LOFSA Act), the Labuan
Offshore Financial Services Authority (LOFSA) is the statutory body responsible for the development of the Labuan International
Offshore Financial Centre (IOFC).
Objectives of LOFSA
LOFSA has been set up to:
• promote and develop Labuan as a centre for offshore financial services; and
• develop national objectives, policies and priorities for the orderly growth and administration of offshore financial services in
Labuan, and to make recommendations to the Government.
In developing Labuan IOFC in line with these objectives, LOFSA’s two-pronged strategy is to:
• create an integrated offshore financial centre offering a wide range of offshore products and services, including Islamic finance;
and
• provide a legal and supervisory framework for the development of a globally competitive offshore industry.
The ultimate aim is for Labuan to be an active and vibrant IOFC providing integrated offshore financial products and services,
including Islamic finance supported by a conducive legal and supervisory framework that facilitates international business.
The Authority and its Members
LOFSA is governed by a board, known as the Authority, whose members are appointed by the Minister of Finance for a term not
exceeding three years, after which they are eligible for reappointment. The current members comprise business leaders from the
private sector and representatives from the Government and statutory bodies.
The roles and responsibilities of the Authority include setting the directions and policies relating to the conduct of offshore business
activities in the IOFC. The day-to-day administration of LOFSA is entrusted to the Director-General, its chief executive officer.
Members of the Authority are:
Dr Zeti Akhtar Aziz, Chairman
•
Dato’ Zarinah Anwar
•
Datuk Oh Chong Peng
•
Dato’ Mohammed Azlan Hashim
•
Datuk Ali Abdul Kadir
•
Dr A Manaf Hussin
•
Encik Abdul Karim Abdul Jalil
•
Dato’ Azizan Abdul Rahman, Director-General
•
Dato’ Basiran Saban (appointed with effect from 1 February 2007)
•
Tan Sri Dato’ Md Nor Md Yusof (term expired on 22 May 2006)
•
Tuan Haji Abidin Arshad (term expired on 1 September 2006)
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9
11
•
Members of the
Authority
•
•
•
Datuk Oh Chong Peng
•
Dato’ Azizan Abdul Rahman, Director-General
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11
•
Dato’ Basiran Saban (appointed with effect from 1 February 2007)
•
•
•
Dr A Manaf Hussin
•
Corporate Profile
Dr Zeti is the Governor of Bank Negara Malaysia (BNM), a position she has held since May 2000.
Dr Zeti joined BNM in 1985 and served in various senior positions, including Chief Economist, Chief Representative (London Office),
Adviser and Assistant Governor. She was the Deputy Governor from 1998 to 2000, taking on additional responsibilities as Acting
Governor on 1 September 1998.
At BNM, Dr Zeti presided over the formulation of the Financial Sector Masterplan and the consolidation programme of the domestic
banking institutions. During the Asian financial crisis in the late 1990s, Dr Zeti led the BNM team to successfully implement selective
exchange controls to restore stability and promote economic recovery in Malaysia. In the area of Islamic finance, Dr Zeti has been
instrumental in its development both in the domestic and international arena. At the regional level, Dr Zeti worked closely with other
central banks in the East Asian region to strengthen regional financial co-operation.
Dr Zeti holds a BSc in Economics from the University of Malaya and a PhD from the University of Pennsylvania, USA.
Dato’ Zarinah is the Chairman of the Securities Commission (SC), Malaysia, a post she assumed on 1 April 2006. She had served
as Deputy Chief Executive of the SC and a member of the Commission since 1 December 2001. Dato’ Zarinah currently chairs the
Malaysian Venture Capital Development Council and Capital Market Development Fund. She is a member of the Foreign Investment
Committee, Financial Reporting Foundation, National Innovation Council and Institut Integriti Malaysia. Prior to joining the SC, Dato’
Zarinah was Deputy Chairman of Shell Malaysia.
Dato’ Zarinah graduated with an LLB (Hons) from the University of Malaya. She started her career in the Government’s Legal and Judiciary
service where she served as Magistrate, Senior Assistant Registrar, Solicitor in the Public Trustee’s Department and Assistant
Parliamentary Draftsman in the Attorney General’s Chambers.
Datuk Oh Chong Peng
Datuk Oh is the Chairman of Malaysian Plantations Berhad and Land & General Berhad. He sits on the Boards of public and private
companies, such as Star Publications (Malaysia) Berhad, British American Tobacco (Malaysia) Berhad, IJM Corporation Berhad, IJM
Plantations Berhad and Watson Wyatt (Malaysia) Sdn Bhd. He is also a member of the Malaysian Accounting Standards Board, and a
trustee of the Huaren Education Foundation and UTAR Education Foundation.
Datuk Oh started his career with Coopers & Lybrand (now merged into PricewaterhouseCoopers) in London in 1969 and in Malaysia
in 1971. He was a partner of Coopers & Lybrand Malaysia from 1974 until his retirement in 1997.
Datuk Oh was a Director of the Rashid Hussain Group Berhad from 1997 to 2002. He was a Council member (1981-2002) and a past
President (1994-1996) of the Malaysian Institute of Certified Public Accountants. He was also a Government-appointed member of the
Kuala Lumpur Stock Exchange from 1990 to 1996.
He has extensive experience in the corporate sector, including in financial services and investment. He has served as Chief Executive/
Executive Director of Bumiputra Merchant Bank Berhad, Group Managing Director of Amanah Capital Malaysia Berhad and Executive
Chairman of Bursa Malaysia Berhad (formerly known as Kuala Lumpur Stock Exchange) Group.
Dato’ Azlan graduated with a Bachelor of Economics from Monash University, Australia. He is a member of the Institute of Chartered
Accountants, Australia, and Malaysian Institute of Accountants, and is also a Fellow Member of the Malaysian Institute of Directors as
well as Institute of Chartered Secretaries and Administrators.
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Dato’ Azlan is Chairman of PROTON Holdings Berhad, D & O Ventures Berhad, Golden Pharos Berhad and Universiti Darul Iman
Malaysia. He also serves as a Board Member of, amongst others, the Employees Provident Fund, Khazanah Nasional Berhad, Scomi
Group Berhad, Malaysian Industry-Government Group for High Technology and Terengganu Incorporated Sdn Bhd.
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Corporate Profile
Datuk Ali is Chief Executive Officer of DIG Asia Sdn Bhd. He also sits on the boards of several public and private companies, such
as Milux Corporation Berhad, Airocom Technology Berhad, Jobstreet Corporation Berhad, Microlink Solutions Berhad and Automotive
Centre of Excellence Sdn Bhd.
Datuk Ali served as Chairman of the Securities Commission, Malaysia from March 1999 to February 2004. He was a member of national
committees that included the National Economic Consultative Council II, Foreign Investment Committee and Oversight Committee of
the National Asset Management Company. He sat as a trustee of the Financial Reporting Foundation. On the international front, Datuk
Ali was on the Executive Committee of the International Organisation of Securities Commissions (IOSCO) and Chairman of IOSCO’s
Asia-Pacific Regional Committee and the Islamic Capital Market Task Force. He was also a trustee of the Accounting and Auditing
Organisation for Islamic Financial Institutions from November 2000 to October 2003.
Datuk Ali was a former President of the Malaysian Institute of Certified Public Accountants (MICPA) and chaired the Executive
Committee and Insolvency Practices Committee. He also co-chaired the Company Law Forum.
Datuk Ali is a Fellow of the Institute of Chartered Accountants in England and Wales (ICAEW) and a member of the MICPA. He is the
Honorary Advisor to ICAEW Malaysia, Honorary Fellow of the Institute of Chartered Secretaries and Administrators (UK) and Honorary
Member of the Malaysian Institute of Directors.
Dato’ Basiran Saban
Dato’ Basiran is the Chief Executive Officer of Labuan Corporation, a position he has held since December 2006.
Prior to joining Labuan Corporation, Dato’ Basiran was the District Officer of Kinta, Perak. In a career with the Government that
spanned over two decades, Dato’ Basiran had held various senior positions, including as Principal Assistant Director with the Public
Services Department Malaysia, President of the Taiping Municipal Council, Perak, and District Officer of Kerian, Perak.
Dato’ Basiran holds a Masters in Development Administration from Michigan University, USA, and a BA (Hons) from the University of Malaya.
Dr A Manaf Hussin
Dr A Manaf is Head of the Capital Market Unit in the Loan Management, Financial Market and Actuary Division of the Ministry of
Finance (MOF), where he is responsible for the development of policy and supervision of the capital market.
In a career with the Government that began in 1980, Dr Manaf had served with the Economic Planning Unit of the Prime Minister’s
Department, Pahang State Economy Planning Unit and MOF. At the MOF, he held senior positions in units that included the State
Government Unit, Privatisation and Finance Minister Inc Unit and Capital Market Unit in the Loan Management and Financial Policy Division.
Dr A Manaf is a Board Member of Lembaga Perumahan dan Hartanah Selangor and alternate Board Member of Bank Simpanan Nasional.
He holds a Doctorate In Business Administration (Finance) from Universiti Kebangsaan Malaysia and Masters in Business Administration
(Finance) from Oklahoma City University, USA.
Encik Abdul Karim is the Chief Executive Officer of the Companies Commission of Malaysia since 1 November 2005.
He began his public service career as a Deputy Public Prosecutor, Attorney General’s Chambers, in 1983. He was then assigned to
numerous senior positions, which include Senior Federal Counsel at the Inland Revenue Department of Malaysia (now known as
Inland Revenue Board of Malaysia), Deputy Public Prosecutor of the Attorney General’s Chambers in Penang and Perlis, as well as
Sessions Court Judge in Kota Kinabalu, Kuala Lumpur and Melaka.
Encik Abdul Karim was Head of the Criminal Appeals Unit at the Prosecution Division of the Attorney General’s Chambers, Director of
Enforcement with the Securities Commission, and Director of the Enforcement and Legal Division at the Anti-Corruption Agency.
142
He is a member of the Foreign Investment Committee, Financial Reporting Foundation, Malaysia International Islamic Financial Centre
and the Coalition of Malay Economic Bodies.
15
Dato’ Azizan Abdul Rahman
Dato’ Azizan has been Director-General of Labuan Offshore Financial Services Authority since July 2005.
Prior to this appointment, Dato’ Azizan was the Director of Banking Supervision I, Bank Negara Malaysia (BNM). He has been with
BNM since 1979, where his career spanned several positions in the areas of finance, supervision and examination. During his initial
years with BNM, he was on attachment with PricewaterhouseCoopers and Standard Chartered Bank from 1979 to 1983 and 1986 to
1987, respectively. While in BNM, he was a member of the boards and investment committees of several government bodies, including
Kumpulan Wang Amanah Pencen and ERF Sdn Bhd, besides being an Advisor to the Malaysian Accounting Standards Board. He is a
Board Member and Chairman of the Audit Committee of Labuan Corporation, and has been appointed as a member of LDA Holdings.
He also serves as an Exco member of the Malaysia International Islamic Financial Centre.
Dato’ Azizan graduated with a Bachelor’s Degree (Hons) in Accounting from the University of Malaya and Masters Degree in Business
Administration from the University of Queensland, Australia. He is a member of CPA (Australia) and a Chartered Accountant of the
Malaysian Institute of Accountants.
Encik Abdul Karim holds an LLB (Honours) degree from the University of Malaya.
Corporate Profile
Functions of LOFSA
LOFSA has been entrusted with the following functions:
• To administer, enforce, carry out and give effect to the
provisions of the:
- Offshore Companies Act 1990
- Labuan Trust Companies Act 1990
- Offshore Banking Act 1990
- Offshore Insurance Act 1990
- Labuan Offshore Trusts Act 1996
- Labuan Offshore Financial Services Authority Act 1996
- Labuan Offshore Limited Partnerships Act 1997
- Labuan Offshore Securities Industry Act 1998
- any other laws relating to offshore financial services in
Labuan;
•
To ensure that offshore financial transactions are conducted
in accordance with the laws;
•
To process applications for conducting business in Labuan
IOFC;
•
To carry out research and commission studies to deepen and
widen the scope of offshore financial services in Labuan;
•
To conduct promotional programmes and other activities to
enhance the development and growth of Labuan IOFC;
•
To make recommendations for the creation and improvement
of facilities to enhance the attraction of Labuan as a centre
for offshore financial services;
•
To cooperate with offshore financial institutions and industry
associations in Labuan in promoting and improving offshore
financial services; and
•
To advice the Government generally on matters relating to
offshore financial services in Labuan.
International Memberships
LOFSA is a member of several international organisations that
promote a high level of regulatory standard amongst offshore
jurisdictions. These organisations are:
•
Offshore Group of Banking Supervisors (OGBS);
•
International Association of Insurance Supervisors (IAIS);
•
International
(IOSCO);
•
Offshore Group of Insurance Supervisors (OGIS);
•
Asia/Pacific Group on Anti-Money Laundering (APG);
•
Islamic Financial Standards Board (IFSB); and
•
International Islamic Financial Market (IIFM).
Organisation
of
Securities
Commissions
In 2006, LOFSA participated in the annual meetings, conferences
and workshops organised by the organisations above.
Organisation Structure
LOFSA is structured into two core areas namely the Supervision and Management, and the Business Strategy Divisions. The structure
enables LOFSA to effectively deliver services to the offshore community and potential clients within the regulatory framework while
complying with international standards.
Minister of
Finance
Advisory Committee
Members of Authority
• International Advisory Panel
• Shariah Advisory Council
Audit & Risk Management
Department
Director-General
Supervision and Management Division
Business Strategy Division
Supervision and
Enforcement Department
Corporate Services
Department
Regulation
Department
Strategic and Development
Department
•
-
• Human Resource
• Finance
• Business Operations
(Banking, Insurance,
Capital Market)
• Strategic Planning
& Research
• Information &
Communication
Technology (ICT)
• Regulation (Banking,
Insurance, Capital
Market)
• Policies/LIS
• Registrar of Companies
Supervision
Banking
Insurance
Capital Market
• Legal Services
- Financial Intelligence/
AML
• Statistics
• Administration
• Islamic Financial
Services
• Business Promotion
• Corporate
Communication &
Customer Services
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Audit & Risk Management
Committee
162
International
Advisory Panel
The International Advisory Panel (IAP) is a consultative body that advises on the strategic direction of
the IOFC relating to business and market development. The Authority appoints members of the IAP.
Dato’ Mohammed Azlan Hashim, Chairman
Dato’ Azlan is an Authority Member of LOFSA. His profile is provided on page 13.
Dato’ Ahmad Johan Mohammad Raslan
Dato’ Johan is Executive Chairman of PricewaterhouseCoopers Malaysia. An Eisenhower Fellow, he has over 25 years of experience in
accounting and auditing, of which ten years were spent in London.
He is Chairman of the Financial Reporting Foundation, which together with the Malaysian Accounting Standards Board, is responsible
for overseeing and improving the overall financial reporting framework in Malaysia. He is also a Director of Putrajaya Corporation,
an Adjunct Professor of the University of Malaya and Chairman of CSR Malaysia, an umbrella body established to drive the country’s
corporate social responsibility agenda.
Datuk Seri Panglima Andrew L T Sheng
Datuk Seri Panglima Sheng was Chairman of the Hong Kong Securities and Futures Commission from 1998 to 2005. He was Chairman
of the Technical Committee of the International Organisation of Securities Commissions from October 2003 to September 2005. He
is currently a member of the Governing Council for the International Centre for Education in Islamic Finance, a Board Member of
the Qatar Financial Centre Regulatory Authority and Sime Darby Berhad. He is also Chief Adviser to the China Banking Regulatory
Commission and Adjunct Professor at the University of Malaya and Tsinghua University, Beijing.
Dr Anthony Francis Neoh, SC, JP
Dr Neoh was Chairman of the Hong Kong Securities and Futures Commission. He was also Chief Advisor to the China Securities
Regulatory Commission. His other formal appointments with the People’s Republic of China include being Arbitrator with the China
International Economic and Trade Arbitration Commission, Legal Advisor to the Shenzhen, Xiamen and Fujian Governments, and
Economic Advisor to the City of Tianjin.
George Ratilal
Mr Ratilal is Vice-President (Finance) of Petroliam Nasional Berhad (PETRONAS) and a member of its Management Committee. He sits
on the Boards of several subsidiaries of PETRONAS.
Before joining PETRONAS in 2003, he was with a local merchant bank for 18 years, specialising in corporate finance, where he was
involved in advisory work in mergers and acquisitions and the capital markets. He left the merchant bank as Managing Director, a
position he held for five years.
From Left to Right
•
•
•
•
•
•
•
•
•
Dato’ Mohammed Azlan Hashim, Chairman
Dato’ Ahmad Johan Mohammad Raslan
Datuk Seri Panglima Andrew L T Sheng
Dr Anthony Francis Neoh, SC, JP
George Ratilal
Iqbal Khan
Tan Sri Dato’ Megat Zaharuddin Megat Mohd Nor
Michael Troth
Robert M Tomlin
Iqbal Khan
Mr Khan is currently a Director of Jadwa Bank in Saudi Arabia. He is also Chairman, Business and Economics Committee of the Muslim
Council of Britain and a trustee of the London Muslim Centre.
He was formerly Chief Executive Officer of HSBC Amanah, HSBC Group’s global Islamic financial services division, and was a Board
Member of the HSBC Bank Middle East, Saudi British Bank and HSBC’s Investment Bank in the Middle East and Saudi Arabia. He was
also previously Global Head of Islamic Finance for Citibank, and before that a senior Islamic investment banker in Bahrain. Mr Khan
is the founding member of the Operating Board of the Harvard Islamic Finance Information Program.
He was the Regional Chief Executive Officer/Managing Director of Shell Exploration and Production BV in the Netherlands.
Michael Troth
Mr Troth is the Managing Director and Head of Asia-Pacific and Middle East for Global Wealth Structuring of Citigroup in Singapore.
Prior to joining Citigroup, he spent 13 years with Jardine Matheson Trust Corporation, of which the last ten years were in Asia as
Managing Director of its Asian Trust Business.
Robert M Tomlin
Mr Tomlin is the Vice Chairman-Asia of UBS Investment Bank. He also serves as an independent Director of two listed companies in
Singapore, a Director of Mediacorp and a trustee of the Singapore Management University.
He has also served in Government working committees on finance and education, and was a Board Member of the Stock Exchange
of Singapore and PSA Corporation.
19
Tan Sri Dato’ Megat Zaharuddin Megat Mohd Nor
Tan Sri Dato’ Megat Zaharuddin is Chairman and Director of Maxis Communications Berhad, Chairman of MNI Berhad and Takaful
Nasional Berhad. He also sits on the boards of Malayan Banking Berhad, Mayban Fortis Holdings Berhad, Mayban General Assurance
Berhad, Mayban Life Assurance Berhad, Mayban Life International (Labuan) Ltd, Capital Market Development Fund and the International
Centre for Leadership in Finance.
184
Shariah Advisory
Council
The Shariah Advisory Council (SAC) is a consultative body that reviews, advises and endorses
Shariah matters pertaining to Islamic financial products and services. Members of the SAC are
appointed by the Authority.
Dr Mohd Daud Bakar, Chairman
Chief Executive Officer, International Institute of Islamic Finance and President, Amanie Business Solutions Sdn Bhd
BA (Hons), University of Kuwait, UAE
PhD, University of St Andrews, United Kingdom
Dr Mohd Daud was formerly an Associate Professor in Islamic Law and Deputy Rector at the International Islamic University Malaysia.
He is a member of the Shariah Advisory Council of many financial institutions in Malaysia and around the world, including Bank
Negara Malaysia, the Securities Commission, International Islamic Financial Market, Accounting and Auditing Organisation for Islamic
Financial Institutions and Dow Jones Islamic Market Indexes.
Dr Ahmed Ali Abdalla, Deputy Chairman
Secretary General, Higher Shariah Supervisory Board, Bank of Sudan
LLB Shariah
LLM Shariah
PhD, University of Khartoum, Sudan
Dr Abdalla is a Shariah Council Member of the Sudan Council for Fatwa, Higher Shariah Supervisory Committee for the Banks and
Financial Institutions of Sudan, Shariah Supervisory Committee for the International Association for Islamic Banks, Accounting and
Auditing Organisation for Islamic Financial Institutions and Bar Association of Sudan. He also represents the African region on the
Shariah Supervisory Committee, International Islamic Financial Market.
Dato’ Dr Abdul Halim Haji Ismail
Executive Director, BIMB Securities Sdn Bhd
BA (Hons) in Economics, University of Malaya
PhD, University of Oxford, United Kingdom
Dato’ Dr Abdul Halim was Dean of the Faculty of Economics at Universiti Kebangsaan Malaysia before joining Bank Bumiputra Malaysia
Berhad. He was Chairman of Bank Islam Malaysia Berhad and the boards of its subsidiary companies. He is also a member of the
Shariah Advisory Council of Bank Negara Malaysia and the Securities Commission Malaysia.
Dr Abdullah Ibrahim
Member of Shariah Supervisory Council, Syarikat Takaful Malaysia Berhad and Bank Islam Malaysia Berhad
Diploma in Education, University Ain Al-Shams, Egypt
BA Shariah, Al-Madinah University, Egypt
MA, Al-Azhar University, Egypt
PhD, Al-Azhar University, Egypt
Dr Abdullah had been a lecturer at the Department of Shariah and Law, Academy of Islamic Studies, University of Malaya. He also
taught Islamic Jurisprudence at the Islamic Institute of Kedah Darul Aman. He was a committee member of the National Fatwa for
Islamic Religious Affairs Malaysia.
From Left to Right
•
•
•
•
•
•
•
Dr Mohd Daud Bakar, Chairman
Dr Ahmed Ali Abdalla, Deputy Chairman
Dato’ Dr Abdul Halim Haji Ismail
Dr Abdullah Ibrahim
Professor Madya Dr Ahmad Shahbari @ Sobri Solomon
Dr Hussein Hamed Hassan
Dr Mohamed Ali Elgari
Professor Madya Dr Ahmad Shahbari @ Sobri Solomon
Executive Chairman, Pusrawi Corporation Sdn Bhd
BA Shariah, Al-Azhar University, Egypt
MA in International Studies, Fairlaigh Dickinson University, USA
MPhil, New York University, USA
PhD, New York University, USA
Dr Ahmad Shahbari is a member of the Shariah Supervisory Council of Syarikat Takaful Malaysia Berhad, Bank Islam Malaysia Berhad
and Syarikat Takaful Indonesia. He was a lecturer in the Department of Shariah, Universiti Kebangsaan Malaysia, before joining the
Kulliyah of Economics and Kulliyyah of Law, International Islamic University Malaysia. He was also a member of the Islamic Religious
Council of Selangor for 22 years.
206
Dr Hussein Hamed Hassan
21
Dr Hussein is an Azharite scholar with a doctorate in Shariah and a Master of Comparative Jurisprudence. He sits on the Shariah
Advisory Boards of a number of banks and regulatory bodies and serves as an advisor to the presidents of several Muslim countries.
He had been a professor of Shariah for more than 22 years and is the author of numerous books on Islamic law, Islamic finance,
Islamic economics, Art and Social Studies.
Dr Mohamed Ali Elgari
Director, Centre for Research in Islamic Economics, King Abdul Aziz University of Jeddah
PhD in Economics, University of California, USA
An established Islamic economist, Dr Elgari teaches, writes and works with several institutions in the field. His appointments include
being a member of the Academic Committee, Islamic Development Bank of Jeddah, and the Islamic Fiqh Academy of the Organisation
of Islamic Countries, International Islamic Financial Market, Accounting and Auditing Organisation for Islamic Financial Institutions and
Dow Jones Islamic Market Indexes.
Head of Shariah Board, Dubai Islamic Bank, UAE
MA, University of New York, USA
PhD, University of Al-Azhar, Egypt
Senior Management
Director-General
Dato’ Azizan is an Authority Member of LOFSA. His profile is provided on page 15.
Danial Mah Abdullah
Senior Director, Business Strategy Division
Danial Mah Abdullah, previously attached to Bank Negara Malaysia, joined LOFSA in 1997. He holds a Bachelor of Accounting from
the University of Malaya and a Masters in Business Administration from Manchester Business School, England. He is a Chartered
Accountant of the Malaysian Institute of Accountants and Associate of the Institute of Bankers Malaysia. He is also a member of the
Executive Committee of the International Islamic Financial Market (IIFM), Alternate Board Member of IIFM and a member of the Board
of LOFSA Incorporated Sdn Bhd.
He oversees the Regulation as well as the Strategic and Development Departments. The Regulation Department monitors the
business operations and policies covering the banking, insurance and capital market sectors of the IOFC as well as the functions of
the administration unit. The Department also acts as the Registrar of Companies and ensures the submission of business reports by
offshore financial institutions. The Strategic and Development Department is responsible for strategic business planning and research,
Islamic financial services, business promotion and development, as well as corporate communications and customer service.
Sani Ab Hamid
Senior Director, Supervision and Management Division
Sani Ab Hamid joined LOFSA in August 2005 on secondment from Bank Negara Malaysia. He holds a Bachelor of Business Administration
majoring in Finance from Western Michigan University, an MBA in Finance from United States International University and MSc in
Actuarial Science from City University, London.
He oversees the Supervision and Enforcement as well as the Corporate Services Departments. The Supervision and Enforcement
Department undertakes the supervision and enforcement of offshore laws and regulations. It also ensures compliance with best
practices and standards of international offshore jurisdictions. The Corporate Services Department is responsible for the business
support functions of LOFSA covering human resources, finance, policies, information and communication technology.
Sabaruddin Ismail
Director, Corporate Services Department
Sabaruddin Ismail, formerly with Bank Negara Malaysia, joined LOFSA in 1998. He graduated with a Bachelor of Arts in Economics
from the University of Malaya and has a Master of Economics from Boston University, Massachussets, USA.
From Left to Right
•
•
•
•
•
•
•
Danial Mah Abdullah
Sani Ab Hamid
Sabaruddin Ismail
Iskandar Mohd Nuli
Md Yunus Atip
Saiful Baharom
He is responsible for the business support functions of LOFSA covering human resources, finance, information and communication
technology and policies as well as the Labuan International School. He also sits on the board of LOFSA’s subsidiary companies,
namely, LOFSA Incorporated Sdn Bhd and Pristine Era Sdn Bhd, which operates the Labuan International School.
Iskandar Mohd Nuli
Director, Supervision and Enforcement Department
228
He oversees the banking, insurance and capital market supervision functions as well as legal and financial intelligence. He is
responsible for the supervision and enforcement of offshore legislation and regulations, compliance with best practices and standards
promoted by international standard setting bodies, and the legal affairs of LOFSA and Labuan as an IOFC. He is also a member of the
board of LOFSA Incorporated Sdn Bhd and Pristine Era Sdn Bhd.
23
Md Yunus Atip
Director, Regulation Department
Md Yunus Atip, formerly with Bank Negara Malaysia, joined LOFSA in 1996. He graduated from Linfield College, Oregon, USA, with a
Bachelor of Business Administration (majoring in Economics).
He is responsible for the business operations and regulation, administration, registrar of companies and statistics units. The activities
of these units include processing of company registrations and applications for offshore licences, overseeing the operations of
offshore financial institutions and offshore companies, regulating offshore activities, monitoring the functions of the administration
unit as well as managing statistical returns submitted by these institutions.
Saiful Baharom
Director, Strategic and Development Department
Saiful Baharom joined LOFSA in February 2006. He was formerly with the CIMB Group. He holds a Bachelor of Science in Economics
from New Hampshire College, USA, and a Master in Asian Studies from Cornell University, USA.
He oversees the strategic planning and research, Islamic financial services, business promotion, and corporate communication and
customer services units. He is also responsible for formulating the development of LOFSA’s strategic direction as well as managing
its branding and corporate communication initiatives.
Iskandar Mohd Nuli joined LOFSA in 1996 and was formerly with the Legal Department, Bank Negara Malaysia. He holds a Bachelor
of Laws (Honours) degree from International Islamic University Malaysia and was admitted as an Advocate and Solicitor in the High
Court of Malaya.
realising
objectives
Statement of Corporate Governance
26
26
26
27
28
28
28
28
The Authority
Authority Meetings
Accountability and Audit
The Audit and Risk Management Committee (ARMC)
Summary of Activities
Relationship with the Auditor-General
Internal Audit
Enterprise Risk Management (ERM)
25
LOFSA’s Statement of Corporate Governance sets out the
framework and process through which the Authority and
Management ensure sound business operations in accordance
with relevant laws, regulations and best practices.
The Authority
In the hierarchy of LOFSA, the Authority is the highest decisionmaking body. Its membership comprises prominent figures
from the public and private sectors, who are appointed by the
Minister of Finance under Section 5 of the Labuan Offshore
Financial Services Act 1996. Currently, there are nine Authority
Members including the Chairman and the Director-General.
The Authority is committed to ensuring that LOFSA practises
the highest standards of corporate governance, in keeping with
the spirit of the Malaysian Code of Corporate Governance. The
Authority provides the strategic directions, reviews and approves
policies and guidelines for the development of the IOFC, ensures
proper financial and human resource management, and oversees
the management of LOFSA.
Authority Meetings
A total of seven meetings were held for the year 2006.
The agenda and a full set of papers for consideration were
distributed well before each meeting so that the members have
sufficient time to read and study the issues. This ensured that
they were properly prepared for deliberation and discussion on
matters highlighted in the papers. All issues deliberated and
the decisions made at the Authority meetings were minuted
accordingly.
Senior management and external consultants may be invited to
attend the Authority meetings to advise the Authority members
and to provide information and clarification in relation to the
relevant items on the agenda tabled at the Authority meetings.
Accountability and Audit
Financial Reporting
The Authority is committed in ensuring that it provides a clear,
comprehensive, true and fair view of the financial performance
at the financial year-end, primarily through the Chairman’s
statement and annual financial statements in the annual report.
The Authority is assisted by the Audit and Risk Management
Committee (ARMC) in overseeing and ensuring that the financial
statement for 2006 provides a fair assessment of the financial
position and that the financial reporting processes are in
accordance with approved accounting standards.
Internal Controls and Compliance
The internal control system of LOFSA is designed to safeguard
the organisation from fraud, loss or failure in internal processes.
The system covers organisational, financial, operational and
compliance controls, as well as risk management framework. The
internal control system also defines the lines of responsibility
and delegation of authority; documents internal policies and
enhances procedural manuals; and formulates corporate action
plans and the operational budget of LOFSA.
The key elements of the internal control systems of LOFSA are
as follows:
•
Clearly defined delegation of responsibilities to Management
including organisation structure and authority levels;
•
Clearly documented internal policies and procedures
that have been updated to take into account changing
environment, risks and enhancement to processes;
•
Establishment of committees to review and make
recommendations on key areas such as licensing and
business application, assets acquisition and human resource
development initiatives;
•
Periodical reporting by the Management to the Authority on
financial and business performance indicators as well as key
risk issues;
•
Annual audit plan covering audits on all the operational
functions of LOFSA as well as regular follow-up reports on
initiatives implemented to address any deficiencies that
have been highlighted that are reviewed periodically by the
ARMC; and
•
Detailed process for budgeting that incorporates the input
of all operational functions of LOFSA for the preparation of
the annual budget that is approved by the Authority.
Responsibility
The Authority recognises that sound internal controls and risk
management practices are key elements to good corporate
governance. The Authority affirms its responsibility with regards
to the internal control system of LOFSA that includes appropriate
control environment as well as reviewing the adequacy and
integrity of the control systems in place.
In this regard, LOFSA has put in place adequate framework and
processes to identify, evaluate, mitigate, monitor and report
significant risks within the organisation. In addition, the
process includes reviewing and updating the system of internal
controls and procedures that would take into account changes
in the environment.
The Audit and Risk Management Committee (ARMC)
The ARMC comprises four members of the Authority. The ARMC
performs the independent oversight on behalf of the Authority
in maintaining a sound system of internal control. The members
of the ARMC are:
Datuk Oh Chong Peng
Chairman
Member
Member
Member
The functions of the ARMC include reviewing internal and external
audit reports and subsequent follow-up actions on outstanding
issues, reviewing internal and external plans and budget, and
reviewing the annual financial statements before submission to
the Authority. In undertaking its functions, the ARMC is required
to meet at least four times a year and additional meetings may
be convened as and when it is deemed necessary. The ARMC
convened five meetings in 2006.
The Director-General and Head of Audit and Risk Management
Department attends all meetings of the ARMC to provide their
views and input on all matters discussed at the ARMC meetings.
10
26
27
The internal controls systems of LOFSA have been adequate
to ensure that no material events had occurred that would
significantly impact the operations and financial performance
of LOFSA.
The Authority ensures that the Management undertakes such
actions that may be necessary in the implementation of the
policies and procedures approved by the Authority in a manner
whereby all risks have been comprehensively identified
and assessed, and appropriate internal controls have been
implemented to ensure that the significant risks have adequate
mitigation and control measures.
Senior management may also be invited to attend the ARMC
meetings as and when necessary.
Summary of Activities
The ARMC performed its roles and responsibilities in accordance
with its terms and reference during 2006. The main activities
reviewed by the ARMC were as follows:
•
Internal Audit reports covering risk areas as outlined in
the annual audit plan of LOFSA and subsequent follow-up
reports highlighting the initiative to address the deficiencies
arising from the audits;
•
External audit review report by the Auditor-General’s Office;
•
Budget proposal for the following year;
•
Financial reporting including quarterly and annual financial
statements; and
•
Status on risk issues to be addressed that relate to operational,
legal and reputation risks of LOFSA.
Relationship with the Auditor-General
The ARMC ensures that there are formal and transparent
arrangements for maintaining a professional relationship with
the Auditor-General. The main responsibilities relating to this
are included in the terms of reference of the ARMC.
Internal Audit
LOFSA has established an independent Internal Audit Unit with
effect from January 2007. Prior to this, the functions of the
Internal Audit Unit was outsourced to a reputable international
audit firm.
The principle role of the internal audit function is to perform
regular and systematic reviews on the activities within LOFSA
with impartiality, proficiency and due professional care. The
internal auditors report to the ARMC on audit matters.
The internal auditors carry out audit programme focussing on
the management of significant risks and execute audit plans
approved by the ARMC. In conducting their independent audit,
the internal auditors place emphasis on a risk-based auditing
approach. The audit findings and recommendations, which also
highlight areas of non-compliance, are submitted to the ARMC
for review.
Enterprise Risk Management (ERM)
LOFSA has implemented an ERM framework in managing its
risks systematically. The framework guides LOFSA and provides
a structured approach in identifying, evaluating and managing
significant risks.
The Authority, Management and staff of LOFSA are integral parts
of the risk management system. In the ERM framework, the Risk
Management Organisational Structure assigns the responsibility for
risk management and facilitates the process for assessing and
communicating risk issues from operational levels to the Authority.
Ultimate accountability for risk management rests with the
Authority, which provides governance, guidance and oversight.
The Authority also defines the levels of risk that the organisation
accepts. The ARMC assists the Authority in its oversight
role and reports its assessment on the governance and risk
management of LOFSA on a regular basis. The Director-General
is responsible for the implementation of the ERM framework
and its continued application in LOFSA, and for ensuring the
alignment of business and risk strategies and policies. The
Audit and Risk Management Department supports the DirectorGeneral and is responsible for monitoring and reporting role via
the ERM framework.
During the year, LOFSA continued to improve the risk management
processes by undertaking a review of the ERM framework
and risks identified in the risk management system. LOFSA
continuously enhances its internal controls and risk management
infrastructure in keeping with the highest standards of corporate
governance, including strengthening the internal audit function
and the adequacy and integrity of internal controls of LOFSA.
12
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29
serving
demands
33
35
41
42
43
50
52
53
53
55
Offshore Companies
Offshore Banks
Offshore Investment Banks
Islamic Financial Services
Offshore Insurance
Offshore Leasing
Offshore Fund Management
Debt Issuance Activities
Labuan International Financial Exchange
Trust Companies
31
The establishment of LOFSA in 1996 has contributed to the growth in the number of offshore companies incorporated in Labuan IOFC over
the last ten years. Prior to 1996, the total number of offshore companies in Labuan IOFC was 594. A year later, the number of offshore
companies increased to 937, almost doubling the total for the first five years since the establishment of the Labuan IOFC in 1990. Presently,
more than 5,500 offshore companies have been incorporated including 57 offshore banks, 123 insurance and insurance-related, 83 leasing,
23 fund managers, 29 mutual funds and 21 trust companies.
In the initial years, business activities were mainly offshore banking. Since then, the financial activities in Labuan IOFC have further
diversified, with more activities in the areas of offshore insurance and insurance-related, investment banking, leasing as well as capital
market activities. This reflects the effectiveness of the policy changes made to enhance the diversity of the institutions and offshore activities
in Labuan IOFC.
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Offshore Companies
Labuan IOFC continued to remain as an attractive offshore financial centre as evidenced by the increase in the number of registered as well
as operating offshore companies during the year. The total number grew by 10.2% from 5,152 to 5,678 due to an increase in the number
of operating companies of 5.4% or 165 companies, bringing the total to 3,226 from 3,061 in 2005.
Table 1 : Offshore Companies - Number of Registered and Operating Offshore Companies
Offshore Companies
2002
2003
2004
2005
2006
Registered
3,571
4,065
4,620
5,152
5,678
Operating
2,291
2,484
2,690*
3,061*
3,226
Note : * Restated
Chart 3 : Offshore Companies - Number of Registered and Operating Offshore Companies
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Labuan IOFC has shown increased diversity in terms of the types of players as well as countries of origin with representation from more than
80 countries. This development reflects the growing significance and attractiveness of Labuan IOFC as the offshore centre of choice in the
Asia Pacific region among international investors. More than half of the operating offshore companies in Labuan IOFC in 2006 are from the
Southeast Asia and Pacific region, including Malaysia, Indonesia, Australia, Singapore, Thailand, New Zealand and the Philippines. Far East
region was represented primarily by Hong Kong, Korea, Taiwan, Japan and China. In addition, the Americas were represented by companies
originating from North America and the Carribean. Meanwhile, European companies were mainly from the United Kingdom, the Netherlands,
Germany, Switzerland, France and Sweden.
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Offshore Banks
As at end-2006, there were 53 offshore banks, including investment banks, operating in Labuan IOFC. Of the total, 15 were Malaysian-owned
banks, consisting of 11 subsidiaries and four branches, and 38 were foreign-owned, comprising seven subsidiaries and 31 branches.
Total assets of offshore banks rose by 15.5% from USD18.3 billion in 2005 to USD21.1 billion in 2006, mainly due to an increase in loans
and advances as well as investments. As a result, the average assets of offshore banks improved by 22.1% to USD398.3 million (2005:
USD326.3 million).
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Table 2 : Offshore Banks – Sources and Uses of Funds
2004
2005
2006
USD Million
2006
change (%)
share (%)
Sources:
Deposits
6,344.3
4,810.1
5,793.1
20.4
27.4
Deposits and Placements of Banks and Other Financial
Institutions
3,669.6
3,632.8
2,436.9
(32.9)
11.5
Balances due to Head Office and Branches Outside
Malaysia
8,165.3
7,933.7
10,822.3
36.4
51.3
Others
1,727.0
1,895.8
2,058.0
8.6
9.8
19,906.2
18,272.4
21,110.3
15.5
100.0
Cash and Short-term Funds
3,503.2
2,956.9
2,327.7
(21.3)
11.0
Balances due from Head Office and Branches Outside
Malaysia
2,537.9
2,473.3
2,843.0
14.9
13.5
Investments
2,366.9
1,525.3
2,316.8
51.9
11.0
10,778.2
10,369.8
11,938.6
15.1
56.5
Total
Uses:
Loans and Advances
Fixed Assets
Others
Total
12.5
6.1
5.7
(6.6)
0.0
707.5
941.0
1,678.5
78.4
8.0
19,906.2
18,272.4
21,110.3
15.5
100.0
Borrowing from head offices and branches remained the main source of funding for the offshore banking industry (51.3% of total resources),
whilst deposits from non-bank customers accounted for 27.4% of total resources. The utilisation of resources continued to focus on loans
and advances with a share of 56.5% or USD11.9 billion (2005: USD10.4 billion). Due to a growth in deposits of 20.4% and a 15.1% increase
in loans and advances, the industry’s resource gap improved to USD6.1 billion (2005: USD5.6 billion).
Total deposits of offshore banks rose by 20.4% to USD5.8 billion in 2006 (2005: USD4.8 billion). Non-residents remained the largest
depositors accounting for 67.2% of total deposits. Total deposits from residents recorded a significant growth of 36.5% to USD1.9 billion
(2005: USD1.4 billion) due to the internationalisation of Malaysian corporations.
Table 3 : Offshore Banks - Key Data
As at end of
2004
Number of Banks Approved
2005
58
Number of Banks in Operations
59
2006
2006
change (%)
share (%)
57
(3.4)
-
52
56
53
(5.4)
Total Deposits (USD Million)
6,344.3
4,810.1
5,793.1
20.4
100.0
Malaysian-owned Banks
4,245.5
2,777.0
3,385.4
21.9
58.4
Foreign-owned Banks
2,098.8
2,033.1
2,407.7
18.4
41.6
10,778.2
10,369.8
11,938.6
15.1
100.0
Total Loans Outstanding (USD Million)
-
3,041.4
2,418.4
3,048.5
26.1
25.5
Foreign-owned Banks
7,736.8
7,951.4
8,890.1
11.8
74.5
Number of Employees
461
474
475
0.2
100.0
184
146
146
0.0
30.7
Foreign-owned Banks
277
328
329
0.3
69.3
Table 4 : Offshore Banks - Deposits and Loans Outstanding of Non-Bank Customers
2004
2005
2006
USD Million
% change (2006)
Total Deposits
6,344.3
4,810.1
5,793.1
20.4
Residents
4,080.3
1,391.9
1,899.6
36.5
64.3
28.9
32.8
2,264.0
3,418.2
3,893.5
% share
Non-Residents
% share
Total Loans Outstanding
Residents
% share
Non-Residents
% share
13.9
35.7
71.1
67.2
10,778.2
10,369.8
11,938.6
15.1
7,074.5
6,177.7
5,207.0
(15.7)
65.6
59.6
43.6
3,703.7
4,192.1
6,731.6
34.4
40.4
56.4
60.6
37
18
36
The demand for offshore financing in 2006 remained strong, as seen in the expansion of total loans outstanding by 15.1%. Loans
outstanding of Malaysian-owned offshore banks recorded a growth of 26.1% to USD3.0 billion (2005: USD2.4 billion), while foreign-owned
offshore banks recorded an increase of 11.8% to USD8.9 billion (2005: USD7.9 billion). The foreign-owned offshore banks dominated the
market with a 74.5% share at end-2006 (2005: 76.7%).
There was greater participation of non-residents in borrowing activities from or through Labuan offshore banks during the year. The size of
loans outstanding granted to non-residents grew significantly by 60.6% whilst that of residents declined to USD5.2 billion as at end-2006.
Chart 5 : Offshore Banks - Deposits and Loans Outstanding
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Chart 6 : Offshore Banks - Total Assets and Number of Banks in Operations
The financing, insurance and business services sector received the most funding support from the offshore banking industry in 2006,
accounting for 19.9% or USD2.4 billion of total loans outstanding (2005: USD1.6 billion). This was followed closely by the transport,
storage and communications sector at 19.2% or USD2.3 billion (2005: USD1.7 billion). Meanwhile, loans extended to the manufacturing
sector reduced by 7.5% to USD1.8 billion (2005: USD1.9 billion). In 2005, this sector had received the greatest percentage of loans from
the offshore banking industry.
20
38
Table 5 : Offshore Banks - Direction of Lending by Sectors
2004
Loans by Sectors
Mining and Quarrying
2006
USD Million
535.7
230.7
364.3
2006
change
(%)
share
(%)
57.9
3.0
619.9
457.2
474.9
3.9
4.0
Manufacturing
2,651.8
1,923.2
1,779.1
(7.5)
14.9
Electricity, Gas and Water
1,319.0
1,370.8
1,417.4
3.4
11.9
Real Estate
150.1
133.9
222.3
66.0
1.9
Construction
211.3
148.8
305.7
105.4
2.6
Property of which:
Housing
60.3
49.0
76.2
55.5
0.6
152.8
122.3
158.9
29.9
1.3
Transport, Storage and Communications
1,381.8
1,695.3
2,294.2
35.3
19.2
Financing, Insurance and Business Services
1,341.2
1,596.6
2,372.9
48.6
19.9
41.0
46.5
0.0
(100.0)
-
Wholesale and Retail Trade and Restaurants and Hotels
Other Services
Miscellaneous
Total
2,313.3
2,595.5
2,472.7
(4.7)
20.7
10,778.2
10,369.8
11,938.6
15.1
100.0
In 2006, gross non-performing loans stood at 2.8% as compared to 6.2% in 2005, indicating a commendable improvement in loan quality
in the offshore banking system. Generally, the offshore banks in Labuan IOFC continued to adopt prudent lending policies and sound credit
risk management to preserve their asset quality.
39
Agriculture, Hunting, Forestry and Fishing
2005
Table 6 : Offshore Banks - Selected Indicators
2004
Return on Assets (%)
2005
2006
1.4
1.3
1.1
592.0
509.5
503.6
29.3
30.4
29.5
Average Assets per Bank (USD Million)
382.8
326.3
398.3
Pre-tax Profit (Loss) (USD Million)
272.9
241.5
239.2
Pre-tax Profit per Employee (USD’000)
Staff Cost per Employee (USD’000)
Total Assets (USD Million)
19,906.2
18,272.4
21,110.3
Staff Cost (USD Million)
13.5
14.4
14.0
Number of Employees
461
474
475
52
56
53
58
59
57
Pre-tax profit of the offshore banking industry remained stable at USD239.2 million in 2006, due mainly to higher interest expenses. Return
on assets therefore declined from 1.3% in 2005 to 1.1% in 2006.
Chart 7 : Offshore Banks - Profit Before Tax
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The total staff strength in the offshore banking industry remained unchanged as at end-2006. Of the total, 69 staff were non-Malaysians, of
whom 24 were in senior management and 19 in middle management. Malaysians holding senior and middle management positions totalled
39 and 81 respectively.
Table 7 : Offshore Banks - Employment
Staff Position
Senior Management
Middle Management
2004
Supervisory Staff
Others
Total Staff
Others
Total
39
86
140
148
413
22
21
4
1
48
61
107
144
149
461
2005
Senior Management
Middle Management
Supervisory Staff
Others
Total Staff
48
80
134
149
411
23
21
6
13
63
71
101
140
162
474
2006
Senior Management
Middle Management
Supervisory Staff
Others
Total Staff
39
81
122
164
406
24
19
5
21
69
63
100
127
185
475
Offshore Investment Banks
The number of offshore investment banks in Labuan IOFC increased to 13 in 2006. These banks sustained their financial performance,
supported by a rapid growth in total assets and gross income level. The industry achieved an increase in pre-tax profit of 125.9% to USD19.2
million (2005: USD8.5 million), attributable to higher income generated from fee-based activities and prudent cost control. Total assets
grew by 47.4% to USD361.1 million (2005: USD245.0 million), due to an increase in long-term investments and other assets. Long-term
investments formed 53.0% or USD191.5 million (2005: USD92.3 million) of total assets. Consequently, return on assets improved to 5.3%
in 2006 from 3.5% in 2005.
22
40
41
Malaysian
Table 8 : Offshore Investment Banks - Selected Indicators
2004
Return on Assets (%)
2005
2006
6.6
3.5
5.3
184.9
102.4
202.1
Staff Cost per Employee (USD’000)
18.9
18.1
22.1
Average Assets per Bank (USD Million)
21.2
30.6
40.1
9.8
8.5
19.2
Pre-tax Profit per Employee (USD’000)
Pre-tax Profit (Loss) (USD Million)
Total Assets (USD Million)
148.4
245.0
361.1
Staff Cost (USD Million)
1.0
1.5
2.1
Number of Employees
53
83
95
7
8
9
11
10
13
The lending activities of offshore investment banks continued to focus on the financing, insurance and business services sector, with 73.8%
or USD18.0 million (2005: 51.7% or USD12.2 million) of total loans outstanding. This was followed by the real estate sector, representing
22.5% or USD5.5 million (2005: Nil) of total loans outstanding.
Islamic Financial Services
Of the Islamic banks in Labuan IOFC in 2006, three were full-fledged Islamic offshore banks while four were Islamic investment banks. Total
assets of the industry, including Islamic assets derived from the Islamic banks, Islamic investment banks and Islamic window of conventional
offshore banks, were USD1.1 billion, representing 5.3% of total assets of the offshore banking industry.
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Both deposits and financing were lower as at end-2006. Total deposits of Islamic banks stood at USD37.0 million (2005: USD41.0 million)
whilst financing declined to USD257.1 million as at end-2006. Non-residents accounted for 82.2% of Islamic deposits and 72.2% (2005:
71.9%) of total financing. Most of the financing were channelled to the manufacturing and property sectors, which accounted for 28.5%
and 22.8% of total financing respectively.
Offshore Insurance
The offshore insurance sector demonstrated strong growth in all aspects from the number of new licensees and level of capitalisation to
asset size and premiums written. This underscores the increasing role of Labuan IOFC in expanding global insurance capacity.
Labuan IOFC continues to attract a well diversified mix of international licensees originating from 23 countries and jurisdictions, with the
Asia and Pacific region, comprising Malaysia, Singapore, Australia, Indonesia and India, being the largest contributor with 58 licensees
(2005: 51). The second largest group was from Europe, comprising 35 (2005: 32) licensees from the United Kingdom, Ireland, Sweden,
France, Germany, Switzerland and Russia. There were 17 (2005: 13) licensees from the United States of America and the Caribbean. The
remaining licensees were from the Middle East.
Table 9 : Offshore Insurance - Number of Insurance and Insurance-Related Licences
Type of Licence
2004
2005
2006
Life
2
2
1
General
4
4
4
Composite
2
2
2
Reinsurance
24
23
28
Captive
25
29
29
5
6
6
Insurance Manager
Underwriting Manager
Broker
Total
8
9
11
36
37
42
106
112
123
43
The total number of approved licensees carrying out offshore insurance and insurance-related activities in Labuan IOFC increased to 123
as at end-2006 from 112 as at end-2005. There were 18 new licences approved in 2006 (2005: 12), comprising eight insurance brokers,
six reinsurers, two captives and two underwriting managers. In 2006, Lloyd’s of London (Lloyd’s) was granted an underwriting manager’s
licence through its Labuan subsidiary. Lloyd’s presence would enhance the insurance industry business in Labuan IOFC. During the year
under review, seven licensees surrendered their licences, of which three were insurance brokers, two captives, one reinsurer and one direct
insurer.
24
42
The total capitalisation of the offshore insurance industry strengthened substantially to USD465.5 million in 2006 from USD327.2 million in 2005,
a growth of 42.2%. This was due largely to a two-fold increase in foreign shareholding from USD134.4 million in 2005 to USD268.2 million in 2006.
Foreign equity participation surpassed Malaysian capitalisation during the year under review, with a 57.6% share of the industry’s total capitalisation.
Table 10 : Offshore Insurance - Total Capitalisation
Held By
Malaysian
2004
2005
2006
USD’000
share (%)
USD’000
share (%)
USD’000
share (%)
198,327
65.2
192,851
58.9
197,304
42.4
Others
105,851
34.8
134,382
41.1
268,163
57.6
Total
304,178
100.0
327,233
100.0
465,467
100.0
In line with the increase in number of licensees, the industry’s total asset portfolio grew by 25.7%, from USD1.2 billion in 2005 to USD1.5 billion
in 2006. The major assets were fixed deposits and money market instruments, which accounted for 48.7% or USD714.3 million of total assets
(2005: USD482.3 million). For 2006, the total gross premiums written for the non-Malaysian was 53.3% as compared to 50.8% the year before.
Table 11 : Offshore Insurance - Total Assets
Assets
Fixed Assets
2004
USD’000
2005
share (%)
USD’000
2006
share (%)
USD’000
share (%)
22,200
2.2
9,600
0.8
8,502
0.6
Due from Ceding/Related Companies
147,700
14.6
213,894
18.3
215,753
14.7
Fixed Deposits/Money Market
429,328
42.5
482,264
41.4
714,254
48.7
66,792
6.6
68,965
5.9
90,888
6.2
138,201
13.7
177,019
15.2
177,445
12.1
Cash and Bank Balances
Investments
Others
Total
206,770
1,010,991
Note: Figures may not necessarily add up due to rounding
20.4
100.0
214,301
1,166,043
18.4
100.0
259,099
1,465,941
17.7
100.0
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Gross premiums written by offshore general insurers and reinsurers recorded a significant growth of 29.6% to USD655.2 million from
USD505.5 million in 2005. This growth was broad based across all sectors. Significant increases were recorded particularly in the engineering
(oil and gas-related risks) and fire sectors. Premiums written for the fire sector was USD263.8 million (2005: USD213.9 million), while that
of engineering was USD109.1 million (2005: USD48.0 million).
Table 12 : Offshore Insurance - Distribution of Gross Premiums
Total
Total
Marine
225,342
210,571
59,845
46,452
49,157
70,163
436,188
256,728
213,924
69,181
47,957
50,317
124,085
505,464
305,894
349,272
263,820
90,261
109,078
45,961
146,046
655,166
2004
2005
2006
3.2
18.0
23.0
10.5
13.9
36.0
8.4
1.6
23.3
13.2
20.4
15.6
3.2
30.5
127.4
share (%)
(7.9)
2.4
(8.7)
1.6
76.9
17.7
6.9
15.9
29.6
2004
2005
2006
48.3
49.2
46.7
51.7
50.8
53.3
48.3
42.3
40.3
13.7
13.7
13.8
11.3
10.0
7.0
16.1
24.5
22.3
100.0
100.0
100.0
Malaysian
Others
2004
210,846
2005
248,736
2006
Engineering
Motor
USD’000
Miscellaneous
Fire
Year
change (%)
10.6
9.5
16.6
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Table 13 : Offshore Insurance - Distribution of Net Premiums
Year
Total
Fire
Marine
Miscellaneous
Total
40,562
58,619
380,505
46,425
64,572
388,532
55,135
41,824
91,544
474,409
(11.8)
10.4
23.2
Engineering
Malaysian
Others
2004
184,954
195,550
185,197
53,974
42,153
2005
167,472
221,060
178,704
60,961
37,870
2006
199,959
274,450
215,282
70,624
Motor
USD’000
% change
2004
35.7
13.4
26.6
30.6
91.0
2005
2006
(9.5)
13.0
(3.5)
12.9
(10.2)
14.5
10.2
2.1
19.4
24.2
20.5
15.9
45.6
(9.9)
41.8
22.1
% share
2004
48.6
51.4
48.7
14.2
11.1
10.7
15.4
100.0
2005
43.1
56.9
46.0
15.7
9.7
11.9
16.6
100.0
2006
42.1
57.9
45.4
14.9
11.6
8.8
19.3
100.0
In 2006, the net retention ratio (net premium over gross premium) for the industry decreased slightly to 72.4% (2005: 76.9%). The motor
sector continued to record the highest retention ratio followed by the fire, marine and engineering sectors.
The total amount of sum insured generated from life reinsurance business stood at USD3.9 billion in 2006 (2005: USD4.1 billion). The total
premiums received from life reinsurers in Labuan IOFC registered a substantial increase of 87.6% or USD129.3 million (2005: USD68.9 million).
46
Table 14 : Offshore Insurance - Net Retention Ratio (%)
Year
Fire
Marine
Engineering
Motor
Miscellaneous
Total
2004
87.9
90.2
90.7
82.5
83.5
87.2
47
2005
83.5
88.1
79.0
92.3
52.0
76.9
2006
81.6
78.2
50.5
91.0
62.7
72.4
Consistent with overall increases in gross premiums, the earned premium income of the insurance industry as at end-2006 recorded an
increase of 13.8%, to USD430.7 million (2005: USD378.3 million). The ratio of net claims incurred to earned premium income reduced to
58.9% in 2006 from 62.9% in 2005. The improvement in the claim ratio resulted in a higher underwriting margin of 10.4% (2005: 6.0%) or
USD45.0 million (2005: USD22.8 million).
Table 15 : Offshore Insurance - Underwriting Experience
Year
Earned Premium
Income
Net Claims Incurred
Commission
Management Expenses
Underwriting Margin
USD’000
USD’000
share (%)
USD’000
share (%)
USD’000
share (%)
USD’000
share (%)
2004
365,486
203,466
55.7
95,895
26.2
15,626
4.3
50,499
13.8
2005
378,273
237,800
62.9
101,586
26.8
16,134
4.3
22,753
6.0
2006
430,663
253,814
58.9
107,796
25.0
24,067
5.6
44,986
10.4
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Net Claims Incurred
Commission
Management Expenses
Underwriting Margin
The offshore captive insurance business recorded a significant level of activity in 2006, due mainly to business underwritten to insure large
and specialised risks relating to the oil and gas industry. This resulted in an increase of 105.4% in total gross premiums to USD111.7 million
(2005: USD54.4 million).
Table 16 : Offshore Insurance - Distribution of Gross Premiums for Captive Business
Year
Fire
Marine
Engineering
Miscellaneous
Total
385
8,102
11,669
USD’000
2004
3,126
56
2005
4,936
348
73
49,025
54,382
2006
9,693
11,223
60,993
29,803
111,712
2004
(33.2)
(13.8)
198.4
(35.4)
(33.0)
2005
57.9
521.4
(81.0)
505.1
366.0
2006
96.4
3,125.0
83,452.1
(39.2)
105.4
% change
% share
2004
26.8
0.5
3.3
69.4
100.0
2005
9.1
0.6
0.1
90.2
100.0
2006
8.7
10.0
54.6
26.7
100.0
In the offshore insurance broking sector, premiums placement for general and life business in 2006 totalled USD257.9 million (2005: USD225.9
million), most of which (80.1%) were placed by brokers for general insurance. The placements of general business were fairly spread across Malaysian
insurers (38.6%), Labuan insurers (28.5%) and overseas insurers (32.9%) while all the placements of life business were with overseas insurers.
Table 17 : Offshore Insurance - Premiums Placement by Insurance Brokers
2004
2005
USD’000
2006
Labuan
43,842
46,321
58,817
Malaysia
55,690
67,619
79,723
Others
43,663
66,523
68,017
Sub Total
Life Business
143,195
180,463
USD’000
General Business
48
Labuan
-
-
-
Malaysia
-
-
-
68,828
45,413
51,319
Others
Sub Total
Grand Total
68,828
45,413
51,319
212,023
225,876
257,876
206,557
49
Table 18 : Offshore Insurance - Brokerage Earned by Insurance Brokers
2004
General Business
2005
USD’000
2006
Labuan
1,515
1,843
2,655
Malaysia
2,755
3,135
3,737
Others
1,942
3,251
3,435
Sub Total
6,212
8,229
9,827
Life Business
USD’000
Labuan
-
-
-
Malaysia
-
-
-
Others
3,455
3,040
3,944
Sub Total
3,455
3,040
3,944
9,667
11,269
13,771
Grand Total
In tandem with the increased level of activity in the offshore insurance sector, the number of employees in this industry rose to 440 (2005:
386). The number of Malaysian staff increased to 364, mainly at the supervisory level (2005: 309), while the number of non-resident
employees remained almost unchanged at 76 (2005: 77).
Offshore Leasing
In 2006, offshore leasing emerged as one of the highest growing financial services industries in Labuan IOFC. The number of leasing
companies expanded from 69 in 2005 to 83 as at end-2006. During the year, 19 new leasing companies were established while five of the
existing leasing companies discontinued operations. As a result, the cumulative amount of lease financing rose by 9.1% to USD11.9 billion
(2005: USD10.9 billion).
In response to strong demand from the oil and gas sector in the Asian region, 42 leasing companies (2005: 33) were engaged in this sector.
The aviation sector saw 37 (2005: 33) leasing companies venturing into aircraft leasing activities. The offshore leasing facilities offered by
industry players are available in accordance with both conventional and Islamic principles.
Table 19 : Offshore Leasing - Growth
Number of Leasing Companies in Operations
2002
2003
34
50
47.8
47.1
2004
60
2005
2006
69
83
15.0
20.3
10,913*
11,908
52.9
9.1
change (%)
20.0
USD Million
2,891
Asset Leased (Cumulative)
6,254
7,139
share (%)
52.2
116.3
14.2
Chart 12 : Offshore Leasing - Asset Leased and Number of Leasing Companies in Operations
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51
Note: * Restated
50
Offshore Fund Management
During the year under review, there was an increase in the total number of new approvals for private funds. There were 12 (2005: 3) new
registrations and two consents were cancelled, while one private fund surrendered its consent certificate. This brought the total number
of registered funds to 27 (2005: 18) at end-2006. The growth in the number of private funds was mainly due to eight umbrella funds. The
number of public funds was maintained at two. The total approved size of the private funds also grew to USD4.5 billion (2005: USD1.9
billion). One of these funds was Shariah-compliant with a fund size of USD101.0 million.
Table 20 : Mutual Funds - Total Approved Fund Size
2002
2003
2004
2005
2006
USD Million
Private Fund
Public Fund
Total
1,700
1,851
1,725
1,900
4,484
250
130
132
130
130
1,950
1,981
1,857
2,030
4,614
Chart 13 : Mutual Funds - Total Approved Fund Size in USD Million
8SXEP%TTVSZIH*YRH7Mze
During the year under review, LOFSA issued five fund management licences, of which two were from Singapore and one each from Malaysia,
Hong Kong and the United Kingdom. The total number of fund managers increased from 18 in 2005 to 23 in 2006.
Debt Issuance Activities
In the past five years, there has been encouraging growth in debt issuance activities in Labuan IOFC. In 2006, ten (2005: 11) offshore
companies or Special Purpose Vehicles were approved for issuing securities by LOFSA, bringing the total number to 30 (2005: 20). Total
market capitalisation of approved debt instruments was USD3.5 billion (2005: USD4.8 billion), of which USD200.0 million was a Shariahcompliant debt instrument.
52
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The Labuan International Financial Exchange (LFX) recorded six new listings in 2006, bringing the total listings to 40. Market capitalisation
of LFX stood at USD15.1 billion as at 31 December 2006. New listings for the year 2006 included sukuks and bonds issued by domestic
issuers and Government-Linked Companies. Among the listings was the Khazanah Exchangeable Sukuk worth USD750.0 million, the world’s
first exchangeable sukuk. For the first time, LFX issued a Listing Sponsor licence to a foreign financial institution. Citibank Malaysia (L)
Limited was appointed as LFX’s Listing Sponsor in May 2006, an indication that LFX is gradually gaining the recognition of international
financial institutions.
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Trust Companies
The total number of trust companies registered in Labuan IOFC in 2006 stood at 21 (2005: 20). Reflective of four consecutive years of
improved business performance and operating income, as well as increased volume of businesses, the number of staff employed by
trust companies grew 3.6% to 229 in 2006. Of this total, 214 were Malaysians. The total number of trust officers approved by LOFSA had
increased to 62 (2005: 51).
Table 21 : Trust Companies – Key Data
Number of Trust Companies
54
2003
2004
2005
2006
20
20
20
21
(%)
Operating Income
5,472
5,980
7,251
9,366
29.2
Profit Before Tax
2,264
2,696
3,150
3,840
21.9
55
USD’000
Annual
change
2006
enhancing
strengths
58 Supervisory Framework
59 Regulatory Environment
60 Legislative Changes
61 Anti-Money Laundering and Counter-Financing for Terrorism
57
The resilience of the financial institutions and the stability of the system are important in safeguarding investors’ interests and
achieving sustainable growth. In line with these objectives, LOFSA has put in place a comprehensive supervisory framework that
would enable to assess in a timely manner the resilience of these offshore financial institutions and detect any weaknesses that can
undermine Labuan IOFC’s financial stability.
Since its establishment in 1996, LOFSA’s supervisory approach has evolved over the years but the guiding objectives remained. The
initial approach was relying primarily on audit reports and statistical returns under its off-site monitoring function. Subsequently,
efforts have been taken to further strengthen the capacity building and assessment methodologies such as rating framework to
assess the performance and soundness of offshore financial institutions. Offshore banking institutions have been evaluated based
on the CAMEL rating framework, which encompasses the review of capital adequacy, asset quality, management capability, earnings
performance and liquidity position. For offshore insurance industry, EMAS rating framework has been used to assess the performance
and condition of offshore insurers based on their earnings, management, assets and solvency. LOFSA employs the AMEO rating
framework to assess the performance of offshore fund entities based on asset quality, management capability, earnings performance
and operational controls. For trust companies, the assessment is based on the compliance with the “Guidelines on Minimum
Requirements of Trust Companies” issued by LOFSA.
In tandem with the increase in the number of offshore financial institutions and complexity of products and services in the Labuan
IOFC as well as changes in the international financial landscape, LOFSA has moved towards a more pro-active and robust supervisory
framework. This includes adoption of risk-based supervisory approach including on-site examination and formal prudential meeting.
The main thrust of the risk-based supervisory approach is to identify and assess key risks encountered by offshore financial
institutions and their capacity to mitigate and manage those risks.
In carrying out its supervisory role, LOFSA is committed to ensure that Labuan IOFC is in compliance with international standards and
best practices to maintain the IOFC as a reputable offshore financial centre. In relation to this, LOFSA was accorded commendable
rating on all areas jointly evaluated by the Asia/Pacific Group on Money-Laundering and the Offshore Group of Banking Supervisors
in 2001. This was reinforced by the positive assessment by the International Monetary Fund under the Offshore Financial Centres
Assessment Programme in 2002.
Supervisory Framework
In 2006, LOFSA has further enhanced its risk-based supervisory framework (RBSF) to suit the level of supervision required for
offshore activities in Labuan IOFC. The RBSF works as an effective system of oversight to evaluate and monitor the financial
strength and soundness of the offshore financial institutions on a continuing basis. Under this framework, the supervisory activities
continue to require off-site surveillance and on-site examination, including formal and informal prudential discussions, but greater
emphasis is placed on the quality of the risk management framework of the offshore institutions. The assessment of an offshore
financial institution is built on a thorough understanding of the institution, its activities, risk management processes and operating
environment. The intensity and cycle of supervision will depend on the risk profile of the offshore financial institutions, with more
focus on areas that pose higher risks.
In implementing the RBSF, LOFSA issued a self-assessment questionnaire to each offshore financial institution. The questionnaire
focused on the following areas:
• The quality of corporate governance and the effectiveness of the risk management functions;
• The level of awareness and preventive practices concerning anti-money laundering and counter-financing for terrorism (AML/CFT);
and
• The adequacy of internal policies and procedures as well as internal controls and systems that have been put in place.
Based on the supervisory activities carried-out on the offshore financial institutions there were no major inadequacies in the areas
under review. The level of awareness and practices concerning AML/CFT matters was satisfactory. In general, the offshore financial
institutions have an adequate level of compliance with the offshore laws, guidelines and circulars issued by LOFSA.
As part of LOFSA’s supervisory capacity building in its understanding of RBSF and to ensure better implementation, in 2006 LOFSA
engaged technical assistance from the Canadian Office of the Superintendent of Financial Institutions (OSFI) to share and impart their
experience on the risk-based supervisory approach being adopted by OSFI. In addition, LOFSA is enhancing its information system
to provide an early warning mechanism.
Regulatory Environment
As an integral part of implementing the RBSF, LOFSA also issued several guidelines to be effective in January 2007. The guidelines were
formulated based on the fundamental concepts of responsibility, accountability and transparency. The guidelines are as follows:
• Guidelines on Risk Weighted Capital Ratio (RWCR) for Subsidiary Banks;
• Guidelines on General Reinsurance Arrangements;
• Guidelines on Minimum Audit Standards for Internal Auditors of Offshore Insurance and Insurance-Related Companies;
• Standard Guidelines on AML/CFT;
• AML/CFT Sectoral Guidelines 1 for Offshore Financial Institutions Licensed or Registered under Offshore Banking Act 1990;
• AML/CFT Sectoral Guidelines 2 for Offshore Insurance and Insurance-Related Companies; and
• AML/CFT Sectoral Guidelines 3 for Capital Market Industries.
In regard to the implementation of Basel II, LOFSA is reviewing the impact of the implementation of Basel II capital framework for
offshore banking institutions in Labuan IOFC. LOFSA is also working closely with other jurisdictions to enhance cross-border cooperation
on the implementation of the Basel II capital framework.
58
59
Concurrent with the self-assessment questionnaire, the offshore financial institutions were also required to declare their compliance
with relevant provisions of the laws, guidelines and circulars issued by LOFSA in the Declaration of Compliance. A major part of this
assessment focused on the key inherent risks in each significant business activity and the capability of the offshore financial institutions
concerned in managing the risks, in particular the effectiveness of the board and management oversight, risk management function,
audit and internal control. In addition, the corporate governance practices of the offshore financial institutions were also assessed to
ensure that these practices are embedded in all aspects of operations at every level in the offshore financial institutions.
LOFSA continued to monitor closely the operations and affairs of offshore financial institutions in Labuan. In 2006, LOFSA conducted
investigations, on-site examinations with a special focus on AML/CFT assessment, and formal prudential meetings with offshore
financial institutions. LOFSA will not hesitate to take stern action against any institution found to be in breach of applicable offshore
legislation and guidelines and viewed to be detrimental to the reputation and credibility of Labuan IOFC. In this regard, LOFSA is in
the process of revoking the licence of two investment banks and liquidating two private funds.
Legislative Changes
LOFSA continued to be proactive in reviewing relevant policies and legislation to keep up with the fast-changing global financial
environment. Such approach has provided a conducive environment that facilitated business growth while maintaining a credible legal
framework at par with international requirements.
Among key amendments that were undertaken since 1990 to expand the scope of business for Labuan IOFC are the amendments
to the Offshore Companies Act 1990 in 1997 to introduce company management activities as another scope of business for Labuan
offshore companies. Such amendment has given greater depth to the scope of business activities that can be undertaken in Labuan IOFC.
Similarly, the Offshore Banking Act 1990 (OBA) was also amended to allow for the creation of a new business category, namely the
offshore investment banking and offshore financial business which includes offshore leasing, money broking and factoring. The OBA
was also amended to require licensed offshore banks (LOB) to submit statement on assets and liabilities to LOFSA for supervisory
purposes. It also provided for the mandatory requirement for LOB to have internal audit function.
In 1998, to enable greater cooperation and sharing of information among international supervisory authorities, the Labuan Offshore
Financial Services Authority Act 1996 was amended to provide provisions with regard to submission and preservation of information,
examination of offshore institutions and appointment of investigating officers.
LOFSA also played a significant role in the enactment of the Anti-Money Laundering Act 2001, which further enhanced Labuan’s
position as a reputable offshore jurisdiction and has gained recognition from international standard setting organisations.
Another major legislative change was the amendments made to the Labuan Trust Companies Act 1990 (LTCA), which came into force
on 1 February 2003. The legal entity of a Labuan Trust Company (LTC) was changed from that of a domestic company under the
Companies Act 1965 to an offshore company under the Offshore Company Act 1990. The amendments allowed the LTCs to enjoy the
tax benefits and incentives accorded to offshore companies. In addition, they could diversify their business, open offices outside
Labuan as well as acquire subsidiaries. These amendments aimed to encourage more trust companies, especially international trust
companies, to operate in Labuan IOFC and provide them with avenues to be more innovative in their activities. The secrecy provision
of the LTCA was also amended to empower LOFSA to obtain full access to information available in LTCs, in compliance with the
recommendations of the Asia/Pacific Group on Anti-Money Laundering and the Offshore Group of Banking Supervisors.
The Labuan Offshore Business Activity Tax Act 1990 (LOBATA) was amended in 2002 to allow branches of Malaysian-based offshore
banks in Labuan to be taxed under LOBATA. Thus, creating a level playing field between these banks and foreign offshore banks.
LOFSA’s supervisory authority was further enhanced in 2004 with the amendments to the Offshore Insurance Act 1990 (OIA) where all
licensed entities under the OIA are required to appoint auditors and conduct internal audit as well as appointment of an actuary.
In 2006, LOFSA reviewed the Labuan Offshore Financial Services Authority Act 1996 and the Offshore Companies Act 1990 to further
rationalise the confidentiality provisions as well as to facilitate cooperation with other supervisory authorities, both domestic and
international. These are in line with the requirements of international standard setting bodies. The proposed amendments are
expected to be tabled in Parliament in 2007.
Towards the last quarter of 2006, the unit worked towards putting in place the requirements of the 40+9 recommendations of the Financial
Action Task Force to combat money laundering and terrorist financing. In line with the recommendation of the Asia/Pacific Group on
Anti-Money Laundering (APG), LOFSA issued Standard Guidelines on AML/CFT in January 2007 to be observed by all offshore
reporting institutions, including OFIs, in Labuan IOFC. These guidelines, together with the Sectoral Guidelines for the offshore banking,
insurance and capital market industries, stipulate the measures that should be taken by offshore reporting institutions. The increased
clarity arising from these guidelines is expected to move the offshore industry towards higher standards of probity, professionalism
and business conduct. In February 2007, the APG conducted its second assessment on the progress of Malaysia, including Labuan
IOFC, in implementing all AML/CFT measures and the recommendations made in the first assessment in 2001.
61
Anti-Money Laundering and Counter-Financing for Terrorism
The establishment of the Anti-Money Laundering Unit (AMLU) is to enhance awareness amongst offshore reporting institutions as well
as provide legal advice relating to the application of the anti-money laundering laws. LOFSA, as one of the supervisory and regulatory
agencies under the Anti-Money Laundering and Anti-Terrorism Financing Act 2001 (AMLA), plays the role in ensuring compliance
with AMLA and monitoring all suspicious transaction reports made by offshore reporting institutions, including offshore financial
institutions (OFIs).
60
creating
opportunities
64 Labuan IOFC
64 Repositioning of Labuan IOFC
65 Islamic Financial Business
66 Malaysia International Islamic Financial Centre
67 Licensing Under MIFC
68 Leveraging on Labuan IOFC’s Preferential Tax Framework
69 Engagement Activities
70 Human Resource Development
LABUAN OFFSHORE FINANCIAL SERVICES AUTHORITY, MALAYSIA ANNUAL REPORT 2006
50
66
63
Labuan IOFC
LOFSA, the regulatory and supervisory agency of Labuan IOFC,
celebrated its tenth year anniversary in 2006. Over the past
ten years, Labuan IOFC has grown from strength to strength.
Positioned as an integrated financial centre, Labuan IOFC offers
a wide range of conventional and Islamic financial products and
services as well as corporate, trust and company secretarial
services. Labuan IOFC has overcome many challenges in its progress
to its present position as a preferred regional offshore centre.
As an offshore centre in the heart of one of the fastest developing
region in the world, Labuan IOFC is now domicile to more than 300
international financial institutions. Seventeen of the world’s top
20 international banks in terms of size of assets are represented in
Labuan IOFC and it has attracted 123 international insurance
and insurance-related licences to conduct their regional business.
In addition, the leasing sector has been registering double-digit
annual growth in recent years and this was driven by the
increased level of activities in the exploration of oil in the
vicinity of Labuan island.
Labuan IOFC is ideally located in the heart of Asia Pacific region
and within convenient time zones of several financial centres in
the region. Other factors such as political stability and its resultant
continuation of policies have also contributed to the success of
Labuan IOFC. LOFSA’s adherence to international standards in
its corporate governance, regulatory and supervisory practices
have held it in good standing in the international regulatory
community. Another critical success factor of the Labuan IOFC
has been the unwavering support of the Government as evidenced
by the capital expenditure in excess of RM3.0 billion to build
world-class infrastructure and amenities on the island.
Repositioning of Labuan IOFC
The landmark occasion of LOFSA’s tenth anniversary was also
taken as an opportune time to re-assess Labuan IOFC’s founding
mission and objectives and its concomitant strategic goals
and direction. The changing international financial landscape,
characterised by increased globalisation, liberalisation of the
international financial markets, lowering of sovereign tax regimes,
higher transparency and corporate governance requirements,
technological advancement and the increased global capital flows
have coalesced to render it necessary for Labuan IOFC to reposition
itself in order to remain competitive and relevant.
Offshore financial centres (OFC) have grown substantially in recent
years due mainly to favourable tax and regulatory structures
offered by the centres. The past 30 years have seen an increase
in the growth in demand for offshore products and services as
indicated by the increase in the number of OFCs, from less than
15 centres in the 1970s to approximately 70 today. Labuan IOFC
therefore operates in a very competitive global landscape.
With the rise of China and India as major economic powerhouses,
and in view of the varying stages of economic development of
the countries in the ASEAN grouping, long-term foreign direct
investment and portfolio capital flows will continue to rise
for the foreseeable future for the Asia Pacific region. China is
forecasted to add an astronomical USD208.0 billion per year to
its Gross Domestic Product (GDP), while estimates show that
India will add USD60.0 billion per year to its GDP. Hence, there
is a compelling strategic force for repositioning Labuan IOFC as
the intermediation for these global capital flows.
By providing an efficient delivery system, Labuan IOFC can
position itself to capture identified segments of the value-chain
of international capital flows as well as become the domicile
of choice for intermediaries. Labuan IOFC strategic location in
the heart of the Asia Pacific region provides common elements
between capital exporting and importing countries. Commonalities
such as time zone, language, culture and history are leveraged
upon to facilitate capital flows. Labuan IOFC, as part of Malaysia,
has taken advantage on the country’s political stability, sound
judiciary system and more than 60 double taxation agreements
with other countries. The presence of financial and other
service providers, such as offshore bank and trust companies,
in Labuan IOFC offers a ready financial infrastructure for
supporting the business and transactions of the intermediaries.
In aggregate, these factors effectively provide Labuan IOFC
its line of distinct capabilities in staking its claim as Asia
Pacific’s preferred jurisdiction for domicile of companies.
Islamic Financial Business
LOFSA has been active in international initiatives to develop
Islamic finance. As one of the founding members of the
International Islamic Financial Market, LOFSA has been playing a
significant role in developing standardised trading practices for
Islamic financial instruments. The contribution of LOFSA in the
overall development of intra-OIC investment flows has moved
to the next level with the formation of a task force arising from
the Memorandum of Understanding signed between the Islamic
Development Bank and Government of Malaysia. The Task
In May 2006, LOFSA issued the ‘Format of Submission for
Endorsement of Islamic Financial Products and Services by the
Shariah Advisory Council (SAC) of LOFSA’. This is to facilitate the
submission of innovative products and services by offshore
financial institutions to the SAC for endorsement. The format
provided guidance aimed at standardising information submitted
by players for the purpose of the SAC’s approval or endorsement.
The players were encouraged to use the format as closely as
possible to expedite the process of endorsement by the SAC.
In the Islamic capital market, Labuan IOFC continues to be
the preferred centre for innovative sukuk issuance. In October
2006, the LFX debuted the primary listing of the world’s first
Shariah-compliant Exchangeable Trust Certificate (Exchangeable
Sukuk). The USD750.0 million Exchangeable Sukuk was issued
by Khazanah Nasional Berhad through its Labuan incorporated
Special Purpose Company. The Exchangeable Sukuk is the
seventh Sukuk listed on LFX, bringing the exchange’s Islamic
capital market capitalisation to USD2.8 billion. This represents
18.5% of the total market capitalisation of USD15.1 billion.
Labuan has been the growing centre for takaful in the region
and is in the position to become a global centre for retakaful
business. Labuan is the secretarial centre for the Asian Takaful
Group (ATG), the first takaful and retakaful organisation formed
to enhance greater co-operation among takaful operators in Asia.
With its membership now covering regions outside Southeast
Asia, the group has adopted a new name, Global Takaful Group
(GTG), to reflect the group’s international membership and to
signal that it is opening its arms wide to accept more takaful
operators as members, regardless of their domicile. The GTG
is fast becoming a global brand in the takaful industry. It is
expected that the players will continue to leverage on Labuan
44
64
65
Recognising the opportunities and challenges above, the year
2006 saw the initiation of several measures to transform the
future direction of Labuan IOFC. An international management
consultant was appointed to conduct a study on the repositioning
of Labuan IOFC. The study had resulted in several clusters of
recommendations for implementation within the next three
years including changes in legislation and incentives. The
recommendations encompassed new business niches, LOFSA’s
structure, human resources, process and technology, horizontal
collaborations and the Labuan International Financial Exchange
(LFX). There will be a thorough review of the entire legislation
pertaining to Labuan IOFC with an emphasis in bringing it into
line with the challenges that globalisation brings. As part of
the business review, LOFSA would be expanding the range
of products and services available in the Labuan IOFC. This
includes the introduction of new company structures, support
services for private equity and expansion of trust activities to
cater for the demands of users in the offshore environment.
Force on Mobilisation of Funds, comprising domestic financial
regulators and intermediaries, provides recommendations and
initiates action plans to spur intra-OIC investment flows.
IOFC as the platform to further enhance inter-linkages among
retakaful players across the various regions.
Given the growth in retakaful activities in Labuan, LOFSA has
embarked on enhancing the relevant regulatory framework
to govern the business. The framework aims to facilitate the
establishment of retakaful activities and, at the same time, allow
the offshore financial institutions to maximise their capabilities
and expertise to expand their business. In September 2006,
LOFSA issued an Exposure Draft on the ‘Guidelines on Takaful
and Retakaful Businesses in Labuan IOFC’. The Exposure
Draft covers the conduct of takaful and retakaful businesses
and complements the existing provisions under the Offshore
Insurance Act 1990 and the ‘Directive on Islamic Financial
Business in Labuan IOFC’ issued in October 2003.
•
The operational offices can conduct non-ringgit Islamic
financial business and deal mainly with non-residents as
per Labuan offshore legislation;
•
They may deal with residents in non-ringgit transactions as
permitted under the current foreign exchange administration
policies;
•
For conventional institutions that have Islamic financial
business window or division, no additional licence fees are
charged on such business; and
•
Subject to the approval by the Minister of Finance, offshore
financial institutions undertaking Islamic financial business
through Labuan IOFC may be exempted from the requirement
of having physical presence in Labuan.
Malaysia International Islamic Financial Centre
Moving forward with the national agenda in regard to the Malaysia
International Islamic Financial Centre (MIFC) as announced by the
Government, LOFSA is positioning itself to play a significant and
complementary role to ensure the successful implementation
of the MIFC initiative. The flexibility accorded under the MIFC
to Labuan offshore financial institutions undertaking Islamic
financial services further enhances business opportunities for
Labuan offshore financial institutions. At the same time, Labuan
offshore financial institutions could leverage on the existing
preferential tax regime and other offshore incentives already
in place in Labuan IOFC. Under the MIFC, Islamic banks, Islamic
divisions of the offshore banks, offshore takaful operators and
retakaful operators in Labuan IOFC are given greater flexibility
as follows:
•
They may open operational offices anywhere in Malaysia;
•
There is no limitation on the staffing and number of
operational offices;
Under the MIFC, these institutions have the option of either:
•
to apply for a licence from Bank Negara Malaysia (BNM); or
•
to be licensed under LOFSA and be taxed accordingly under
the Labuan Offshore Business Activity Tax Act 1990 (LOBATA)
– refer to box on key tax incentives available in Labuan
IOFC.
Licensing Under MIFC
OFFSHORE REGULATORY
FRAMEWORK
ONSHORE REGULATORY
FRAMEWORK
66
Licensed by LOFSA
Offshore Legislation
Licensed by BNM
Domestic Legislation
67
Offshore Takaful &
Retakaful
Islamic Division of Offshore
Institutions
Tax under LOBATA
(3% or RM20,000, in perpetuity)
Enjoy DTA benefits with all treaty partners
over 60 countries
“International
Currency
Business Unit
(ICBU)”
Islamic Bank
(with ICBU)
International
Islamic Bank
Takaful
Operator
(with ICBU)
International
Takaful Operator
Zero tax under ITA for 10 years
Enjoy DTA benefits with all treaty
partners over 60 countries
Offshore Islamic
Bank
Leveraging on Labuan IOFC’s Preferential Tax Framework
An offshore institution (OI) conducting Islamic financial services enjoys the preferential corporate tax rate accorded in Labuan and
can elect every year to:
•
Pay corporate tax at a rate of 3.0% of the audited net profit; or
•
Pay a fixed sum of RM20,000.
OIs are also granted an income tax rebate equivalent to the amount of business zakat paid, subject to a maximum of 3.0% of the
audited net profit or RM20,000. In addition, OIs are granted other tax exemptions as follows:
•
Dividends received from an OI by its shareholders including a Malaysian domestic company, which are paid, credited or distributed out
of income derived from an offshore business activity, are exempted from income tax. In addition, the shareholders of the Malaysian
domestic company are exempted from tax on the dividends paid out of dividends received by a Malaysian domestic company
from an offshore company.
•
Royalties received from an OI by a non-resident or another OI are exempted from income tax.
•
Profits received from an OI by residents and non-residents or another OI are exempted from income tax.
•
Technical and management fees received from an OI by a non-resident or another OI are exempted from income tax.
•
Distributions received from an offshore trust, including Islamic trust, by the beneficiaries are exempted from tax.
•
Documentation for business, transfer of shares in an OI and Memorandum and Articles of Association are exempted from stamp duty.
•
50.0% tax exemption on gross employment income of a non-citizen working in a managerial capacity in OIs, until the year of
assessment 2010.
•
50.0% tax exemption on Labuan allowance and housing allowance of Malaysian citizens working in the OIs, until the year of
assessment 2010.
•
65.0% exemption of statutory income of service providers providing qualifying professional services to OIs, until the year of
assessment 2010.
•
Withholding tax exemption on rental payment made to non-residents from the use of moveable property by OIs.
•
100.0% exemption on director fees received by a non-citizen director of an OI, until the year of assessment 2010.
•
OI could leverage on the benefits of Double Tax Agreements, which Malaysia has signed with more than 60 countries.
finance amongst the offshore community, LOFSA initiated the
‘International Islamic Finance Lecture Series’ in September 2006.
The Deputy Finance Minister II, YB Datuk Awang Adek Hussin
delivered the inaugural lecture, entitled ‘The Role of Malaysia in
the Internationalisation of Islamic Finance’.
In the year under review, LOFSA organised and participated in a
number of conferences and seminars at both the international
and domestic levels in its efforts to disseminate knowledge and
awareness of Labuan IOFC. In June 2006, LOFSA was invited to
present a paper ‘Islamic Offshore Financial Centre: The Labuan
Experience’, at the Victoria University of Wellington, New Zealand
and made a presentation on the business and regulatory
environment in Labuan IOFC at a conference held in Bangkok,
organised by the Asian Offshore Association in September 2006.
LOFSA also presented a paper at the International Conference
on Islamic Banking, Capital and Financial Market in Jakarta,
organised by the International Islamic Financial Market in
August 2006. Fellow regulators of other offshore jurisdictions
and international offshore industry service providers attended
the conferences.
In addition to offering itself as a hub for ‘out-out’ business,
Labuan IOFC is also well positioned to serve as a platform for
‘in-out’ business. To highlight this potential, LOFSA organised a
conference in Kuala Lumpur entitled ‘Labuan – The Investment
Route To Asia’ in December 2006. The conference attracted
almost 600 participants, with representation from nine countries
and exhibitors from five organisations including the International
Centre for Education in Islamic Finance.
Throughout 2006, LOFSA organised and participated in several
engagement visits, including to Hong Kong, Dubai, Qatar, Bahrain
and Jeddah. LOFSA also participated in seminars organised by
Malaysian Investment Development Authority (MIDA) in Beijing,
Riyadh, Jeddah, Singapore, Brunei, Taipei and Kaoshiung, Taiwan.
In conjunction with LOFSA’s tenth anniversary, a series of events
were held in Labuan, including a conference on ‘Labuan IOFC:
The Preferred Financial Hub’ in May 2006. The conference was
well attended by both local and international delegates from the
Labuan offshore community. In supporting the national agenda
to position Malaysia as an international centre for Islamic finance
and to further increase knowledge and awareness of Islamic
Apart from it’s own engagement programme, LOFSA also
participated in MIDA’s domestic roadshows in Kuala Lumpur,
Melaka, Pulau Pinang and Kota Kinabalu. A presentation was
also made to directors from MIDA offices worldwide in Kuala
Lumpur in June 2006. This formed part of LOFSA’s collaborative
efforts with Government agencies to further create awareness
of Labuan IOFC.
LOFSA’s profile in the public domain was also cultivated with
a media communications programme that included interviews
with senior officials of LOFSA and editorials featured in several
leading globally-circulated journals and publications. Labuan
IOFC was also featured in a special segment of a televised
business programme by a local broadcasting company.
In cognizant of its responsibilities as a good corporate citizen
of Labuan, LOFSA organised or participated in a number of
community events as part of its outreach programme for the
local community. Staff of LOFSA and the offshore financial
institutions have also acted as visiting lecturers at the University
48
68
69
Engagement Activities
One of the major critical success factors of Labuan IOFC lies in
its engagement with the members of the financial industry. In
this regard, LOFSA recognises that a highly targeted engagement
programme is essential to compete in a crowded marketplace.
Malaysia Sabah – Labuan International Campus to enhance the
students’ understanding of offshore business.
Human Resource Development
The development of LOFSA’s human capital is a key factor in
ensuring it’s credibility and competency in performing its
functions. This encompasses successful recruitment, retention
and reward strategies, comprehensive training and development
as well as systematic succession planning and performance
management.
LOFSA carried out a recruitment exercise to further equip itself
with competent and capable talent during the year under review.
As at 31 December 2006, it has a total of 82 staff, comprising
mainly executives. To attract mid-career talent and retain its
high performers, LOFSA has to ensure that its remuneration and
benefits structure is market competitive. In this regard, a market
repositioning review was undertaken during the year.
LOFSA enhanced its shared values centred on the following:
•
Integrity, Commitment & Professionalism
•
Open and Honest Communication
•
Teamwork
•
Business and Stakeholder-Oriented
•
Continuous Learning
Various seminars and workshops, including the ‘Shared
Values Workshop’ and ‘Teambuilding Through Shared Values’
programme, were conducted to reinforce the above values.
Other in-house training initiatives organised for staff during the
year focused on soft skills, such as personal development, verbal
and written communication, as well as on computer-related
skills. In addition, staff attended relevant external training
courses conducted by reputable training bodies such as The
South East Asian Central Banks Research and Training Centre,
Financial Stability Institute, the International Centre for Education
in Islamic Finance and the International Centre for Leadership
in Finance.
Box Article
70
71
Promoting ASEAN Trade and
Investment: The Facilitative Role of
Labuan IOFC
The Changing Face of ASEAN
In recent times, the terms globalisation and liberalisation characterise the direction towards which countries around the world are moving.
The nations of ASEAN, of which Malaysia is a leading member, are no exception, going forward with confidence and strength.
Being export-oriented economies, trade and manufacturing have always played a significant role in stimulating economic development
within the ASEAN region, with regional exports increasing from USD144.0 billion in 1990 to USD765.5 billion in 20061. A total of
USD277.7 billion of foreign direct investment (FDI) flows into ASEAN was recorded between 1995 and 2005p, of which USD30.5 billion
originated from within ASEAN itself, making up 11.0% of total flows.
Whilst FDI and global trade expand exponentially, deeper economic integration is being emphasised in response to recent global
trends. The rise of China and India as emerging world economies is a major catalyst in persuading the member countries of ASEAN to
actively pursue the formation of an ASEAN Economic Community (AEC), which aims to transform the region into a highly competitive
area, making ASEAN a single market and production base with free flow of goods, services, investment, skilled labour and capital by
2020. Recently, there have been suggestions to expedite the process to 2015, five years ahead of schedule.
The existing ASEAN Free Trade Area (AFTA) is already a strong testament to efforts for building a strong integrated economic
community. Tariff reductions have been successful, with about 99.8% of products having been brought down to a 0-5.0% tariff range.
Work is underway to establish the ASEAN Charter which will set effective mechanisms for enforcing effective implementation of its
initiatives, further enhancing a spirit of cooperation within the region.
While there are signs that indicate an increasingly competitive ASEAN region, effective coordination and implementation of
commitments can still be enhanced. Each member country would benefit greatly from a more systematic and extensive dissemination
of information on specific initiatives to encourage further intra-regional trade and investment opportunities. Such information should
be made available to those in trade, industry, commerce and finance within and without their respective home countries.
Malaysia in a Globalised ASEAN
It is against such a backdrop that Malaysia formulates national policies to continually enhance its economic performance. Its role
within the ASEAN region is significant. Malaysia itself is the recipient of USD44.7 billion2, or 16.1%, of total FDI flows into the ASEAN
region between 1995 and 2005p. Chart 1 illustrates FDI flows into Malaysia within that period. There was a drop in 2001 but the flows
increased significantly again in subsequent years. Malaysia exported a total of USD4.9 billion of FDI to its fellow ASEAN countries
within the period 1995 – 20043, one of the highest source countries after Singapore.
p = projection
1 = ASEAN Secretariat website
2 = ASEAN Secretariat website
3 = 2005 data not available
8,000
7,000
6,000
52
72
4,000
73
3,000
2,000
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1,000
Year
Chart 1: FDI Flows to Malaysia, 1995 - 2005
Source: ASEAN Secretariat – ASEAN FDI Database
Malaysia’s commitment in the engagement of bilateral and regional free trade agreements (FTAs) reflects the position it takes within
ASEAN. In addition, Malaysia has concluded and signed more than 60 Double Tax Agreements which has contributed to increased
trade with other markets. These are necessary to encourage a freer flow of services, trade and investment within the region.
Malaysia and ASEAN have proceeded to create strategic and preferential trade alliances that offer bilateral access into specific
market sectors. Malaysia is involved in the ASEAN-China FTA, ASEAN-Japan FTA and Trans-Regional EU-ASEAN Trade initiatives. These
agreements aim to increase the competitiveness of ASEAN countries in attracting investments into the region. The network created by
these trade alliances and initiatives would give rise to a criss-crossing of capital flows, which require flexible regulatory frameworks
USD Million
5,000
Promoting ASEAN Trade and Investment: The Facilitative Role of Labuan IOFC
to facilitate movements across national boundaries. Therein lies an opportunity for Labuan IOFC. Labuan IOFC is ideally positioned
to be a jurisdiction through which such capital flows could be channelled.
Labuan IOFC – As Facilitator
Labuan IOFC was established in 1990 with the objective of promoting offshore finance and investment. Strategically located in the
heart of the ASEAN region, the IOFC also aims to enhance intra-regional economic activity among the neighbouring countries in the
region. Since its inception, it has succeeded in attracting a total of more than 5,500 companies, 55.0% of which are from ASEAN and
the Asia Pacific region.
25,000
USD Million
20,000
15,000
10,000
5,000
0
2003
2004
2005
Year
Total Assets of LOFSA-Licensed Institutions in Labuan, 2003 – 2006
Note: Companies include offshore insurance, operating banks and investment banks
Source: LOFSA Annual Report
2006
Labuan IOFC offers an integrated range of conventional and Islamic financial products and services, provided by more than 300
financial institutions. Regulations are favourable towards foreign investors, which include levying a maximum tax rate of 3.0% of
net profits or a flat tax of RM20,000, and allowing different structure of ownership of offshore companies including those limited by
guarantee or by shares. In addition, expatriate managers working in an offshore company are given 50.0% tax abatement on their
gross income from employment. All offshore business transactions attract no stamp duty and capital gains are not subject to any form
of tax. The Labuan Offshore Financial Services Authority (LOFSA), the one-stop regulatory agency for the Labuan IOFC, has rigorously
put specific mechanisms into place that support an active and thriving financial centre.
74
These value propositions provide a conducive base for investors to be domiciled in Labuan IOFC to conduct trade and investment
throughout the ASEAN region. Labuan IOFC offers a strong justification as a centre to capture capital flows within the region.
Capital
Exporting
Countries
Labuan IOFC
• Trading and Investment Holding
Companies
• Favourable Incentives
• Serviced By More Than 300
Licensed Institutions
Capital
Importing
Countries
Moving Forward
Labuan IOFC can serve as a regional intermediary for the movement of global capital flows. Positioning itself as a link for offshore
finance to the international capital markets, Labuan IOFC plays an effective role in the development of the economies of ASEAN
countries. Momentum is gaining within the ASEAN region to expedite the process of deeper economic integration. There exists a
symbiotic relationship between the progress of ASEAN and that of each individual member nation, which necessitates the opening
up of regulatory regimes, strong operational support and conscious moves to enlarge markets. Labuan IOFC can serve as a trade and
investment enabler for an integrated ASEAN to contribute to the region’s economic growth.
Labuan IOFC - Facilitating Trade and Investment Flows
75
Financial Statements
78 Certificate of the Auditor General
79 Statement by the Members
80 Statutory Declaration
81 Income Statement
82 Balance Sheet
83 Statement of Changes in Reserves
50
76
84 Cash Flow Statement
85 Notes to the Financial Statements
77
Statement by the Members
Of the Labuan Offshore Financial Services Authority
We, DR. ZETI AKHTAR AZIZ and AZIZAN ABD RAHMAN, being two of the Members of LABUAN OFFSHORE FINANCIAL SERVICES AUTHORITY state
that, in the opinion of the Members of the Authority, the accompanying balance sheet and statements of income, cash flows and changes in
reserves are properly drawn up in accordance with the provisions of the Labuan Offshore Financial Services Authority Act, 1996 and applicable
approved accounting standards for entities other than private entities issued by the Malaysian Accounting Standards Board so as to give a
true and fair view of the state of affairs of the Authority at 31 December 2006 and of its operating results and cash flows for the year ended
on that date.
On behalf of the Members of the Authority,
78
79
CHAIRMAN
AZIZAN ABD RAHMAN
DIRECTOR-GENERAL
Labuan Offshore Financial Services Authority
2 APRIL 2007
DR. ZETI AKHTAR AZIZ
LABUAN OFFSHORE FINANCIAL SERVICES AUTHORITY
(Established in Malaysia under the Labuan Offshore Financial Services Authority Act, 1996)
Statutory Declaration
By The Officer Primarily Responsible For The Financial Management of Labuan Offshore Financial Services Authority
I, SABARUDDIN ISMAIL (591208-07-5579), the officer primarily responsible for the financial management of LABUAN OFFSHORE FINANCIAL
SERVICES AUTHORITY, do solemnly and sincerely declare that the accompanying balance sheet and statements of income, cash flows and
changes in reserves are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the
same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.
SABARUDDIN ISMAIL
Subscribed and solemnly declared by the above named
SABARUDDIN ISMAIL at LABUAN, MALAYSIA on this 2nd
day of APRIL 2007.
Before me,
COMMISSIONER FOR OATHS
Income Statement
For The Year Ended 31 December 2006
Note
2006
2005
RM
RM
17,564,938
Revenue
4
19,853,227
Government grant
16
4,746,457
–
Other operating income
5
421,908
257,442
Staff costs
6
(9,300,959)
(7,251,906)
Depreciation of property, plant and equipment
9
(1,160,371)
(1,140,830)
Other operating expenses
5
(13,759,951)
(6,802,792)
800,311
2,626,852
Income from other investments
7
1,232,778
688,051
Surplus for the year
8
2,033,089
3,314,903
Surplus from operations
80
81
The accompanying Notes form an integral part of the Financial Statements.
Balance Sheet
At 31 December 2006
Note
2006
2005
RM
RM
3,956,288
3,322,865
ASSETS
Property, plant and equipment
9
Investment in subsidiary companies
10
1
1
Other receivables
11
7,797,836
7,487,679
11,754,125
10,810,545
Total non-current assets
Fees receivable
12
900,350
482,830
Other receivables
11
1,948,147
1,543,683
Cash and cash equivalents
13
41,371,950
26,815,966
Total current assets
44,220,447
28,842,479
Total assets
55,974,572
39,653,024
24,944,915
22,911,826
RESERVES
Accumulated surplus
LIABILITIES
Employee benefits
14
201,214
156,673
Government loans
15
13,000,000
13,000,000
13,201,214
13,156,673
Total non-current liabilities
Deferred income
16
11,253,543
–
Fees received in advance
17
976,198
806,000
Refundable deposits
18
1,250,000
1,250,000
Other payables and accruals
19
4,348,702
1,528,525
Total current liabilities
17,828,443
3,584,525
Total liabilities
31,029,657
16,741,198
Total reserves and liabilities
55,974,572
39,653,024
Statement of Changes In Reserves
Note
Balance at 1 January 2005 as previously stated
Effect of derecognition of Staff Welfare Fund
Balance at 31 December 2005
Balance at 1 January 2006 as previously stated
Balance at 1 January 2006 as restated
Balance at 31 December 2006
Accumulated
Welfare
Surplus
Fund
Total
RM
RM
RM
272,948
19,869,871
19,596,923
20
Balance at 1 January 2005 as restated
Effect of derecognition of Staff Welfare Fund
Staff
–
(272,948)
19,596,923
–
19,596,923
3,314,903
–
3,314,903
22,911,826
–
22,911,826
277,057
23,188,883
22,911,826
20
(272,948)
–
22,911,826
(277,057)
–
(277,057)
82
22,911,826
2,033,089
–
2,033,089
24,944,915
–
24,944,915
83
Cash Flow Statement
Note
2006
2005
RM
RM
2,033,089
3,314,903
1,160,371
1,140,830
CASH FLOWS FROM/(USED IN) OPERATING ACTIVITIES
Adjustments for:
Depreciation of property, plant and equipment
Government grant
(4,746,457)
Other long term employee benefits
44,541
Fee income-in-suspense
(557,538)
Property, plant and equipment written off
–
Interest income
(1,417,266)
(Deficit)/Surplus Before Working Capital Changes
(3,483,260)
–
19,352
241,049
352
(888,051)
3,828,435
(Increase)/Decrease in working capital:
Fees receivable
140,018
Other receivables
Fees received in advance
910,469
170,198
(332,714)
2,820,177
Cash (Used In)/Generated From Operations
(511,019)
Interest received
184,489
Net Cash (Used In)/From Operating Activities
(47,161)
(158,152)
(326,530)
439,174
4,798,203
200,000
4,998,203
CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES
Additions to property, plant and equipment
(1,793,794)
Interest received
Net Cash Used In Investing Activities
(979,155)
676,308
744,916
(1,117,486)
(234,239)
CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES
Government grant received
16,000,000
–
Net Cash From Financing Activities
16,000,000
–
NET INCREASE IN CASH AND CASH EQUIVALENTS
14,555,984
4,763,964
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
26,815,966
22,052,002
41,371,950
26,815,966
CASH AND CASH EQUIVALENTS AT END OF YEAR
13
Notes to the Financial Statements
1.
GENERAL INFORMATION
The Labuan Offshore Financial Services Authority was established on 15 February 1996. The main activities of the Authority are to
promote and develop Labuan, Malaysia as a centre for offshore financial services and to develop national objectives, policies and
priorities for the orderly development and administration of offshore financial services in Labuan.
The principal activities of the subsidiary companies are disclosed in Note 10.
There have been no significant changes in the nature of the principal activities of the Authority and its subsidiary companies during
the financial year.
The total number of employees of the Authority at year end was 82 (2005: 69).
The registered office and principal place of operations of the Authority are located at Level 17, Main Office Tower, Financial Park
84
Complex, Jalan Merdeka, 87000 Federal Territory of Labuan, Malaysia.
The financial statements of the Authority have been approved by the Members of the Authority for issuance on 2 APRIL 2007.
BASIS OF PREPARATION
(a)
Statement of compliance
The financial statements of the Authority have been prepared in accordance with the provisions of the Labuan Offshore Financial
Services Authority Act, 1996 and applicable approved accounting standards for entities other than private entities issued by the
Malaysian Accounting Standards Board (MASB).
The MASB has issued a number of new and revised Financial Reporting Standards (FRSs) that are effective for accounting
periods beginning on or after 1 January 2006.
The following new and revised FRSs that are effective for annual periods beginning after 1 January 2006 have not been applied
in preparing these financial statements:
(i)
FRS 117, Leases – This FRS is effective for annual periods beginning on or after 1 October 2006. By virtue of the exemption
in paragraph 67B of FRS 117, the impact of applying FRS 117 on the financial statements upon first adoption of this
standard as required by paragraph 30(b) of FRS 108, Accounting Policies, Changes in Accounting Estimates and Errors is
not disclosed;
(ii)
FRS 124, Related Party Disclosures – This FRS is effective for annual periods beginning on or after 1 October 2006. By
virtue of the exemption in paragraph 22A of FRS 124, the impact of applying FRS 124 on the financial statements upon
first adoption of this standard as required by paragraph 30(b) of FRS 108 is not disclosed;
2.
85
2.
BASIS OF PREPARATION (Cont’d)
(a)
Statement of compliance (Cont’d)
(iii)
FRS 139, Financial Instruments: Recognition and Measurement – This FRS has been issued by the MASB but the MASB has
yet to announce the effective date of this standard. By virtue of the exemption in paragraph 103AB of FRS 139, the impact
of applying FRS 139 on the financial statements upon first adoption of this standard as required by paragraph 30(b) of
FRS 108 is not disclosed;
(iv)
Amendment to FRS 1192004, Employee Benefits – Actuarial Gains and Losses, Group Plans and Disclosures – Certain
amendments made to FRS 1192004 are effective for annual periods beginning on or after 1 January 2007. The adoption of
these amendments will not have any significant impact on the financial statements of the Authority in the period of initial
application; and
(v)
FRS 6, Exploration for and Evaluation of Mineral Resources – This FRS is effective for annual periods beginning on or after
1 January 2007. This standard is not applicable to the Authority and hence, no further disclosure is warranted.
The Authority plans to apply FRS 117, FRS 124, and the Amendment to FRS 1192004 initially for the annual period beginning 1
January 2007.
Apart from the new policies and extended disclosures where required by these new/revised standards, there is no effect on
these financial statements.
(b)
Basis of measurement
The financial statements have been prepared on the historical cost basis.
(c)
Functional and presentation currency
These financial statements are presented in Ringgit Malaysia (RM), which is the Authority’s functional currency.
(d)
Use of estimates and judgements
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ
from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised and in any future periods affected.
In particular, the significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the
most significant effect on the amounts recognised in the financial statements is in respect of the suspension of fees recognised
as income as described in Note 3(c).
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these financial statements.
(a)
Basis of consolidation
Subsidiary companies are those enterprises controlled by the Authority. Control exists when the Authority has the power, directly
or indirectly, to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. In
assessing control, potential voting rights that presently are exercisable are taken into account.
The financial statements of subsidiary companies are included in the consolidated financial statements from the date that
control effectively commences until the date that control effectively ceases. Subsidiary companies are consolidated using the
acquisition method of accounting.
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Investments in subsidiary companies are stated in the Authority’s balance sheet at cost less impairment losses, unless the
investment is classified as held for sale (or included in a disposal group that is classified as held for sale).
Foreign currency transactions
Transactions in foreign currencies are translated to the functional currency of the Authority at exchange rates at the dates of the
transaction.
Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated to the functional
currency at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are
measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was
determined. Foreign currency differences arising on retranslation are recognised in the income statement.
(c)
Revenue
Fees
Fees comprise incorporation and registration fees and annual fees of offshore companies, annual licence fees for offshore banks
and insurance companies and other related fees received and receivable. Revenue is recognised when services are provided or
upon anniversary date of incorporation or date of registration of offshore companies. When fees receivable are overdue by more
than certain periods, recognition of fees are suspended until they are realised on a cash basis.
Interest income
Interest income is recognised in the income statement as it accrues, taking into account the effective yield on the asset.
Rental income
Rental income is recognised on an accrual basis.
(b)
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3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(d)
Government grants
Grants that compensate the Authority for the cost of an asset are recognised initially as deferred income when there is reasonable
assurance that they will be received and that the Authority will comply with the conditions associated with the grants. The grants
are recognised in the income statement on a systematic basis over the useful life of the asset.
Grants that compensate the Authority for expenses incurred are recognised in the income statement on a systematic basis in the
same periods in which the expenses are recognised.
(e)
Property, plant and equipment
Recognition and measurement
Long term leasehold land and capital work-in-progress are stated at cost. All other property, plant and equipment are stated at
cost less accumulated depreciation and impairment losses, if any.
Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets
includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to working condition
for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located.
Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.
The cost of property, plant and equipment recognised as a result of a business combination is based on fair value at acquisition
date. The fair value of property is the estimated amount for which a property could be exchanged on the date of valuation
between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each
acted knowledgeably, prudently and without compulsion. The fair value of other items of plant and equipment is based on the
quoted market prices for similar items.
When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate
items (major components) of property, plant and equipment.
Subsequent costs
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is
probable that the future economic benefits embodied within the part will flow to the Authority and its cost can be measured
reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in the income statement as
incurred.
3.
(e)
Property, plant and equipment (Cont’d)
Depreciation
Property, plant and equipment purchased at a cost of RM500 and below are expensed as incurred. Long term leasehold land
with unexpired leases in excess of 50 years is not amortised. Depreciation is recognised in the income statement on a straightline basis over the estimated useful lives of each part of an item of plant and equipment. The estimated useful lives for the
current and comparative periods are as follows:
Buildings
50 years
Motor vehicles
4 years
Computers
3 years
Furniture, fittings, office equipment and renovation
5 years
88
Depreciation methods and useful lives are reassesses at the reporting date.
(f)
Impairment of assets
are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists
then the asset’s recoverable amount is estimated. An impairment loss is recognised if the carrying amount of an asset or
its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that
generates cash flows that are largely independent from other assets and groups. Impairment losses are recognised in the income
statement. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of
any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (groups of units) on
a pro rata basis.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior
periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment
loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss
is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are
credited to the income statement in the year in which the reversals are recognised.
(g)
Receivables
Fee and other receivables are reduced by the appropriate allowance for estimated irrecoverable amounts and fee income-insuspense.
The carrying amounts of the Authority’s assets, other than financial assets (other than investments in subsidiary companies),
89
3.
(h)
Employee benefits
Short term employee benefits
Short term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are measured
on an undiscounted basis and are expensed as the related service is provided.
A provision is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group
has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the
obligation can be estimated reliably.
The Authority’s contributions to the Employees Provident Fund are charged to the income statement in the year to which they
relate. Once the contributions have been paid, the Authority has no further payment obligations.
Liability for other long term employee benefits
The Authority’s net obligation in respect of other long term employee benefits is the amount of future benefit that employees
have earned in return for their service in the current and prior periods. The obligation is calculated using the projected unit
credit method and is discounted to its present value and the fair value of any related assets is deducted. The discount rate is
the market yield at the balance sheet date on high quality corporate bonds or government bonds.
(i)
Cash flow statement
The Authority adopts the indirect method in the preparation of the cash flow statement.
Cash equivalents are short term, highly liquid investments with maturities of three months or less from the date of acquisition
and are readily convertible to cash with insignificant risks of changes in value.
4.
REVENUE
Fee income
Movement in fee income-in-suspense
2006
2005
RM
RM
19,295,689
17,805,987
557,538
19,853,227
(241,049)
17,564,938
5.
OTHER OPERATING INCOME/(EXPENSES)
Included in other operating income/(expenses) are the following:
2006
2005
RM
RM
184,489
200,000
Other operating income:
Interest income from staff loans
Rental income
Miscellaneous income
8,250
11,000
229,169
46,442
Other operating expenses:
Project expenditure incurred under the Ninth Malaysia Plan government grant
Auditors’ remuneration
(4,746,457)
–
(14,000)
(15,000)
(533,422)
(1,066,048)
(50,400)
(52,774)
(689,516)
(689,616)
(1,287,039)
(286,000)
(476,155)
(458,955)
90
Members’ remuneration:
Executive
Rental expenses
Bad debts written off:
Fees receivable
Amount owing by subsidiary companies
Property, plant and equipment written off
6.
–
(352)
STAFF COSTS
Staff costs
2006
2005
RM
RM
9,300,959
7,251,906
Included in staff costs are the Authority’s contributions to the Employees Provident Fund of RM914,183 (2005: RM729,037).
7.
INCOME FROM OTHER INVESTMENTS
2006
2005
RM
RM
1,193,321
613,653
Interest received from:
Fixed deposits
Money at call
39,457
74,398
1,232,778
688,051
91
Non-executive
8.
INCOME TAX EXPENSE
No provision for taxation was made although the Authority made a surplus in 2005 as the Authority has been exempted from tax
on all its income, other than dividend income, under the Income Tax (Exemption) (No.33) Order 1997 [PU(A) 221/97] and Income Tax
(Exemption) (Amendment) (No.2) Order 2003 [PU(A) 198/2003] until the year of assessment 2005.
In respect of the surplus in 2006, the Authority has been informed by the Ministry of Finance that its application to extend the above
exemption orders until the year of assessment 2010 has been approved. The relevant Exemption Order will be issued in due course.
9.
PROPERTY, PLANT AND EQUIPMENT
Furniture,
fittings, office
Long term
leasehold
Motor
equipment
Capital
and
work-in-
land
Buildings
vehicles
Computers
renovation
progress
Total
RM
RM
RM
RM
RM
RM
RM
442,000
688,000
690,088
4,026,892
2,491,842
92,620
8,431,442
Cost
At 1 January 2006
Additions
–
–
7,400
248,047
345,687
1,192,660
1,793,794
442,000
688,000
697,488
4,274,939
2,837,529
1,285,280
10,225,236
At 1 January 2006
–
107,165
485,831
3,067,924
1,447,657
–
5,108,577
Additions
–
13,750
62,649
615,492
468,480
–
1,160,371
At 31 December 2006
–
120,915
548,480
3,683,416
1,916,137
–
6,268,948
At 31 December 2006
442,000
567,085
149,008
591,523
921,392
1,285,280
3,956,288
At 31 December 2005
442,000
580,835
204,257
958,968
1,044,185
92,620
3,322,865
–
13,750
59,350
627,207
440,523
–
1,140,830
At 31 December 2006
Accumulated depreciation
Net book value
Depreciation charge for
the year ended
31 December 2005
Included in property, plant and equipment of the Authority are fully depreciated property, plant and equipment which are still in use,
with an aggregate cost of RM3,505,747 (2005: RM2,782,912).
10.
INVESTMENT IN SUBSIDIARY COMPANIES
2006
2005
RM
RM
1
1
Unquoted shares, at cost
The subsidiary companies, all incorporated in Malaysia, are as follows:
Effective
Percentage
Name of Company
LOFSA Incorporated Sdn Bhd
of Ownership
Principal Activities
2006
2005
%
%
100
100
92
Investment holding
93
Pristine Era Sdn Bhd
100
100
Provision of educational services
In 2003, the Authority acquired the entire equity interest in Pristine Era Sdn Bhd, (a company which manages the Labuan International
School) through LOFSA Incorporated Sdn Bhd for a cash consideration of RM1 and undertakes to provide financial support to the said
subsidiary company.
Consolidated financial statements were not presented as the Authority is of the opinion that the controlling interests in the subsidiary
companies are temporary.
11.
OTHER RECEIVABLES
2006
2005
RM
RM
Staff housing loans
422,919
704,063
Staff vehicle loans
183,616
201,270
Staff advances/Sundry debtors
102,903
57,216
Current
Other receivables:
Refundable deposits
198,121
146,575
Interest receivable
989,906
433,437
Prepaid expenses
50,682
1,122
1,948,147
1,543,683
Subsidiary company of LOFSA Incorporated Sdn Bhd
11.
OTHER RECEIVABLES (Cont’d)
2006
2005
RM
RM
7,442,651
7,036,792
Non-Current
Other receivables:
Staff housing loans
Staff vehicle loans
355,185
450,887
7,797,836
7,487,679
Staff loans
Staff housing and vehicle loans are repayable over a maximum period of 25 years and 7 years respectively. The interest charged on
these loans ranges from 2% to 4% (2005: 2% to 4%) per annum.
12.
FEES RECEIVABLE
Fees receivable
Fee income-in-suspense
13.
2006
2005
RM
RM
1,489,993
1,630,011
(589,643)
(1,147,181)
900,350
482,830
2006
2005
RM
RM
Fixed deposits with licensed banks
39,393,101
19,840,957
Money at call with licensed banks
1,358,000
6,265,000
CASH AND CASH EQUIVALENTS
Cash on hand and at banks
620,849
710,009
41,371,950
26,815,966
2006
2005
%
%
The average effective interest rates are as follows:
Fixed deposits
3.5
3.1
Money at call
2.3
2.5
The deposits have an average maturity of 30 days to 1 year (2005: 30 days to 1 year).
14.
EMPLOYEE BENEFITS
Movements in the liability for other long term employee benefits:
At 1 January
Recognised in income statement
At 31 December
2006
2005
RM
RM
156,673
137,321
44,541
19,352
201,214
156,673
The liability for other long term employee benefits is in respect of staff entitlement to set aside unutilised annual leave for the purpose
of conversion into cash at the time of retirement.
15.
94
GOVERNMENT LOANS
Government loans represent the balance of RM3 million out of a RM6 million loan and a RM10 million loan obtained in 1996 and 2000
95
are repayable in the year 2010 or such other period as may be mutually agreed by the parties.
16.
respectively from Bank Negara Malaysia. The loans are unsecured and interest-free. The balance of the first loan and the second loan
DEFERRED INCOME
During the year, the Authority received a government grant of RM16 million from the Ministry of Finance for the purpose of projects to
be undertaken by the Authority under the Ninth Malaysia Plan. The grant represents the allocation for 2006 and forms part of the total
allocation of RM80 million for the duration of the Ninth Malaysia Plan from 2006 to 2010.
The government grant received is recognised in the income statement on the basis of the expenses incurred relating to projects
undertaken by the Authority under the Ninth Malaysia Plan, totalling RM4,746,457 (2005: Nil) for the year ended 31 December 2006
which have been charged out to the income statement.
Deferred income at 1 January
Government grant received
17.
2006
2005
RM
RM
–
–
16,000,000
–
Less: Amount recognised in income statement
(4,746,457)
–
Deferred income at 31 December
11,253,543
–
FEES RECEIVED IN ADVANCE
Fees received in advance comprise annual and licence fees paid in advance by offshore banks, insurance companies and other offshore
entities.
18.
REFUNDABLE DEPOSITS
Refundable deposits represent security deposits paid by trust companies in accordance with the provisions of the Labuan Trust
Companies Act, 1990 and other security deposits.
Trust companies security deposits
Management company security deposits
19.
2006
2005
RM
RM
1,200,000
1,200,000
50,000
50,000
1,250,000
1,250,000
2006
2005
RM
RM
OTHER PAYABLES AND ACCRUALS
Other payables
Accruals
4,202,239
281,767
146,463
1,246,758
4,348,702
1,528,525
Other payables comprise amounts outstanding for ongoing costs. The amounts owing are interest-free and have no fixed terms of
repayment.
20.
PRIOR YEAR ADJUSTMENT
The Staff Welfare Fund, established under Section 18A of the Labuan Offshore Financial Services Authority Act, 1996 and governed by the
Staff Welfare Fund Trust Directions, 1998 was previously recognised in the reserves of the Authority.
The Trust Directions require that separate accounts of the Staff Welfare Fund are to be maintained separately from those of the
Authority. Accordingly, the assets, liabilities and reserves of the Staff Welfare Fund have been derecognised in the financial
statements of the Authority and recognised in its separate financial statements. The comparative figures have also been restated
to conform to the current year’s presentation.
21.
FINANCIAL INSTRUMENTS
Financial instruments are contracts that give rise to both a financial asset of one entreprise and a financial liability or equity instrument
of another enterprise.
Financial Risk Management Objectives and Policies
The operations of the Authority are subject to a variety of financial risks, including credit risk, liquidity risk and cash flow risk. The
Authority has agreed to formulate a financial risk management framework with the principal objective to minimise the Authority’s
exposure to risks and/or costs associated with the financing, investing and operating activities of the Authority.
Various risk management policies are made and approved by the Authority for observation in the day-to-day operations for the
controlling and management of the risks associated with financial instruments.
Credit risk
96
The financial instruments which potentially subject the Authority to credit risk are fee receivables. Concentration of credit risk with
respect to fee receivables is limited due to a large number of offshore companies in various industries. The Authority are of the opinion
Liquidity risk
The Authority practises liquidity risk management to minimise the mismatch of financial assets and liabilities and to maintain sufficient
credit facilities for contingent funding requirement of working capital.
Cash flow risk
The Authority reviews its cash flow position regularly to manage its exposure to fluctuations in future cash flows associated with its
monetary financial instruments.
Financial assets
The Authority’s principal financial assets are fixed deposits, money at call, cash on hand and at banks and fee and other receivables.
The accounting policies applicable to the major financial assets are as disclosed in Note 3.
97
that the risk of incurring material losses related to this credit risk is remote.
21.
FINANCIAL INSTRUMENTS (Cont’d)
Financial Liabilities and Equity Instruments
Debts and equity instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement.
Significant financial liabilities include refundable deposits, other payables and interest-free government loans.
Government loans are recorded at the proceeds received.
There were no equity instruments as of the financial year-end.
Fair Values
Cash and cash equivalents, fee and other receivables and refundable deposits and other payable
The carrying amounts of these financial instruments approximate their fair values because of the short maturity period for these
instruments.
Government loans
The Authority considers that the carrying amounts of government loans approximate their fair values.
22.
CAPITAL COMMITMENTS
As of 31 December 2006, the Authority has the following capital expenditure in respect of property, plant and equipment:
Approved and contracted for
Approved but not contracted for
23.
2006
2005
RM
RM
390,000
99,900
–
–
390,000
99,900
CONTINGENT LIABILITIES
As disclosed in Note 10 to the financial statements, the Authority undertakes to provide financial supports to its subsidiary company,
Pristine Era Sdn Bhd
24.
COMPARATIVE FIGURES
The presentation and classification of the following comparative figures have been restated for the effects of the prior year adjustment
as stated in Note 20:
As previously
2005
Balance Sheet
Non-Current Assets:
Other receivables
Current Assets:
Other receivables
Cash and cash equivalents
Statement of Changes in Reserves
Staff Welfare Fund
At 1 January 2005
At 31 December 2005
stated
RM
RM
7,487,679
7,510,794
1,543,683
26,815,966
1,580,312
27,033,417
98
99
1,528,525
1,528,663
–
–
272,948
277,057
–
3,828,435
4,109
3,832,544
Cash Flow Statement
Cash flows from/(used in) operating activities
Adjustments for:
Surplus attributable to Staff Welfare Fund
Surplus before working capital changes
(Increase)/Decrease in working capital:
Other receivables
Cash (used in)/generated from operations
Net cash (used in)/from operating activities
Cash flows from/(used in) investing activities
Interest received
Net cash used in investing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
910,469
439,174
4,798,203
4,998,203
950,830
439,313
4,842,812
5,042,812
744,916
(234,239)
4,763,964
22,052,002
744,907
(234,248)
4,808,564
22,224,853
Cash and cash equivalents at end of the year
26,815,966
27,033,417
Non-current Liabilities:
As restated
Appendices
Listings of Labuan Offshore Financial Institutions
102 Offshore Banks
105 Offshore Investment Banks
106 Reinsurers
108 General Insurers
108 Life Insurers
108 Captives
110 Insurance Brokers
113 Insurance Managers
115 Labuan Trust Companies
116 Fund Management Companies
118 Labuan Offshore Associations
118 Labuan International Financial Exchange
119 Listing Sponsors
120 Trading Agents
101
114 Underwriting Managers
100
Listings of Labuan Offshore
Financial Institutions
As at 31 March 2007
Offshore Banks (Country of Origin)
1
2
3
4
5
6
7
ABN AMRO Bank N.V., Labuan Branch
(Netherlands)
Tel: 087-423008 Fax: 087-421078
E-mail: [email protected]
Mr Anthony Rajan M Liguori
Bank of America National Association,
Labuan Branch
(United States of America)
Tel: 087-411778 Fax: 087-424778
Mr Daniel Yue Tuck Cheong
8
Affin Bank Berhad, Labuan Branch
(Malaysia)
Tel: 087-411931 Fax: 087-411973
E-mail: head.treasury@affinbank.com.my
Mr Tan Kok Toon
Barclays Bank Plc, Labuan Branch
(United Kingdom)
Tel: 087-425571 Fax: 087-425575
Mr Miaw Siaw Loong
9
BNP Paribas, Labuan Branch
(France)
Tel: 087-422328 Fax: 087-419328
Ms Yap Siew Ying
AmInternational (L) Ltd
(Malaysia)
Tel: 087-425212 Fax: 087-425211
Mr Paul Ong Whee Sen
AmInvestment Bank Berhad,
Labuan Offshore Branch
(Malaysia)
Tel: 087-413133 Fax: 087-425211
Bank Islam Malaysia Berhad,
(Malaysia)
Tel: 087-451802 Fax: 087-451800
Mr Engku Afandi Engku Taib
Bank Muamalat Malaysia Berhad,
(Malaysia)
Tel: 087-412898 Fax: 087-451164
Mr Helmi Izham Harunarashid
10 Calyon, Labuan Branch
(France)
Tel: 087-408334 Fax: 087-408335
Mr Tan Boon Eong
11 Cathay United Bank, Labuan Branch
(Taiwan)
Tel: 087-452168 Fax: 087-453678
Mr Alexander Wu Hsing Hwa
12 CIMB Bank (L) Limited
(Malaysia)
Tel: 087-410302 Fax: 087-410313
Ms Rositah Mariam Sulaiman
13 CIMB (L) Limited
(Malaysia)
Tel: 087-451608 Fax: 087-451610
14 Citibank Malaysia (L) Limited
Tel: 087-421181 Fax: 087-419671
Ms Clara Lim Ai Cheng
16 DBS Bank Ltd, Labuan Branch
(Singapore)
Tel: 087-423375 Fax: 087-423376
Mr Jeffrey Ling Hee Keong
17 Deutsche Bank AG, Labuan Branch
(Germany)
Tel: 087-439811 Fax: 087-439866
Mr Raymond Yeoh Cheng Seong
18 Dresdner Bank AG, Labuan Branch
(Germany)
Tel: 087-419271 Fax: 087-419272
Mr Christopher David Mersey
19 ING Bank N.V., Labuan Branch
(Netherlands)
Tel: 087-425733 Fax: 087-425734
Ms Milly Tan
21 J.P. Morgan Malaysia Ltd
Tel: 087-459000 Fax: 087-451328
Mr Ishammudin Mansor
22 KBC Bank N.V., Labuan Branch
(Belgium)
Tel: 087-581778 Fax: 087-583787
Mr Kong Kok Chee
23 Kuwait Finance House (Labuan) Berhad
(Malaysia)
Tel: 087-418777 Fax: 087-418666
Mr Nawaf Almenayekh
24 Lloyds TSB Bank Plc, Labuan Branch
(United Kingdom)
Tel: 087-418918 Fax: 087-411928
Ms Chua Ping Ling
25 Macquarie Bank Limited, Labuan Branch
(Australia)
Tel: 087-583080 Fax: 087-583088
Mr Gordon Kuik Teck Wee
26 Maybank International (L) Ltd
(Malaysia)
Tel: 087-414406 Fax: 087-414806
Mr Punjau Sepoi
78
102
103
15 Credit Suisse, Labuan Branch
(Switzerland)
Tel: 087-425381 Fax: 087-425384
E-mail: alfred.lee@credit_suisse.com
Mr Lee Chee Meng
20 J.P. Morgan Chase Bank, Labuan Branch
Tel: 087-424384 Fax: 087-424390
Mr Ishammudin Mansor
As at 31 March 2007
27 Mega International Commercial Bank Co., Ltd,
Labuan Branch
(Taiwan)
Tel: 087-581688 Fax: 087-581668
Mr Tai Chih-Hsien
28 Mizuho Corporate Bank Ltd, Labuan Branch
(Japan)
Tel: 087-417766 Fax: 087-419766
Mr Kazumasa Domen
29 Natixis, Labuan Branch
(France)
Tel: 087-581009 Fax: 087-583009
Mr Rizal Abdullah
30 Oversea-Chinese Banking Corporation Limited,
Labuan Branch
(Singapore)
Tel: 087-423381 Fax: 087-423390
Mr Daniel Kwan Chieu Bock
31 Public Bank (L) Ltd
(Malaysia)
Tel: 087-411898 Fax: 087-413220
Mr Alexander Wong
32 Rabobank Nederland, Labuan Branch
(Netherlands)
Tel: 087-451128 Fax: 087-452328
Mr Clement Wong
33 RHB Bank (L) Ltd
(Malaysia)
Tel: 087-417480 Fax: 087-417484
Ms Toh Ay Leng
34 Schroders Malaysia (L) Berhad
(United Kingdom)
Tel: 087-421181 Fax: 087-419671
35 Societe Generale, Labuan Branch
(France)
Tel: 087-421676 Fax: 087-421669
Mr Ibrahim Nasir
36 Standard Chartered Bank Offshore, Labuan Branch
(United Kingdom)
Tel: 087-417200 Fax: 087-417202
Mr Edward Ng Chin Swee
37 Sumitomo Mitsui Banking Corporation
(Japan)
Tel: 087-410955 Fax: 087-410959
Mr Junichi Ikeno
38 The Bank of East Asia, Limited, Labuan Branch
(Hong Kong)
Tel: 087-451145 Fax: 087-451148
Mr Alvin Gerard Arrais
39 The Bank of Nova Scotia, Labuan Branch
(Canada)
Tel: 087-451101 Fax: 087-451099
Mr Steven Narendran
40 The Bank of Tokyo-Mitsubishi UFJ, Ltd,
Labuan Branch
(Japan)
Tel: 087-410487 Fax: 087-410476
Mr Naoki Sugie
41 The Hongkong and Shanghai Banking Corporation Limited,
Offshore Banking Unit Labuan
(United Kingdom)
Tel: 087-419690 Fax: 087-417169
Mr Chew Hoi Meng
3
Capital Investment Bank (Labuan) Ltd
(Malaysia)
Tel: 087-581488 Fax: 087-583488
Mr Louise Paul A/L Joseph Paul
4
City Credit Investment Bank Limited
(Hong Kong)
Tel: 087-582268 Fax: 087-581268
Dato’ Abdul Rahman Abdullah
42 The Royal Bank of Scotland, Plc, Labuan Branch
(Scotland)
Tel: 087-423228 Fax: 087-425228
Mr Mohd Rashid Mohamad
ECM Libra Investment Bank Limited
(Malaysia)
Tel: 087-408525 Fax: 087-408527
Mr Jeyaratnam A/L Tamotharam Pillai
6
Morgan Stanley Labuan Investment Bank Limited
(Singapore)
Tel: 087-423878 Fax: 087-424878
Ms Kate G Richdale
7
OSK Investment Bank (Labuan) Limited
(Malaysia)
Tel: 087-581885 Fax: 087-582885
Mr Ong Leong Huat
8
RUSD Investment Bank Inc
(Saudi Arabia)
Tel: 087-452100 Fax: 087-453100
Mr Naseeruddin A Khan
44 United Overseas Bank Limited, Labuan Branch
(Singapore)
Tel: 087-424388 Fax: 087-424389
Ms Linda Tan Mei Lin
Offshore Investment Banks (Country of Origin)
1
Al-Hidayah Investment Bank (Labuan) Ltd
(Malaysia)
Tel: 087-451660 Fax: 087-451662
2
AmanahRaya Investment Bank Ltd
(Malaysia)
Tel: 087-421663 Fax: 087-421662
Ms Zanariah Jaafar
105
5
43 UBS AG, Labuan Branch
(Switzerland)
Tel: 087-421743 Fax: 087-421746
Ms Zelie Ho Swee Lum
80
104
As at 31 March 2007
Reinsurers (Country of Origin)
1
ACE Tempest Reinsurance Ltd
(Bermuda)
Tel: 087-427018 Fax: 087-429018
Mr Gerard Mario Sitaramayya
8
C.C.R., Labuan Branch
(France)
Tel: 087-417672 Fax: 087-417675
Mr Alain Tertzakian
9
China International Reinsurance Company Limited,
Labuan Branch
(Hong Kong)
Tel: 087-417672 Fax: 087-417675
Mr Kenneth Ng Yu Lam
2
Allianz SE General Reinsurance Branch Labuan
(Germany)
Tel: 087-442899 Fax: 087-451899
Mr Ronnie Cheah
3
Allianz SE Life Reinsurance Branch Labuan
(Germany)
Tel: 087-442899 Fax: 087-451899
Mr Duncan Lord
4
Arab Insurance Group (B.S.C) Labuan Branch
(Bahrain)
Tel: 087-442899 Fax: 087-451899
Mr Lee Yew Wing
5
ASEAN Retakaful International (L) Ltd
(Malaysia)
Tel: 087-451301 Fax: 087-451300
Mr Abdul Halim Nasri
6
AXA Re Asia Pacific Pte Ltd (Labuan Branch)
(France)
Tel: 087-427018 Fax: 087-429018
Mr Daniel Lim Teck Choon
13 International General Insurance Company Ltd,
Labuan Branch
(Jordan)
Tel: 087-417672 Fax: 087-417675
Mr Wasef S Jabsheh
7
B.E.S.T. Reinsurance - Far East Regional Office
(Tunisia)
Tel: 087-451600 Fax: 087-452600
Mr Riadh Karray
14 Jerneh Asia Reinsurance Limited
(Malaysia)
Tel: 087-427818 Fax: 087-426818
Mr Tan Yoke Leong
10 Cologne Reinsurance Company Plc
(Germany)
Tel: 087-417672 Fax: 087-417675
Mr Andres Webersinke
11 Converium Ltd, Regional Reinsurance Branch Office
(Switzerland)
Tel: 087-422004 Fax: 087-422005
Mr Mohd Din Merican
12 IAG Re Labuan (L) Berhad
(Australia)
Tel: 087-417672 Fax: 087-417675
Mr Stuart William Anderson
15 Kuwait Reinsurance Company - Far East Regional Office
(Kuwait)
Tel: 087-442899 Fax: 087-451899
Mr Ahmad Zabidi Ismail
23 Sompo Japan Insurance Inc, Labuan Branch
(Japan)
Tel: 087-417672 Fax: 087-417675
Mr Yasuhiro Funai
16 Labuan Reinsurance (L) Ltd
(Malaysia)
Tel: 087-452886 Fax: 087-425070
Mr Majid Mohamad
24 Swiss National Insurance Company (Labuan Branch) Ltd
(Switzerland)
Tel: 087-417672 Fax: 087-417675
Ms Cheah Phek Choo
18 Mitsui Sumitomo Reinsurance Limited
(Ireland)
Tel: 087-452748 Fax: 087-452750
Mr Takashi Tsuchiya
19 Partner Reinsurance Company Ltd
(Bermuda)
Tel: 087-417672 Fax: 087-417675
Mr Emil Bergundthal
20 SCOR Reinsurance Asia-Pacific Pte Ltd, Labuan Branch
(France)
Tel: 087-417672 Fax: 087-417675
Mr Teo Lai Kim
21 Singapore Reinsurance Corporation Limited
(Singapore)
Tel: 087-417672 Fax: 087-417675
Mr Mervyn Low Cheng Chwee
22 Sirius International Insurance Corporation (publ),
Labuan Branch
(Sweden)
Tel: 087-417672 Fax: 087-417675
Mr Yap Song Kng
25 Tokio Marine Global Re Limited
(Ireland)
Tel: 087-583001 Fax: 087-583002
Mr Keiichi Maruyama
26 Trust International Insurance B.S.C. (c), Labuan Branch
(Bahrain)
Tel: 087-417672 Fax: 087-417675
Mr Nabil Kotran
27 Virginia Surety Company, Labuan Branch
Tel: 087-442899 Fax: 087-451899
Mr Viswanath C Kandasamy
28 XL Re Ltd Labuan
(Bermuda)
Tel: 087-417672 Fax: 087-417675
Mr Scott Ryrie
29 B.E.S.T. Reinsurance, Family Retakaful Office
(Tunisia)
Tel: 087-451600 Fax: 087-452600
Mr Riadh Karray
107
17 Mitsui Sumitomo Insurance Co. Ltd
(Japan)
Tel: 087-452748 Fax: 087-452750
Mr Takao Yasukochi
82
106
As at 31 March 2007
General Insurers (Country of Origin)
Life Insurers (Country of Origin)
1
(Malaysia)
Tel: 087-451301 Fax: 087-451300
Mr Abdul Halim Nasri
1
2
Federal Insurance Company, Labuan Branch
Tel: 087-417672 Fax: 087-417675
Mr Mario Del Rosso
Mayban Life International (Labuan) Limited
(Malaysia)
Tel: 087-582588 Fax: 087-583588
Mr Ahmed Farouk Aripen
Captives (Country of Origin)
1
Asian Forum Inc
(Malaysia/Philippines/Indonesia)
Tel: 087-417672 Fax: 087-417675
Mr Reynaldo P Palmiery
MAA International Assurance Ltd
(Malaysia)
Tel: 087-422007 Fax: 087-422008
Mr James Beltran
2
APS Risk Management Sdn Bhd
(Japan)
Tel: 087-427018 Fax: 087-429018
E-mail: N/A
Mr Makoto Sawaeda
5
MNI Offshore Insurance (L) Ltd
(Malaysia)
Tel: 087-417672 Fax: 087-417675
Dato’ Aminuddin Md Desa
3
AWCK International Insurance Company Ltd
(Hong Kong)
Tel: 087-427018 Fax: 087-429018
Ms Elaine Cheung
6
PT. Asuransi Jasa Indonesia, Labuan Branch
(Indonesia)
Tel: 087-417672 Fax: 087-417675
Mr Syarifudin Jajang
4
BGC Insurance (L) Ltd
(Australia)
Tel: 087-417672 Fax: 087-417675
Mr Stephen Robertson
5
BIB Asia (L) Berhad
(Malaysia)
Tel: 087-427018 Fax: 087-429018
Mr Chou Sean Chong
3
HIH Casualty and General Insurance (Labuan) Limited
(Australia)
Tel: 087-423828 Fax: 087-417242
Mr Ooi Woon Chee (Liquidator)
4
Brighton Assurance Company Ltd
(Malaysia)
Tel: 087-442899 Fax: 087-451899
Mr Raymond Wong
13 GHR Risk Management (Labuan) Limited
(Malaysia)
Tel: 087-427018 Fax: 087-429018
Dr R Thillainathan
7
Blakford Insurance Ltd
(Malaysia)
Tel: 087-426686 Fax: 087-426010
E-mail: khliu@pacific-world.com
Mr Liu Kim Hock
14 IRM Limited
(Malaysia)
Tel: 087-442899 Fax: 087-451899
Mr Raymond Wong
8
Central Assurance Limited
(Australia)
Tel: 087-442899 Fax: 087-451899
Mr Raymond Wong
15 KLK Assurance (Labuan) Limited
(Malaysia)
Tel: 087-417672 Fax: 087-417675
Mr Tham Chee Phing
9
Energas Insurance (L) Limited
(Malaysia)
Tel: 087-417672 Fax: 087-417675
Ms Raziyah Yahya
16 Lion Insurance Company Limited
(Malaysia)
Tel: 087-427018 Fax: 087-429018
Mr Wang Wing Ying
10 GAP Cover Insurance Inc
(Malaysia)
Tel: 087-417672 Fax: 087-417675
Mr Peter Kent Searle
17 New World Insurance Company (L) Limited
(Hong Kong)
Tel: 087-416122 Fax: 087-422122
Mr Wong Hei
11 Genting (Labuan) Limited
(Malaysia)
Tel: 087-427018 Fax: 087-429018
Dr R Thillainathan
18 Nichiryo (Malaysia) Sdn Bhd
(Japan)
Tel: 087-417672 Fax: 087-417675
Mr Shigeru Sase
12 Genting Risk Management (Labuan) Limited
(Malaysia)
Tel: 087-427018 Fax: 087-429018
Dr R Thillainathan
19 NWS International Insurance Limited
(Hong Kong)
Tel: 087-416122 Fax: 087-416128
Mr Wong Hei
108
109
6
As at 31 March 2007
20 Pacific Insurance (L) Ltd
(Indonesia)
Tel: 087-442899 Fax: 087-451899
Mr Benny Setiawan
27 Twenty-One Insurance Company (Labuan) Ltd
(Japan)
Tel: 087-442899 Fax: 087-451899
Mr Kenjiro Noda
21 R H Insurance Ltd
(Malaysia)
Tel: 087-427018 Fax: 087-429018
Mr Peter Ng Choong Joo
28 Warisan Captive Incorporated
(Malaysia)
Tel: 03-20310828 Fax: 03-20310829
Mr Tan Eng Guan
22 Risk Retention Partners Limited
(Malaysia)
Tel: 087-442899 Fax: 087-451899
Mr Raymond Wong
Insurance Brokers (Country of Origin)
1
23 Sime Darby Insurance Pte Ltd
(Malaysia)
Tel: 087-417672 Fax: 087-417675
Mr Martin Giles Manen
Advisers Worldwide (Malaysia) Limited
(Australia)
Tel: 087-427018 Fax: 087-429018
E-mail: gregw@profinvest.com.au
Mr Gregory Joseph Whimp
2
24 Something Re. Co., Ltd
(Japan)
Tel: 087-427018 Fax: 087-429018
Mr Atsushi Kasahara
Agilent Reinsurance Brokers Limited
(Indonesia)
Tel: 087-427018 Fax: 087-429018
Mr Ian Lim Teck Soon
3
25 The Four Nine Asia Sdn Bhd
(Japan)
Tel: 087-442899 Fax: 087-451899
Mr Takaharu Miyake
Alexander Beard (Malaysia) Limited
(United Kingdom)
Tel: 087-427018 Fax: 087-429018
Ms Jacqueline Evans
4
Al Wasl Insurance Brokers Limited
(United Arab Emirates)
Tel: 087-442899 Fax: 087-451899
Mr Syed Hassan Mujtaba Kazmi
5
ArmenWoodBerg Incorporated
(Sweden)
Tel: 087-417672 Fax: 087-417675
Mr Armen Alex Babayan Fard
26 The Mutual Assurance Co. Plc
(Malaysia)
Tel: 087-442899 Fax: 087-451899
Mr Raymond Wong
Arthur J. Gallagher Asia (L) Bhd
Tel: 087-417672 Fax: 087-417675
Mr Silvius Von Lindeiner
14 Financial Partners International (Labuan) Ltd
(United Kingdom)
Tel: 087-427018 Fax: 087-429018
E-mail: eric.jordan@financial-partner.biz
Mr Eric Jack Jordan
7
Asure Re Broker Pte Ltd
(Korea)
Tel: 087-427018 Fax: 087-429018
Mr Y T Zhu
15 GAA Direct Limited
(United Kingdom)
Tel: 087-427018 Fax: 087-429018
Mr Carl Butler
8
BIB Asia (L) Berhad
(Malaysia)
Tel: 087-427018 Fax: 087-429018
Mr Chou Sean Chong
16 Global Strategies (L) Ltd
(United Kingdom)
Tel: 087-417672 Fax: 087-417675
Dr Alan F King
9
BMS Asia Intermediaries Limited
(United Kingdom)
Tel: 087-427018 Fax: 087-429018
Mr John Mawson
17 Guy Carpenter & Co Labuan Ltd
Tel: 087-417672 Fax: 087-417675
Mr Duncan Garland
10 Citystate Risk Management (L) Bhd
(Singapore)
Tel: 087-417672 Fax: 087-417675
Mr Leow Tze Wen
18 Haakon (Asia) Ltd
(Switzerland)
Tel: 087-417672 Fax: 087-417675
Mr Paul Karl Ludwig
11 Delphi International Insurance Broker Ltd
(Sweden)
Tel: 087-427018 Fax: 087-429018
Mr Hans Lennart Bjornered
19 Heath Lambert Asia Pacific Ltd
(United Kingdom)
Tel: 087-417672 Fax: 087-417675
Mr Lee Jeffrey Warner
12 EuroAsian Reinsurance Broker Corporation
(Russia)
Tel: 087-417672 Fax: 087-417675
Ms Fadeeva Irina Vjacheslavovna
20 Infinity Financial Solutions Ltd
(United Kingdom)
Tel: 087-427018 Fax: 087-429018
E-mail: benbennett@infinsolutions.com
Mr Benjamin Bennett
13 FEIC (Asia) Limited
(United Kingdom)
Tel: 087-417672 Fax: 087-417675
Mr Colin Richard Irwin
21 Inter-Alliance International (South East Asia) Ltd
(British Virgin Islands)
Tel: 087-427018 Fax: 087-429018
Mr Robin Eric Deal
110
111
6
As at 31 March 2007
22 Inter-Alliance International Corporate Benefits Ltd
(Malaysia)
Tel: 087-427018 Fax: 087-429018
Mr Robin Eric Deal
29 Miller Insurance Services (Labuan) Limited
(United Kingdom)
Tel: 087-417672 Fax: 087-417675
Mr Jonathan Philip Garnett
23 International Insurance Brokers Limited
(Singapore)
Tel: 087-427018 Fax: 087-429018
Mr Wun Pak Hay
30 Montpelier (Labuan) Ltd
(United Kingdom)
Tel: 087-419661 Fax: 087-419662
Mr Stuart Robert Williamson
24 J.B. Boda Insurance Services (L) Berhad
(Singapore)
Tel: 087-427018 Fax: 087-429018
Ms Anuradha Umesh Nayak
31 Montpelier Nordic Ltd
(Sweden)
Tel: 087-411236 Fax: 087-411235
Mr Roger Eric Spetz
25 JCC Reinsurance Ltd
(United Kingdom)
Tel: 087-417672 Fax: 087-417675
Mr Jeremy C Camps
32 New World Risk Management (L) Ltd
(Bermuda)
Tel: 087-416122 Fax: 087- 422122
Mr Wong Hei
26 JLT Re Labuan Ltd
(Hong Kong)
Tel: 087-417672 Fax: 087-417675
Mr Julian Hodge
33 Orion International Ltd
(United Kingdom)
Tel: 087-427018 Fax: 087-429018
Mr Steven Robert John Baker
27 K.M.Dastur & Company Private Limited
(India)
Tel: 087-442899 Fax: 087-451899
Mr Mahmood Ahmed Khairaz
34 Pacific World Reinsurance Brokers Limited
(Malaysia)
Tel: 087-426686 Fax: 087-426010
Mr Paul Lam Sai Kwong
28 Mason LaRoche International Ltd
(United Kingdom)
Tel: 087-427018 Fax: 087-429018
Mr Clive Graham Macdonald
35 Pana Management (L) Ltd
(Singapore)
Tel: 087-427018 Fax: 087-429018
Mr Yee San Siong
36 PI Ltd
(United Kingdom)
Tel: 087-442899 Fax: 087-451899
Mr Roger Gumbrell
37 PWS East Asia (L) Ltd
(Singapore)
Tel: 087-417672 Fax: 087-417675
Mr Ahmad Farouk Faizi
1
Brighton Management Limited
(Malaysia)
Tel: 087-442899 Fax: 087-451899
Ms Annie Undikai
2
Labuan Insurance Management Services Limited
(Malaysia)
Tel: 087-427018 Fax: 087-429018
Ms Jocelyn Yeo
3
Mitsui Sumitomo Reinsurance Limited
(Ireland)
Tel: 087-452748 Fax: 087-452750
Mr Yasushi Aoki
4
40 Three Sixty Financial Inc
(United Kingdom)
Tel: 087-427018 Fax: 087-429018
E-mail: justinmoorhouse@threesixtyfinancial.net
Mr Justin Moorehouse
MNI Offshore Insurance (L) Limited
(Malaysia)
Tel: 087-417672 Fax: 087-417675
5
41 Uni Financial Reinsurance Services (L) Ltd
(Singapore)
Tel: 087-427018 Fax: 087-429018
E-mail: leongwk@unifinancialre.com
Mr Leong Weng Kee
New World Insurance Management (L) Limited
(Malaysia)
Tel: 087-416122 Fax: 087-422122
Mr Wong Hei
6
Pacific World Insurance Managers Limited
Tel: 03-20310828 Fax: 03-20310829
Mr William M Cameron
39 Select Asset Management (L) Limited
(United Kingdom)
Tel: 087-417672 Fax: 087-417675
Mr Harold Tsiamis
42 Willis Re Labuan Limited
(Bermuda)
Tel: 087-417672 Fax: 087-417675
Mr Adrian Nicholas Jones
112
113
38 Questor Capital (Labuan) Limited
(Malaysia)
Tel: 087-417672 Fax: 087-417675
Mr Warren Bruce Rodrigues
Insurance Managers (Country of Origin)
As at 31 March 2007
Underwriting Managers (Country of Origin)
1
2
3
4
7
(Malaysia)
Tel: 087-451301 Fax: 087-451300
Mr Abdul Halim Nasir
Mitsui Sumitomo Reinsurance Limited
(Ireland)
Tel: 087-452748 Fax : 087-452750
Mr Yasushi Aoki
8
Brighton Management Limited
(Malaysia)
Tel: 087-442899 Fax: 087-451899
Ms Annie Undikai
MNI Offshore Insurance (L) Limited
(Malaysia)
Tel: 087-417672 Fax: 087-417675
9
New World Insurance Management (L) Limited
(Malaysia)
Tel: 087-416122 Fax: 087-422122
Mr Wong Hei
Catlin Labuan Limited
(Bermuda)
Tel: 087-417672 Fax: 087-417675
Mr Raymond Wong Shu Yoon
Labuan Insurance Management Services Limited
(Malaysia)
Tel: 087-427018 Fax: 087-429018
Ms Jocelyn Yeo
5
Lloyd’s Labuan Limited
(United Kingdom)
Tel: 087-442 899 Fax: 087-451 899
Mr Simon Wilson
6
Marsh Management Services (L) Ltd
(Bermuda)
Tel: 087-417672 Fax: 087-417675
Mr Vittorio Pannuzzo
10 Pacific World Insurance Managers Limited
Tel: 03-2031 0828 Fax: 03-2031 0829
Mr William M Cameron
11 Richard Oliver International (Labuan) Limited
(Singapore)
Tel: 087-593828 Fax: 087-417242
Ms Ng Hwee Hong
Labuan Trust Companies
1
2
3
5
6
7
8
Al-Aman Trust Services Limited
Tel: 087-423828 Fax: 087-417242
Mr Raymond Wong
BIMB Trust Limited
Tel: 087-451806 Fax: 087-451808
Dr Aimi Zulhazmi Abd Rashid
CIMB Trust Limited
Tel: 087-414252 Fax: 087-411855
Mr Nor Azli Mohd Noor
EC Trust (Labuan) Bhd
Tel: 087-452858 Fax: 087-453616
Mr Peter Kent Searle
Ernst & Young Trust Ltd
Tel: 087-413524 Fax: 087-414526
Ms Liau Shih Mei
Equity Trust (Labuan) Limited
Tel: 087-423828 Fax: 087-417242
Mr Raymond Wong
Integrated Agents Trust Ltd
Tel: 087-417810 Fax: 087-424220
Ms Joyce Ng
ITMC Fiduciary Limited
Tel: 087-416518 Fax: 087-417655
E-mail: itmc@itmcfiduciary.com
Mr Colin Paul Seah
10 KPMG Labuan Trust Company Limited
Tel: 087-415467 Fax: 087-414781
Mr Arthur Chin Shoon Choong
11 Law & Commerce Trust Limited
Tel: 087-421644 Fax: 087-421646
Mr Ahmad Kamil Mohd Yusop
12 LGT Trust Labuan Ltd
Tel: 087-443118 Fax: 087-441288
Mr Moritz Gubler
13 Mayban International Trust (Labuan) Ltd
Tel: 087-414406 Fax: 087-410741
Mr Punjau Sepoi
14 Noblehouse International Trust Ltd.
Tel: 087-410745 Fax: 087-419755
Mr Chin Chee Kee
15 PB Trust (L) Ltd
Tel: 087-412336 Fax: 087-451193
Ms Ng Siew Chin
16 Portcullis Trustnet (Labuan) Limited
Tel: 087-451310 Fax: 087-451311
Mr Foo Chee Thong
92
114
115
4
Amanah Raya (Labuan) Limited
Tel: 087-421663 Fax: 087-421662
Mr Zainuddin Suhaimi
9
As at 31 March 2007
17 RHB International Trust (L) Ltd
Tel: 087-417480 Fax: 087-417484
Ms Noreen Wong Ming Li
18 Shearn Skinner Trust Company Ltd
Tel: 087-414073 Fax: 087-413281
Ms Lillian Chau Siew Ha
Fund Management Companies (Country of Origin)
1
Alliance Asset Management (L) Limited
(Malaysia)
Tel: 03-26944888 Fax: 03-26943200
Ms Lim Bong Shih
2
AmanahRaya Asset Management (Labuan) Ltd
(Malaysia)
Tel: 03-20557388 Fax: 03-20788187
Mr Zainul Abidin Ahmad
3
Arcap Inssef Ltd
(Malaysia)
Tel: 087-414252 Fax: 087-411855
Mr Rashdan Ibrahim
4
Arthur J Stewart Capital Limited
(Malaysia)
Tel: 087-423828 Fax: 087-417242
Mr Tan Lip Lin
5
Aurex Management & Investment (L) Limited
(Switzerland)
Tel: 087-421663 Fax: 087-421662
Mr Roger Notter
6
Avenue Asset Management Services (L) Ltd
(Malaysia)
Tel: 03-20892900 Fax: 03-20892901
Mr Lye Thim Loong
19 SitiTrust Administrator Limited
Tel: 087-421663 Fax: 087-421662
Ms Siti Hawa Saat
20 Trustco Labuan Ltd
Tel: 087-453288 Fax: 087-451288
Mr Geoffrey Chang Tze Weng
21 ZI Labuan Trust Company Limited
Tel: 087-451688 Fax: 087-453688
Mr Azizan Mohd Som
Bellador Advisory Services (L) Ltd
(British Virgin Islands)
Tel: 087-418318 Fax: 087-419318
Mr James Kirby
14 Five Dragons (Labuan) Limited
(United Kingdom)
Tel: 087-414252 Fax: 087-411855
8
Canaan Asset Management Limited
(Hong Kong)
Tel: 087-423828 Fax: 087-417242
Mr John David Dryden
15 Fullerton Investment Ltd
(Malaysia)
Tel: 087-423828 Fax: 087-417242
Dr Wong Kai Fatt
Capitalwerks (Labuan) Limited
(Malaysia)
Tel: 087-451688 Fax: 087-453688
Mr Azizan Mohd Som
16 Fulton Capital Management Ltd
(Singapore)
Tel: 087-451806 Fax: 087-451808
Mr Ramlan Ahmad
9
10 CCIB Asset Management Limited
(Hong Kong)
Tel: 087-418868 Fax: 087-418858
Mr Paul Chen Ting-Kang
17 Intrinsic Capital Management (L) Ltd
(Malaysia)
Tel: 087-414073 Fax: 087-413281
Dr Aziz Abu Hassan
11 CFC Seymour Ltd
(Singapore)
Tel: 087-582802 Fax: 087-428802
Mr Frederick Ernest van Tuyll van Serooskerken
18 International Islamic Asset Management LLC
(Hong Kong)
Tel: 087-582268 Fax: 087-581268
Dato’ Abdul Rahman Abdullah
12 EAssetManagement (Labuan) Pte Ltd
(Malaysia)
Tel: 03-21649029 Fax: 03-21649039
Mr Lance W Roberts
19 Namirah Capital Management Ltd
(Singapore)
Tel: 087-451688 Fax: 087-453688
Mr Azizan Mohd Som
13 E & S Assets Management Company Limited
(Malaysia)
Tel: 087-421663 Fax: 087-421662
Ms Siti Hawa Saat
20 Portsmouth Securities Limited
(United Kingdom)
Tel: 087-426801 Fax: 087-426802
Mr Roy George Charles Smith
94
116
117
7
As at 31 March 2007
21 Trident Investment Ltd
(Australia)
Tel: 087-414252 Fax: 087-411855
22 United Base Global Assets Limited
(Malaysia)
Tel: 087-414252 Fax: 087-411855
Mr Jude Anthony
Labuan Offshore Associations
1
Association of Labuan Trust Companies
Lot 2&3, Wisma Lazenda, Jalan Kemajuan
87024 F T Labuan, Malaysia
Tel: 087-414073 Fax: 087-413281
Chairman: Mr Chin Chee Kee
Secretary: Ms Lilian Chau Siew Ha
2
Association of Offshore Banks Labuan
Level 8(D), Main Office Tower
Financial Park Labuan, Jalan Merdeka
Tel: 087-452778 Fax: 087-452779
Chairman: Mr Paul Ong Whee Sen
Secretary: Ms Zelie Ho Swee Lum
3
Labuan International Insurance Association
c/o MNI Offshore Insurance (L) Ltd
Level IIB, Block 4 Office Tower, Financial Park Labuan
Jalan Merdeka, 87000 F T Labuan, Malaysia
Tel: 087-439400 Fax: 087-426652
Chairman: Mr Jeremy C Camps
Secretary: Mr Steve Baker
23 Washington Square Investment Management
(Asia Pacific) Limited
(United Kingdom)
Tel: 087-451688 Fax: 087-453688
Mr Steve Basirdin
1
Labuan International Financial Exchange Inc
Unit Level 7(B), Main Office Tower
Financial Park Labuan, Jalan Merdeka
Tel: 087-451359 Fax: 087-451379
Website: www.lfx.com.my
Ms Rusmin Jaafar
Listing Sponsors
1
2
Citibank Malaysia (L) Limited
Tel: 087-421181 Fax: 087-419671
ECM Libra Avenue Securities Sdn Bhd
(formerly known as Avenue Securities Sdn Bhd)
Tel: 03-21781888 Fax: 03-21781848
Mr Robert Ti
K & N Kenanga Holdings Berhad
Tel: 03-21647178 Fax: 03-21610691
Mr Fazri Mohd Zain
4
AmInternational (Labuan) Limited
Tel: 087-413133 Fax: 087-425211
5
Aseambankers Malaysia Berhad
Tel: 03-20723431 Fax: 03-20784220
Ms Rohaya Mohd Yusof
Ms Yong Lee Mei
6
Bank Islam Malaysia Berhad, Labuan Offshore Branch
Tel: 087-451802 Fax: 087-451800
Mr Engku Afandi Engku Taib
7
EQ Funds Services (Asia) Limited
(formerly known as Insinger Funds)
Tel: 087-423828 Fax: 087-417242
Mr Vijayan Ramanjulu
Alliance Merchant Bank Berhad
Tel: 03-26927788 Fax: 03-26919028
Ms Hwang Mei Lyn
9
CIMB Bank (Labuan) Limited
(formerly known as Bumiputra-Commerce Bank (L) Limited)
Tel: 087-410305 Fax: 087-410313
10 OSK Investment Bank (Labuan) Limited
Tel: 087-581885 Fax: 087-582885
Mr Yeoh Kok Hoe
118
119
3
8
As at 31 March 2007
Trading Agents
1
Aseambankers Malaysia Berhad
Tel: 03-20723431 Fax: 03-20784220
Ms. Rohaya Mohd Yusof
Ms. Yong Lee Mei
2
Bank Islam Malaysia Berhad, Labuan Offshore Branch
Tel: 087-451802 Fax: 087-451800
Mr Iam Nazir Ibrahim
3
CIMB Bank (Labuan) Limited
(formerly known as Bumiputra-Commerce Bank (L) Limited)
Tel: 087-410305 Fax: 087-410313
Labuan Offshore Financial Services Authority
Level 17, Main Office Tower
Financial Park Complex
Jalan Merdeka
87000 Federal Territory Labuan, Malaysia
Tel No : (+6 087) 591 200
Fax No : (+6 087) 428 200
[email protected]
www.lofsa.gov.my

2006 - Labuan International Financial Exchange

Transcription

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