Labuan: International offshore financial centre
Labuan Island is located off the northwest coast of Borneo, north of Brunei and faces the South China Sea. It comprises of the main island of Pulau Labuan and six smaller islands namely Pulau Kuraman, Pulau Daat, Pulau Rusukan Besar, Pulau Rusukan Kecil, Pulau Papan and Pulau Burung. It lies approximately 10 km southeast off the coast of the East Malaysian state of Sabah. The island has an estimated population of 80,000 people. Its quite a small community where everyone knows everyone.
Labuan has a tropical climate with two annual monsoon seasons – the South West monsoon from April to June and the North East monsoon from September to December. It is free from hurricanes and typhoons and enjoys good climate all year round. Daily temperatures average between 28 to 32 degrees Celsius.
Labuan is the main island of the Malaysian Federal Territory of Labuan. Labuan’s capital is Victoria and is best known as an offshore financial centre offering international financial and business services via Labuan IBFC since 1990 as well as a tourist destination for nearby Bruneians and scuba divers. The name Labuan derives from the Malay word labuhan meaning anchorage.
In 1984, Labuan was ceded by Sabah to the federal government and made a federal territory. In 1990, it was declared an international offshore financial centre and free trade zone. The Labuan International Business and Financial Centre (Labuan IBFC) was created as Malaysia’s only offshore financial hub on October 1990 and was operating under the name of Labuan International Offshore Financial Centre (IOFC). At the time it was established to strengthen the contribution of financial services to the Gross National Products (GNP) of Malaysia as well as to develop the island and its surrounding vicinity.
Since its inception, the jurisdiction has expanded to become a base for more than 6,500 offshore companies and more than 300 licensed financial institutions including world leading banks. Labuan IBFC is embarking on an aggressive growth strategy to become the premier international business and financial centre in the Asia Pacific region.
Labuan’s business focus is on five core areas: offshore holding companies, captive insurance, Shariah-compliant Islamic Finance structures, public and private funds and wealth management. Labuan IBFC’s position is further enhanced by the launch of the Malaysian International Islamic Finance Centre initiative in August 2006.
