Labuan IBFC well placed to meet financial requirements of O&G sector

KUALA LUMPUR: Integrated financial services centre Labuan International Business and Financial Centre (Labuan IBFC) is well positioned to provide financial requirements to the oil and gas (O&G) industry, according to Labuan Financial Services Authority (Labuan FSA) chairman Tan Sri Dr Zeti Akhtar Aziz.

Source from (The Star Online): http://biz.thestar.com.my/news/story.asp?file=/2012/6/8/business/11439267&sec=business
Published: Jun 08, 2012

“Emerging markets still are experiencing growth and their demand for O&G, the exploration for O&G, new investment in this industry that is continuing, in particular in our part of the world, therefore there is tremendous potential for Labuan IBFC to serve the business and financial requirements of this industry.

“Labuan is very well positioned, having put in place all the areas that this industry would demand,” she said at the launch of Labuan FSA Annual Report 2011. Zeti, who is also Bank Negara governor, said the on-going World Gas Conference 2012 saw some 6,000 participants. “I believe this is an industry where there is continued growth although there is some slowing of growth as a result of the development in Europe and to some extend in the US.”

Since the introduction of the Global Incentives for Trading (GIFT) programme in September 2011, five trading licences have been issued, enabling the Labuan International Trading Commodity (LITC) companies to benefit from incentives under the GIFT programme. The establishment of GIFT augurs well for the overall development of the oil and gas industry in Labuan.

She said the area of focus in respect of support for the development of the O&G industry was in leasing services. “The LITC will become a trading hub with many projects expected to go forward and this is going to be an exciting development for the industry,” she added.

The leasing sector was one of the most vibrant sectors in Labuan, with a strong increase in the number of leasing companies to 227 companies in 2011 and accumulated assets leased of US$27.6bil. The focus of the leasing companies in the highly specialised areas in aviation and oil and gas provides strong support for the growth and development of the oil and gas sector in Labuan.

According to the report, 651 new companies were incorporated in 2011, representing an increase of 8.1% from 2010. Of the total Labuan companies of 8,655, 72% were from the Asia-Pacific and Far East region.

The Labuan banking sector also reported a steady increase in total assets by 13%, amounting to US$38.3bil in 2011. The capital position of Labuan banks remained resilient with the industry's risk weighted capital ratio and core capital ratio at 22.1% and 23% respectively whilst the ratio of gross non-performing loans improved to 1.5% in 2011. Two new banks from Australia and Ghana obtained licences to operate in Labuan, bringing the total number of Labuan banks to 57.

Labuan trust companies continued to improve with an aggregate operating income of US$18.6mil in 2011 from US$15.4mil a year ago. Seven new Labuan trust companies were also established in 2011, of which five were foreign-owned.

Meanwhile, the insurance sector in the Labuan IBFC remained resilient despite various episodes of natural disasters within the region during the year.

There were 22 new licenses issued, bringing the total of Labuan insurance and insurance-related companies to 181 (2010: 169). The sector's total assets increased by 16.1% to US$3.6bil in 2011 from US$3.1bil in 2010. Gross premiums also grew to US$1.57bil in 2011.

Total Islamic assets registered a growth of 15.4% to US$1.5bil (2010: US$1.29bil), reflecting the strong interest in Islamic finance.

Total Islamic bank financing increased significantly to US$294.6mil as at end-2011, with larger demand from non-residents. The takaful and re-takaful sectors also recorded a double-digit growth, with gross contributions improved by 54.6% for the fifth consecutive year, where total gross contributions of the sectors reached US$459.5mil (2010: US$297.3mil).

For the fiscal year ending 31 December 2011, Labuan FSA recorded a 17% increase in its operating income to RM26.9mil from RM23mil in 2010. Total reserves of the authority remained strong at RM25.2mil.

Moving forward, as outlined in the Financial Sector Blueprint, the Labuan FSA will implement plans to realise the strategic potential of Labuan IBFC to serve the needs of domestic and regional businesses.

This will be complemented by continuous strengthening of the regulatory and supervisory framework of Labuan IBFC to meet international standards and best practices and to promote the sustainable growth of Labuan.

In a statement, Labuan IBFC has appointed Saiful Bahari Baharom as chief executive officer. Saiful, who has a degree in Economics and Finance, has previously work at the Finance Ministry where he served as Special Functions Officer to the Minister of Finance II for the last three years.