Labuan IOFC
Capturing Global Capital Flows
annual report 2006
Chairman’s Statement 2 Corporate Profi le 8
Developmental Review 64 Box Article 72
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
Business Activities of Labuan IOFC 32 Supervision of Offshore Financial Institutions 58
Financial Statements 78 Appendices 102
Capturing Global Capital Flows
In 2006, the signifi cant fi nancial structures and transactions conducted out of Labuan IOFC include:
• Listing of USD750 million world fi rst exchangeable equity-linked sukuk
• USD505 million fi nance for purchase of aircrafts by a regional airline
• USD2.6 billion private funds for investments in the region
• USD1.1 billion lease structures for fi nancing 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
Chairman’s Statement
The year 2006 marks the Labuan Offshore Financial Services
Authority’s (LOFSA) tenth year anniversary. The establishment
of LOFSA 10 years ago was a strategic move by the Government
to streamline the administration and supervision of the Labuan
International Offshore Financial Centre (IOFC). Its establishment
has not only signifi cantly expedited the administrative processes
in the IOFC, but has also contributed towards the signifi cant
development and growth of the centre. Today, Labuan IOFC is home
to over 300 fi nancial institutions, that provide a comprehensive
range of fi nancial services, both conventional and Islamic,
including offshore banking, investment banking, insurance and
insurance-related activities, investment holding, trust, fund
management and leasing. These institutions serve more than
5,500 offshore companies registered in Labuan IOFC. The
ability to attract well-established and reputable international
fi nancial institutions to the IOFC has been one of the critical
success factors in LOFSA’s development roadmap for the IOFC.
In addition, the Labuan International Financial Exchange (LFX)
has further complemented the capital raising activities in the
IOFC, allowing for listing and trading of fi nancial instruments by
international issuers especially from the Asia-Pacifi c region.
In the more recent years, the Labuan IOFC has developed into
an active international centre for Islamic fi nance, regionally and
worldwide and is now home for innovative Islamic fi nancial
solutions. This development is supported by the necessary
fi nancial infrastructure that provides the foundation for the
development of Islamic fi nancial services. The establishment of
the Shariah Advisory Council to advise LOFSA on issues relating
to the development of Shariah-approved fi nancial instruments
in Labuan IOFC has paved the way for more effi cient and
effective introduction of innovative and new Islamic fi nancial
instruments. Labuan IOFC also came to the forefront in Islamic
product development with the issuance of the fi rst global sukuk
by a Malaysian corporation and the sovereign sukuk by the
Government of Malaysia, both of which are listed on the LFX. In
October 2006, Labuan IOFC achieved another major milestone
with the primary listing of the world’s fi rst exchangeable and
equity-linked sukuk on the LFX. The USD750.0 million sukuk
increased the exchange’s Islamic capital market capitalisation
to USD2.8 billion, representing 18.5% of the total market
capitalisation of USD15.1 billion.
3
LOFSA ANNUAL REPORT 2006
Today, Labuan IOFC is home to over 300 fi nancial
institutions, that provide a comprehensive range of
fi nancial sevices, both conventional and Islamic...
2 2
The success of Labuan IOFC over the last decade is attributed to
a number of key factors. The conducive business environment
and tax regime, the effi cient and competitive cost of doing
business coupled with the political stability in Malaysia, have
contributed towards positioning Labuan IOFC as an internationally
recognised centre. LOFSA has also put in place a comprehensive
legislative framework, reinforced by strong regulatory regime
and supervisory systems to maintain confi dence and preserve
the reputation of the IOFC. The legal infrastructure in Labuan
is separate and independent of the Malaysian domestic laws
and is comprehensive to deal with all aspects of fi nancial
activities. Labuan IOFC is also endowed with a relatively welldeveloped
physical infrastructure and amenities, providing a
strong foundation not only for the development of the IOFC
industry but also for the tourism industry and other commercial
activities, in particular the oil and gas industry, in Labuan.
In an environment of increasing international trade and global
investment fl ows, the growth potential of Asia offers investment
opportunities that are manifold. Malaysia’s strategic location
between the growing economies of China and India, proximity
to regional fi nancial centres as well as close ties with the Gulf
Cooperation Countries, contributes towards positioning Labuan
as a gateway for tapping investment opportunities in the rapidly
growing Asia-Pacifi c region. Coupled with low operational cost
of doing business and world-class infrastructure, Labuan has the
potential to become one of the established offshore fi nancial
centres of the Asia-Pacifi c region.
Given the internationalisation of fi nancial activities in the more
globalised and integrated global economy, the transformation of
the Malaysian fi nancial sector has been driven by developments
in both the onshore and offshore fi nancial markets. Over the
years, the efforts on strengthening and diversifying the fi nancial
sector have yielded signifi cant results. In particular, with the
expansion of new areas of activities in the fi nancial services
sector, it has become an important source of growth and
employment opportunities. Labuan IOFC has a complementary
role to strengthen the contribution of the overall fi nancial services
sector to the overall economic performance of Malaysia by
providing access to a broader and more sophisticated range of
offshore products and services. Towards achieving this, Labuan
IOFC is well-positioned to play a bigger role in the area of fund
management and Islamic fi nance.
The development of Labuan IOFC and the dynamism of its
players would potentially move to a much higher level with the
launching of the Malaysia International Islamic Financial Centre
(MIFC) initiative by the Malaysian Government in August 2006.
The initiative aims to position Malaysia as a leading centre for the
offering of Islamic fi nancial products and services in international
currencies to the global and domestic fi nancial community. The
growth potential of the Labuan IOFC is expected to be further
enhanced with the MIFC initiative that seeks to attract global
investors and strengthen the integration with the international
fi nancial system. This is demonstrated by the ability for Islamic
offshore banks, Islamic divisions of offshore banks, offshore
takaful operators and offshore retakaful operators in the Labuan
IOFC to expand their physical operations beyond the Labuan
island to operate on the mainland and conduct foreign currency
business, whilst enjoying the full benefi ts of the IOFC.
As competition intensifi es amongst the many offshore fi nancial
centres driven largely by the more discerning requirements
Chairman’s Statement
5
LOFSA ANNUAL REPORT 2006
of investors, Labuan IOFC has repositioned itself to thrive in
this more competitive and dynamic environment through the
identifi cation of niche businesses, looking beyond traditional
products and services and capitalising on its strengths. Labuan
with the conducive legal, tax and regulatory framework and its
close proximity to the Asian region is well-positioned to take
advantage of the high growth potential of the region which
is resulting in increases in the momentum of foreign direct
investments into the region as well as outward investments
from high growth countries in the region. Malaysian companies
investing abroad are also opening up tremendous opportunities
for Labuan fi nancial institutions. In addition, the Labuan IOFC
can leverage on tax treaties signed with 63 countries and its
effi cient tax legislation to attract the participation of new players
and increase the volume of business, in particular the out-out
and non-resident business.
LOFSA would also be leveraging on multiple channels to elevate
the awareness of Labuan IOFC and its value proposition to
attract new businesses. Towards this end, efforts have been
made to enhance the attractiveness of Labuan via a more robust
yet facilitative regulatory framework, strong infrastructure
and effi cient and effective delivery systems. A facilitative and
conducive regulatory and legislative framework will encourage
the proactive expansion of the breadth and scope of products
and services, whilst ensuring the resilience and stability of the
offshore fi nancial system is not compromised to sustain investor
confi dence in the market. As part of this process, LOFSA has
introduced a modifi ed risk-based supervisory framework as an
effective mechanism of oversight to evaluate and monitor the
fi nancial strength and soundness of the licensed institutions on
a continuing basis. This will provide an early trigger mechanism
to prompt the appropriate response measures to preserve
stability of Labuan IOFC.
Players in the Labuan IOFC are well-positioned to reap the
benefi ts from the recent liberalisation of the exchange control
administration rules by Malaysia. Increased investment
opportunities in ringgit assets for non-resident investors would
translate into greater opportunities for product enhancements
by the offshore players. The combination of global network and
better knowledge of domestic markets of the offshore players
would naturally strengthen their competitive positions. Effi ciency
gains would also be achieved through greater operational
fl exibility for offshore players to facilitate transactions involving
ringgit fi nancial products by non-resident investors. Offshore
players are also expected to take advantage of the opportunities
emerging as a result of growing trade linkages with the regional
economies and with other parts of the world, facilitated by the
more fl exible exchange control regime. These would emanate
amongst others from the increased fl exibility on rules governing
investment abroad by Malaysian residents and higher limits for
their foreign currency borrowings.
In advancing forward, Labuan IOFC will continue to be transformed.
There will be thorough review of the entire legislation pertaining
to Labuan IOFC to ensure that it is robust and dynamic aligned
with the developments and 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 entails the introduction of new company structures to
cater for the demands of users in the offshore environment.
The next challenge would also be to capture a greater level
of economic throughput from the business activities facilitated
4 4
through the IOFC gateway. The new business niches are
envisioned to be the catalyst to spur demand for the services
of professionals including fi nancial, legal, accounting, tax and
other ancillary service providers. This would augurs well for the
future development of offshore fi nancial 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
fi nancial 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
Chairman’s Statement
7
LOFSA ANNUAL REPORT 2006
8 Objectives of LOFSA
8 The Authority and its Members
16 Functions of LOFSA
16 International Memberships
17 Organisation Structure
18 International Advisory Panel
20 Shariah Advisory Council
22 Senior Management
Corporate Profi le
6 2
Corporate Profi le
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 fi nancial services; and
• develop national objectives, policies and priorities for the orderly growth and administration of offshore fi nancial 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 fi nancial centre offering a wide range of offshore products and services, including Islamic fi nance;
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 fi nancial products and services,
including Islamic fi nance 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 offi cer.
LOFSA ANNUAL REPORT 2006
9
11
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)
8 2
Members of the
Authority
• Dr Zeti Akhtar Aziz, Chairman
• Dato’ Mohammed Azlan Hashim
• Datuk Oh Chong Peng
• Dato’ Azizan Abdul Rahman, Director-General
LOFSA ANNUAL REPORT 2006
11
• Dato’ Basiran Saban (appointed with effect from 1 February 2007)
• Encik Abdul Karim Abdul Jalil
• Dato’ Zarinah Anwar
• Dr A Manaf Hussin
• Datuk Ali Abdul Kadir
102
Dr Zeti Akhtar Aziz, Chairman
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 Offi ce),
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 fi nancial 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 fi nance, 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 fi nancial 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 Anwar
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.
Corporate Profi le
LOFSA ANNUAL REPORT 2006
13
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 Certifi ed Public Accountants. He was also a Government-appointed member of the
Kuala Lumpur Stock Exchange from 1990 to 1996.
Dato’ Mohammed Azlan Hashim
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.
He has extensive experience in the corporate sector, including in fi nancial 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.
122
Datuk Ali Abdul Kadir
Datuk Ali is Chief Executive Offi cer 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-Pacifi c 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 Certifi ed 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 Offi cer of Labuan Corporation, a position he has held since December 2006.
Prior to joining Labuan Corporation, Dato’ Basiran was the District Offi cer 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 Offi cer 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.
Corporate Profi le
LOFSA ANNUAL REPORT 2006
15
Encik Abdul Karim Abdul Jalil
Encik Abdul Karim is the Chief Executive Offi cer 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.
He is a member of the Foreign Investment Committee, Financial Reporting Foundation, Malaysia International Islamic Financial Centre
and the Coalition of Malay Economic Bodies.
Encik Abdul Karim holds an LLB (Honours) degree from the University of Malaya.
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 fi nance, 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.
142
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 fi nancial services in
Labuan;
• To ensure that offshore fi nancial 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 fi nancial 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 fi nancial services;
• To cooperate with offshore fi nancial institutions and industry
associations in Labuan in promoting and improving offshore
fi nancial services; and
• To advice the Government generally on matters relating to
offshore fi nancial 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 Organisation of Securities Commissions
(IOSCO);
• Offshore Group of Insurance Supervisors (OGIS);
• Asia/Pacifi c Group on Anti-Money Laundering (APG);
• Islamic Financial Standards Board (IFSB); and
• International Islamic Financial Market (IIFM).
In 2006, LOFSA participated in the annual meetings, conferences
and workshops organised by the organisations above.
Corporate Profi le
LOFSA ANNUAL REPORT 2006
17
162
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.
Advisory Committee
• International Advisory Panel
• Shariah Advisory Council
Supervision and
Enforcement Department
• Supervision
- Banking
- Insurance
- Capital Market
• Legal Services
- Financial Intelligence/
AML
Corporate Services
Department
• Human Resource
• Finance
• Information &
Communication
Technology (ICT)
• Policies/LIS
Regulation
Department
• Business Operations
(Banking, Insurance,
Capital Market)
• Regulation (Banking,
Insurance, Capital
Market)
• Registrar of Companies
• Statistics
• Administration
Strategic and Development
Department
• Strategic Planning
& Research
• Islamic Financial
Services
• Business Promotion
• Corporate
Communication &
Customer Services
Audit & Risk Management Members of Authority
Committee
Director-General
Audit & Risk Management
Department
Supervision and Management Division Business Strategy Division
Minister of
Finance
Dato’ Mohammed Azlan Hashim, Chairman
Dato’ Azlan is an Authority Member of LOFSA. His profi le 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 fi nancial 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 fi nance, 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 fi ve years.
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.
LOFSA ANNUAL REPORT 2006
19
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
4
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 Offi cer of HSBC Amanah, HSBC Group’s global Islamic fi nancial 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.
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.
He was the Regional Chief Executive Offi cer/Managing Director of Shell Exploration and Production BV in the Netherlands.
Michael Troth
Mr Troth is the Managing Director and Head of Asia-Pacifi c 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 fi nance and education, and was a Board Member of the Stock Exchange
of Singapore and PSA Corporation.
18
Dr Mohd Daud Bakar, Chairman
Chief Executive Offi cer, 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 fi nancial 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.
Shariah Advisory
Council
The Shariah Advisory Council (SAC) is a consultative body that reviews, advises and endorses
Shariah matters pertaining to Islamic fi nancial products and services. Members of the SAC are
appointed by the Authority.
LOFSA ANNUAL REPORT 2006
21
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
6
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.
Dr Hussein Hamed Hassan
Head of Shariah Board, Dubai Islamic Bank, UAE
MA, University of New York, USA
PhD, University of Al-Azhar, Egypt
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 fi nance,
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 fi eld. 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.
20
Dato’ Azizan Abdul Rahman
Director-General
Dato’ Azizan is an Authority Member of LOFSA. His profi le 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 fi nancial institutions. The Strategic and Development Department is responsible for strategic business planning and research,
Islamic fi nancial 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, fi nance, 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.
Senior Management
LOFSA ANNUAL REPORT 2006
23
From Left to Right • Dato’ Azizan Abdul Rahman
• Danial Mah Abdullah
• Sani Ab Hamid
• Sabaruddin Ismail
• Iskandar Mohd Nuli
• Md Yunus Atip
• Saiful Baharom
8
He is responsible for the business support functions of LOFSA covering human resources, fi nance, 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
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.
He oversees the banking, insurance and capital market supervision functions as well as legal and fi nancial 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.
Md Yunus Atip
Director, Regulation Department
Md Yunus Atip, formerly with Bank Negara Malaysia, joined LOFSA in 1996. He graduated from Linfi eld 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 fi nancial 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 fi nancial 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.
22
realising
objectives
26 The Authority
26 Authority Meetings
26 Accountability and Audit
27 The Audit and Risk Management Committee (ARMC)
28 Summary of Activities
28 Relationship with the Auditor-General
28 Internal Audit
28 Enterprise Risk Management (ERM)
Statement of Corporate Governance
LOFSA ANNUAL REPORT 2006
25
Statement of Corporate Governance
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 fi gures
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 fi nancial 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
suffi cient 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 clarifi cation 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 fi nancial performance
at the fi nancial year-end, primarily through the Chairman’s
statement and annual fi nancial statements in the annual report.
The Authority is assisted by the Audit and Risk Management
Committee (ARMC) in overseeing and ensuring that the fi nancial
statement for 2006 provides a fair assessment of the fi nancial
position and that the fi nancial 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, fi nancial, operational and
compliance controls, as well as risk management framework. The
internal control system also defi nes 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 defi ned 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;
LOFSA ANNUAL REPORT 2006
27
• Periodical reporting by the Management to the Authority on
fi nancial 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 defi ciencies 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.
The internal controls systems of LOFSA have been adequate
to ensure that no material events had occurred that would
signifi cantly impact the operations and fi nancial performance
of LOFSA.
Responsibility
The Authority recognises that sound internal controls and risk
management practices are key elements to good corporate
governance. The Authority affi rms 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
signifi cant 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 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 identifi ed
and assessed, and appropriate internal controls have been
implemented to ensure that the signifi cant risks have adequate
mitigation and control measures.
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
Datuk Ali Abdul Kadir Member
Dato’ Mohammed Azlan Hashim Member
Encik Abdul Karim Abdul Jalil 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 fi nancial 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 fi ve 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.
2160
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 defi ciencies
arising from the audits;
• External audit review report by the Auditor-General’s Offi ce;
• Budget proposal for the following year;
• Financial reporting including quarterly and annual fi nancial
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 fi rm.
The principle role of the internal audit function is to perform
regular and systematic reviews on the activities within LOFSA
with impartiality, profi ciency 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 signifi cant 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 fi ndings 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
signifi cant 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 defi nes 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
Statement of Corporate Governance
LOFSA ANNUAL REPORT 2006
29
alignment of business and risk strategies and policies. The
Audit and Risk Management Department supports the Director-
General 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 identifi ed 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.
2182
serving
demands
33 Offshore Companies
35 Offshore Banks
41 Offshore Investment Banks
42 Islamic Financial Services
43 Offshore Insurance
50 Offshore Leasing
52 Offshore Fund Management
53 Debt Issuance Activities
53 Labuan International Financial Exchange
55 Trust Companies
Business Activities of Labuan IOFC
LOFSA ANNUAL REPORT 2006
31
Business Activities of Labuan IOFC
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 fi rst fi ve 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 fi nancial activities in Labuan IOFC have further
diversifi ed, with more activities in the areas of offshore insurance and insurance-related, investment banking, leasing as well as capital
market activities. This refl ects the effectiveness of the policy changes made to enhance the diversity of the institutions and offshore activities
in Labuan IOFC.
􀀧􀁌􀁅􀁖􀁘􀀄􀀕􀀄􀀞􀀄􀀳􀁊􀁊􀁗􀁌􀁓􀁖􀁉􀀄􀀧􀁓􀁑􀁔􀁅􀁒􀁍􀁉􀁗􀀄􀀑􀀄􀀫􀁖􀁓􀁛􀁘􀁌􀀄􀁓􀁊􀀄􀀳􀁊􀁊􀁗􀁌􀁓􀁖􀁉􀀄􀀧􀁓􀁑􀁔􀁅􀁒􀁍􀁉􀁗􀀄􀁊􀁓􀁖
􀀕􀀝􀀝􀀚􀀄􀀑􀀄􀀖􀀔􀀔􀀚
􀀚􀀐􀀔􀀔􀀔
􀀙􀀐􀀔􀀔􀀔
􀀘􀀐􀀔􀀔􀀔
􀀗􀀐􀀔􀀔􀀔
􀀖􀀐􀀔􀀔􀀔
􀀕􀀝􀀝􀀚 􀀕􀀝􀀝􀀛 􀀕􀀝􀀝􀀜 􀀕􀀝􀀝􀀝 􀀖􀀔􀀔􀀔 􀀖􀀔􀀔􀀕 􀀖􀀔􀀔􀀖 􀀖􀀔􀀔􀀗 􀀖􀀔􀀔􀀘 􀀖􀀔􀀔􀀙 􀀖􀀔􀀔􀀚
􀀕􀀐􀀔􀀔􀀔
􀀔
􀀲􀁙􀁑􀁆􀁉􀁖
LOFSA ANNUAL REPORT 2006
33
3124
􀀔
􀀙􀀔
􀀕 􀀔􀀔
􀀕 􀀙􀀔
􀀖􀀔􀀔
􀀖􀀙􀀔
􀀗􀀔􀀔
􀀗􀀙􀀔
􀀘􀀔􀀔
􀀕 􀀝􀀝􀀚 􀀕 􀀝􀀝􀀛 􀀕 􀀝􀀝􀀜 􀀕 􀀝􀀝􀀝 􀀖􀀔􀀔􀀔 􀀖􀀔􀀔􀀕 􀀖􀀔􀀔􀀖 􀀖􀀔􀀔􀀗 􀀖􀀔􀀔􀀘 􀀖􀀔􀀔􀀙 􀀖􀀔􀀔􀀚
􀀧􀁌􀁅􀁖􀁘􀀄􀀖􀀄􀀞􀀄􀀳􀁊􀁊􀁗􀁌􀁓􀁖􀁉􀀄􀀧􀁓􀁑􀁔􀁅􀁒􀁍􀁉􀁗􀀄􀀑􀀄􀀫􀁖􀁓􀁛􀁘􀁌􀀄􀁓􀁊􀀄􀀳􀁊􀁊􀁗􀁌􀁓􀁖􀁉􀀄􀀰􀁍􀁇􀁉􀁒􀁗􀁉􀁈􀀄􀀭􀁒􀁗􀁘􀁍􀁘􀁙􀁘􀁍􀁓􀁒􀁗􀀎􀀄􀁊􀁓􀁖􀀄
􀀕􀀝􀀝􀀚􀀄􀀑􀀄􀀖􀀔􀀔􀀚
􀀲􀁙􀁑􀁆􀁉􀁖
􀀲􀁓􀁘􀁉􀀄􀀞􀀄􀀎􀀄􀀰􀁍􀁇􀁉􀁒􀁗􀁉􀁈􀀄􀀭􀁒􀁗􀁘􀁍􀁘􀁙􀁘􀁍􀁓􀁒􀁗􀀄􀁖􀁉􀁊􀁉􀁖􀀄􀁘􀁓􀀄􀁓􀁊􀁊􀁗􀁌􀁓􀁖􀁉􀀄􀁆􀁅􀁒􀁏􀁗􀀐􀀄􀁍􀁒􀁗􀁙􀁖􀁅􀁒􀁇􀁉􀀄􀁅􀁒􀁈􀀄􀁍􀁒􀁗􀁙􀁖􀁅􀁒􀁇􀁉􀀑􀁖􀁉􀁐􀁅􀁘􀁉􀁈􀀐􀀄􀁊􀁙􀁒􀁈􀀄􀁑􀁅􀁒􀁅􀁋􀁉􀁖􀁗􀀐􀀄􀁐􀁉􀁅􀁗􀁍􀁒􀁋􀀄􀁇􀁓􀁑􀁔􀁅􀁒􀁍􀁉􀁗􀀐􀀄􀁑􀁙􀁘􀁙􀁅􀁐􀀄􀀄
􀀄􀀄􀀄􀀄􀀄􀀄􀀄􀀄􀀄􀀄􀀄􀁊􀁙􀁒􀁈􀁗􀀄􀁅􀁒􀁈􀀄􀁘􀁖􀁙􀁗􀁘􀀄􀁇􀁓􀁑􀁔􀁅􀁒􀁍􀁉􀁗
Offshore Companies
Labuan IOFC continued to remain as an attractive offshore fi nancial 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
􀀖􀀔􀀔􀀖 􀀖􀀔􀀔􀀗 􀀖􀀔􀀔􀀘 􀀖􀀔􀀔􀀙 􀀖􀀔􀀔􀀚
􀀗􀀐􀀙􀀛􀀕
􀀘􀀐􀀔􀀚􀀙
􀀘􀀐􀀚􀀖􀀔
􀀙􀀐􀀕􀀙􀀖
􀀙􀀐􀀚􀀛􀀜
􀀶􀁉􀁋􀁍􀁗􀁘􀁉􀁖􀁉􀁈 􀀳􀁔􀁉􀁖􀁅􀁘􀁍􀁒􀁋
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 refl ects the growing signifi cance and attractiveness of Labuan IOFC as the offshore centre of choice in the
Asia Pacifi c region among international investors. More than half of the operating offshore companies in Labuan IOFC in 2006 are from the
Southeast Asia and Pacifi c region, including Malaysia, Indonesia, Australia, Singapore, Thailand, New Zealand and the Philippines. Far East
Business Activities of Labuan IOFC
Chart 3 : Offshore Companies - Number of Registered and Operating Offshore Companies
LOFSA ANNUAL REPORT 2006
35
3146
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.
􀀧􀁌􀁅􀁖􀁘􀀄􀀘􀀄􀀞􀀄􀀳􀁔􀁉􀁖􀁅􀁘􀁍􀁒􀁋􀀄􀀳􀁊􀁊􀁗􀁌􀁓􀁖􀁉􀀄􀀧􀁓􀁑􀁔􀁅􀁒􀁍􀁉􀁗􀀄􀀑􀀄􀀦􀁖􀁉􀁅􀁏􀁈􀁓􀁛􀁒􀀄􀁓􀁊􀀄􀀳􀁖􀁍􀁋􀁍􀁒􀀄􀁆y 􀀄 􀀶􀁉􀁋􀁍􀁓􀁒􀀄􀁅􀁗􀀄􀁅􀁘􀀄􀀗􀀕􀀄􀀨􀁉􀁇􀁉􀁑􀁆􀁉􀁖􀀄􀀖􀀔􀀔􀀚
􀀥􀁑􀁉􀁖􀁍􀁇􀁅􀁗
􀀕􀀗􀀒􀀗􀀉
􀀱􀁍􀁈􀁈􀁐􀁉􀀄􀀩􀁅􀁗􀁘􀀄􀀊􀀄􀀥􀁊􀁖􀁍􀁇􀁅
􀀖􀀒􀀙􀀉
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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).
Table 2 : Offshore Banks – Sources and Uses of Funds
2004 2005 2006 2006
USD Million 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 Offi ce 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
Total 19,906.2 18,272.4 21,110.3 15.5 100.0
Uses:
Cash and Short-term Funds 3,503.2 2,956.9 2,327.7 (21.3) 11.0
Balances due from Head Offi ce 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
Loans and Advances 10,778.2 10,369.8 11,938.6 15.1 56.5
Fixed Assets 12.5 6.1 5.7 (6.6) 0.0
Others 707.5 941.0 1,678.5 78.4 8.0
Total 19,906.2 18,272.4 21,110.3 15.5 100.0
Borrowing from head offi ces 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 signifi cant growth of 36.5% to USD1.9 billion
(2005: USD1.4 billion) due to the internationalisation of Malaysian corporations.
Business Activities of Labuan IOFC
LOFSA ANNUAL REPORT 2006
37
3168
Table 3 : Offshore Banks - Key Data
As at end of 2006
2004 2005 2006 change (%) share (%)
Number of Banks Approved 58 59 57 (3.4) -
Number of Banks in Operations 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
Total Loans Outstanding (USD Million) 10,778.2 10,369.8 11,938.6 15.1 100.0
Malaysian-owned Banks 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
Malaysian-owned Banks 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
% change (2006)
USD Million
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
% share 64.3 28.9 32.8
Non-Residents 2,264.0 3,418.2 3,893.5 13.9
% share 35.7 71.1 67.2
Total Loans Outstanding 10,778.2 10,369.8 11,938.6 15.1
Residents 7,074.5 6,177.7 5,207.0 (15.7)
% share 65.6 59.6 43.6
Non-Residents 3,703.7 4,192.1 6,731.6 60.6
% share 34.4 40.4 56.4
The demand for offshore fi nancing 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 signifi cantly by 60.6% whilst that of residents declined to USD5.2 billion as at end-2006.
􀀹􀀷􀀨􀀄􀀱􀁍􀁐􀁐􀁍􀁓􀁒
􀀕􀀘􀀐􀀔􀀔􀀔
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􀀕􀀖􀀐􀀔􀀔􀀔
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􀀖􀀔􀀔􀀖 􀀖􀀔􀀔􀀗 􀀖􀀔􀀔􀀘 􀀖􀀔􀀔􀀙 􀀖􀀔􀀔􀀚
􀀔
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􀀘􀀚
􀀸􀁓􀁘􀁅􀁐􀀄􀀥􀁗􀁗􀁉􀁘􀁗 􀀲􀁙􀁑􀁆􀁉􀁖􀀄􀁓􀁊􀀄􀀦􀁅􀁒􀁏􀁗􀀄􀁍􀁒􀀄􀀳􀁔􀁉􀁖􀁅􀁘􀁍􀁓􀁒􀁗
Business Activities of Labuan IOFC
Chart 5 : Offshore Banks - Deposits and Loans Outstanding
Chart 6 : Offshore Banks - Total Assets and Number of Banks in Operations
LOFSA ANNUAL REPORT 2006
39
3280
The fi nancing, 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.
Table 5 : Offshore Banks - Direction of Lending by Sectors
Loans by Sectors
2004 2005 2006 2006
USD Million
change
(%)
share
(%)
Agriculture, Hunting, Forestry and Fishing 535.7 230.7 364.3 57.9 3.0
Mining and Quarrying 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
Property of which:
Real Estate 150.1 133.9 222.3 66.0 1.9
Construction 211.3 148.8 305.7 105.4 2.6
Housing 60.3 49.0 76.2 55.5 0.6
Wholesale and Retail Trade and Restaurants and Hotels 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
Other Services 41.0 46.5 0.0 (100.0) -
Miscellaneous 2,313.3 2,595.5 2,472.7 (4.7) 20.7
Total 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.
Table 6 : Offshore Banks - Selected Indicators
2004 2005 2006
Return on Assets (%) 1.4 1.3 1.1
Pre-tax Profi t per Employee (USD’000) 592.0 509.5 503.6
Staff Cost per Employee (USD’000) 29.3 30.4 29.5
Average Assets per Bank (USD Million) 382.8 326.3 398.3
Pre-tax Profi t (Loss) (USD Million) 272.9 241.5 239.2
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
Number of Banks in Operations 52 56 53
Number of Banks Approved 58 59 57
Pre-tax profi t 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.
􀀹􀀷􀀨􀀄􀀱􀁍􀁐􀁐􀁍􀁓􀁒
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􀀴􀁖􀁓􀁊􀁍􀁘􀀄􀀦􀁉􀁊􀁓􀁖􀁉􀀄􀀸ax
􀀖􀀔􀀔􀀗 􀀖􀀔􀀔􀀘 􀀖􀀔􀀔􀀙 􀀖􀀔􀀔􀀚
􀀔
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.
Business Activities of Labuan IOFC
Chart 7 : Offshore Banks - Profi t Before Tax
LOFSA ANNUAL REPORT 2006
41
4202
Table 7 : Offshore Banks - Employment
2004
Staff Position Malaysian Others Total
Senior Management 39 22 61
Middle Management 86 21 107
Supervisory Staff 140 4 144
Others 148 1 149
Total Staff 413 48 461
2005
Senior Management 48 23 71
Middle Management 80 21 101
Supervisory Staff 134 6 140
Others 149 13 162
Total Staff 411 63 474
2006
Senior Management 39 24 63
Middle Management 81 19 100
Supervisory Staff 122 5 127
Others 164 21 185
Total Staff 406 69 475
Offshore Investment Banks
The number of offshore investment banks in Labuan IOFC increased to 13 in 2006. These banks sustained their fi nancial performance,
supported by a rapid growth in total assets and gross income level. The industry achieved an increase in pre-tax profi t 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.
Table 8 : Offshore Investment Banks - Selected Indicators
2004 2005 2006
Return on Assets (%) 6.6 3.5 5.3
Pre-tax Profi t per Employee (USD’000) 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
Pre-tax Profi t (Loss) (USD Million) 9.8 8.5 19.2
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
Number of Banks in Operations 7 8 9
Number of Banks Approved 11 10 13
The lending activities of offshore investment banks continued to focus on the fi nancing, 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-fl edged 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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􀀛􀀚􀀘􀀒􀀔
􀀖􀀔􀀔􀀖􀀎 􀀖􀀔􀀔􀀗􀀎 􀀖􀀔􀀔􀀘􀀎 􀀖􀀔􀀔􀀙􀀎 􀀖􀀔􀀔􀀚
􀀸􀁓􀁘􀁅􀁐􀀄􀀥􀁗􀁗􀁉􀁘􀁗􀀄􀁓􀁊􀀄􀀭􀁗􀁐􀁅􀁑􀁍􀁇􀀄􀀦􀁅􀁒􀁏􀁗􀀄􀁅􀁒􀁈􀀄􀀭􀁗􀁐􀁅􀁑􀁍􀁇􀀄􀀭􀁒􀁚􀁉􀁗􀁘􀁑􀁉􀁒􀁘􀀄􀀦􀁅􀁒􀁏􀁗
􀀸􀁓􀁘􀁅􀁐􀀄􀀭􀁗􀁐􀁅􀁑􀁍􀁇􀀄􀀥􀁗􀁗􀁉􀁘􀁗􀀄􀁍􀁒􀁇􀁐􀁙􀁈􀁍􀁒􀁋􀀄􀀭􀁗􀁐􀁅􀁑􀁍􀁇􀀄􀀻􀁍􀁒􀁈􀁓􀁛􀁗􀀄
􀀲􀁓􀁘􀁉􀀞􀀄􀀎􀀄􀀶􀁉􀁗􀁘􀁅􀁘􀁉􀁈
Business Activities of Labuan IOFC
LOFSA ANNUAL REPORT 2006
43
4224
Both deposits and fi nancing were lower as at end-2006. Total deposits of Islamic banks stood at USD37.0 million (2005: USD41.0 million)
whilst fi nancing 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 fi nancing. Most of the fi nancing were channelled to the manufacturing and property sectors, which accounted for 28.5%
and 22.8% of total fi nancing 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.
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.
Labuan IOFC continues to attract a well diversifi ed mix of international licensees originating from 23 countries and jurisdictions, with the
Asia and Pacifi c 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
Insurance Manager 5 6 6
Underwriting Manager 8 9 11
Broker 36 37 42
Total 106 112 123
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
2004 2005 2006
USD’000 share (%) USD’000 share (%) USD’000 share (%)
Malaysian 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 fi xed 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
2004 2005 2006
USD’000 share (%) USD’000 share (%) USD’000 share (%)
Fixed Assets 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
Cash and Bank Balances 66,792 6.6 68,965 5.9 90,888 6.2
Investments 138,201 13.7 177,019 15.2 177,445 12.1
Others 206,770 20.4 214,301 18.4 259,099 17.7
Total 1,010,991 100.0 1,166,043 100.0 1,465,941 100.0
Note: Figures may not necessarily add up due to rounding
Business Activities of Labuan IOFC
LOFSA ANNUAL REPORT 2006
45
􀀧􀁌􀁅􀁖􀁘􀀄􀀝􀀄􀀞􀀄􀀳􀁊􀁊􀁗􀁌􀁓􀁖􀁉􀀄􀀭􀁒􀁗􀁙􀁖􀁅􀁒􀁇􀁉􀀄􀀑􀀄􀀸􀁓􀁘􀁅􀁐􀀄􀀥􀁗􀁗􀁉􀁘􀁗􀀄􀁅􀁒􀁈􀀄􀀲􀁙􀁑􀁆􀁉􀁖􀀄􀁓􀁊􀀄􀀭􀁒􀁗􀁙􀁖􀁅􀁒􀁇􀁉
􀁅􀁒􀁈􀀄􀀭􀁒􀁗􀁙􀁖􀁅􀁒􀁇􀁉􀀑􀀶􀁉􀁐􀁅􀁘􀁉􀁈􀀄􀀰􀁍􀁇􀁉􀁒􀁇􀁉􀁗
􀀲􀁙􀁑􀁆􀁉􀁖􀀄􀁓􀁊􀀄􀀭􀁒􀁗􀁙􀁖􀁅􀁒􀁇􀁉􀀄􀁅􀁒􀁈
􀀭􀁒􀁗􀁙􀁖􀁅􀁒􀁇􀁉􀀑􀀶􀁉􀁐􀁅􀁘􀁉􀁈􀀄􀀰􀁍􀁇􀁉􀁒􀁇􀁉􀁗􀀄
􀀹􀀷􀀨􀀄􀀱􀁍􀁐􀁐􀁍􀁓􀁒
􀀕􀀐􀀚􀀔􀀔
􀀕􀀐􀀘􀀔􀀔
􀀕􀀐􀀖􀀔􀀔
􀀕􀀐􀀔􀀔􀀔
􀀜􀀔􀀔
􀀚􀀔􀀔
􀀘􀀔􀀔
􀀖􀀔􀀔
􀀔
􀀕􀀘􀀔
􀀕􀀖􀀔
􀀕􀀔􀀔
􀀜􀀔
􀀚􀀔
􀀘􀀔
􀀖􀀔
􀀔
􀀖􀀔􀀔􀀖
􀀸􀁓􀁘􀁅􀁐􀀄􀀥􀁗􀁗􀁉􀁘􀁗 􀀲􀁙􀁑􀁆􀁉􀁖􀀄􀁓􀁊􀀄􀀭􀁒􀁗􀁙􀁖􀁅􀁒􀁇􀁉􀀄􀁅􀁒􀁈􀀄􀀭􀁒􀁗􀁙􀁖􀁅􀁒􀁇􀁉􀀑􀀶􀁉􀁐􀁅􀁘􀁉􀁈􀀄􀀰􀁍􀁇􀁉􀁒􀁇􀁉􀁗
􀀖􀀔􀀔􀀗 􀀖􀀔􀀔􀀘 􀀖􀀔􀀔􀀙 􀀖􀀔􀀔􀀚
Gross premiums written by offshore general insurers and reinsurers recorded a signifi cant growth of 29.6% to USD655.2 million from
USD505.5 million in 2005. This growth was broad based across all sectors. Signifi cant increases were recorded particularly in the engineering
(oil and gas-related risks) and fi re sectors. Premiums written for the fi re 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
Year
Total Fire Marine Engineering Motor Miscellaneous Total
Malaysian Others USD’000
2004 210,846 225,342 210,571 59,845 46,452 49,157 70,163 436,188
2005 248,736 256,728 213,924 69,181 47,957 50,317 124,085 505,464
2006 305,894 349,272 263,820 90,261 109,078 45,961 146,046 655,166
change (%)
2004 3.2 10.5 8.4 13.2 20.4 (7.9) 1.6 6.9
2005 18.0 13.9 1.6 15.6 3.2 2.4 76.9 15.9
2006 23.0 36.0 23.3 30.5 127.4 (8.7) 17.7 29.6
share (%)
2004 48.3 51.7 48.3 13.7 10.6 11.3 16.1 100.0
2005 49.2 50.8 42.3 13.7 9.5 10.0 24.5 100.0
2006 46.7 53.3 40.3 13.8 16.6 7.0 22.3 100.0
Note: Figures may not necessarily add up due to rounding
44
􀀧􀁌􀁅􀁖􀁘􀀄􀀕􀀔􀀄􀀞􀀄􀀳􀁊􀁊􀁗􀁌􀁓􀁖􀁉􀀄􀀭􀁒􀁗􀁙􀁖􀁅􀁒􀁇􀁉􀀄􀀑􀀄􀀨􀁍􀁗􀁘􀁖􀁍􀁆􀁙􀁘􀁍􀁓􀁒􀀄􀁓􀁊􀀄􀀫􀁖􀁓􀁗􀁗􀀄􀀴􀁖􀁉􀁑􀁍􀁙􀁑􀁗􀀄􀁍􀁒􀀄􀀖􀀔􀀔􀀚
􀀱􀁍􀁗􀁇􀁉􀁐􀁐􀁅􀁒􀁉􀁓􀁙􀁗
􀀖􀀖􀀒􀀗􀀉
􀀱􀁓􀁘􀁓􀁖
􀀛􀀒􀀔􀀉
􀀩􀁒􀁋􀁍􀁒􀁉􀁉􀁖􀁍􀁒􀁋
􀀕􀀚􀀒􀀚􀀉
􀀱􀁅􀁖􀁍􀁒􀁉
􀀕􀀗􀀒􀀜􀀉
􀀪􀁍􀁖􀁉
􀀘􀀔􀀒􀀗􀀉
Table 13 : Offshore Insurance - Distribution of Net Premiums
Year
Total Fire Marine Engineering Motor Miscellaneous Total
Malaysian Others USD’000
2004 184,954 195,550 185,197 53,974 42,153 40,562 58,619 380,505
2005 167,472 221,060 178,704 60,961 37,870 46,425 64,572 388,532
2006 199,959 274,450 215,282 70,624 55,135 41,824 91,544 474,409
% change
2004 35.7 13.4 26.6 30.6 91.0 (11.8) 10.4 23.2
2005 (9.5) 13.0 (3.5) 12.9 (10.2) 14.5 10.2 2.1
2006 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
Note: Figures may not necessarily add up due to rounding
Business Activities of Labuan IOFC
LOFSA ANNUAL REPORT 2006
47
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 fi re, 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).
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
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
46
􀀧􀁌􀁅􀁖􀁘􀀄􀀕􀀕􀀄􀀞􀀄􀀳􀁊􀁊􀁗􀁌􀁓􀁖􀁉􀀄􀀭􀁒􀁗􀁙􀁖􀁅􀁒􀁇􀁉􀀄􀀑􀀄􀀹􀁒􀁈􀁉􀁖􀁛􀁖􀁍􀁘􀁍􀁒􀁋􀀄􀀩􀁜􀁔􀁉􀁖􀁍􀁉􀁒􀁇􀁉
􀀴􀁉􀁖􀁇􀁉􀁒􀁘􀁅􀁋􀁉
Net Claims Incurred Commission Management Expenses Underwriting Margin
􀀛􀀔
􀀚􀀔
􀀙􀀔
􀀘􀀔
􀀗􀀔
􀀖􀀔
􀀕􀀔
􀀔
􀀖􀀔􀀔􀀖 􀀖􀀔􀀔􀀗 􀀖􀀔􀀔􀀘 􀀖􀀔􀀔􀀙 􀀖􀀔􀀔􀀚
The offshore captive insurance business recorded a signifi cant 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
USD’000
2004 3,126 56 385 8,102 11,669
2005 4,936 348 73 49,025 54,382
2006 9,693 11,223 60,993 29,803 111,712
% change
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
% 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
Business Activities of Labuan IOFC
LOFSA ANNUAL REPORT 2006
49
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 2006
General Business USD’000
Labuan 43,842 46,321 58,817
Malaysia 55,690 67,619 79,723
Others 43,663 66,523 68,017
Sub Total 143,195 180,463 206,557
Life Business USD’000
Labuan - - -
Malaysia - - -
Others 68,828 45,413 51,319
Sub Total 68,828 45,413 51,319
Grand Total 212,023 225,876 257,876
48
Table 18 : Offshore Insurance - Brokerage Earned by Insurance Brokers
2004 2005 2006
General Business USD’000
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
Grand Total 9,667 11,269 13,771
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 fi nancial 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 fi ve of the
existing leasing companies discontinued operations. As a result, the cumulative amount of lease fi nancing 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.
Business Activities of Labuan IOFC
LOFSA ANNUAL REPORT 2006
51
Table 19 : Offshore Leasing - Growth
Number of Leasing Companies in Operations
2002 2003 2004 2005 2006
34 50 60 69 83
change (%)
47.8 47.1 20.0 15.0 20.3
Asset Leased (Cumulative)
USD Million
2,891 6,254 7,139 10,913* 11,908
share (%)
52.2 116.3 14.2 52.9 9.1
Note: * Restated
􀀲􀁙􀁑􀁆􀁉􀁖􀀄􀁓􀁊􀀄􀀰􀁉􀁅􀁗􀁍􀁒􀁋􀀄􀀧􀁓􀁑􀁔􀁅􀁒􀁍􀁉􀁗
􀁍􀁒􀀄􀀳􀁔􀁉􀁖􀁅􀁘􀁍􀁓􀁒􀁗􀀄
􀀹􀀷􀀨􀀄􀀱􀁍􀁐􀁐􀁍􀁓􀁒
􀀕􀀘􀀐􀀔􀀔􀀔
􀀕􀀖􀀐􀀔􀀔􀀔
􀀕􀀔􀀐􀀔􀀔􀀔
􀀜􀀐􀀔􀀔􀀔
􀀚􀀐􀀔􀀔􀀔
􀀘􀀐􀀔􀀔􀀔
􀀖􀀐􀀔􀀔􀀔
􀀖􀀔􀀔􀀖
􀀥􀁗􀁗􀁉􀁘􀀄􀀰􀁉􀁅􀁗􀁉􀁈􀀄􀀌􀀧􀁙􀁑􀁙􀁐􀁅􀁘􀁍􀁚􀁉􀀍 􀀲􀁙􀁑􀁆􀁉􀁖􀀄􀁓􀁊􀀄􀀰􀁉􀁅􀁗􀁍􀁒􀁋􀀄􀀧􀁓􀁑􀁔􀁅􀁒􀁍􀁉􀁗􀀄􀁍􀁒􀀄􀀳􀁔􀁉􀁖􀁅􀁘􀁍􀁓􀁒􀁗
􀀖􀀔􀀔􀀗 􀀖􀀔􀀔􀀘 􀀖􀀔􀀔􀀙 􀀖􀀔􀀔􀀚
􀀝􀀔
􀀜􀀔
􀀛􀀔
􀀚􀀔
􀀙􀀔
􀀘􀀔
􀀗􀀔
􀀖􀀔
􀀕􀀔
􀀔
50
Chart 12 : Offshore Leasing - Asset Leased and Number of Leasing Companies in Operations
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 certifi cate. 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 1,700 1,851 1,725 1,900 4,484
Public Fund 250 130 132 130 130
Total 1,950 1,981 1,857 2,030 4,614
􀀸􀁓􀁘􀁅􀁐􀀄􀀥􀁔􀁔􀁖􀁓􀁚􀁉􀁈􀀄􀀪􀁙􀁒􀁈􀀄􀀷􀁍ze
􀀖􀀔􀀔􀀖
􀀕􀀐􀀝􀀙􀀔 􀀕􀀐􀀝􀀜􀀕 􀀕􀀐􀀜􀀙􀀛 􀀖􀀐􀀔􀀗􀀔
􀀘􀀐􀀚􀀕􀀘
􀀖􀀔􀀔􀀗 􀀖􀀔􀀔􀀘 􀀖􀀔􀀔􀀙 􀀖􀀔􀀔􀀚
During the year under review, LOFSA issued fi ve 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.
Business Activities of Labuan IOFC
Chart 13 : Mutual Funds - Total Approved Fund Size in USD Million
LOFSA ANNUAL REPORT 2006
53
Debt Issuance Activities
In the past fi ve 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.
􀀧􀁌􀁅􀁖􀁘􀀄􀀕􀀘􀀄􀀞􀀄􀀨􀁉􀁆􀁘􀀄􀀭􀁒􀁗􀁘􀁖􀁙􀁑􀁉􀁒􀁘􀁗􀀄􀀑􀀄􀀱􀁅􀁖􀁏􀁉􀁘􀀄􀀧􀁅􀁔􀁍􀁘􀁅􀁐􀁍􀁗􀁅􀁘􀁍􀁓􀁒􀀄􀁅􀁒􀁈􀀄􀀸􀁓􀁘􀁅􀁐􀀄􀀥􀁔􀁔􀁖􀁓􀁚􀁉􀁈􀀄􀀭􀁗􀁗􀁙􀁅􀁒􀁇􀁉
􀀸􀁓􀁘􀁅􀁐􀀄􀀥􀁔􀁔􀁖􀁓􀁚􀁉􀁈􀀄􀀭􀁗􀁗􀁙􀁅􀁒􀁇􀁉
􀀹􀀷􀀨􀀄􀀱􀁍􀁐􀁐􀁍􀁓􀁒
􀀕􀀘􀀐􀀔􀀔􀀔
􀀕􀀖􀀐􀀔􀀔􀀔
􀀕􀀔􀀐􀀔􀀔􀀔
􀀜􀀐􀀔􀀔􀀔
􀀚􀀐􀀔􀀔􀀔
􀀘􀀐􀀔􀀔􀀔
􀀖􀀐􀀔􀀔􀀔
􀀖􀀔􀀔􀀖 􀀖􀀔􀀔􀀗 􀀖􀀔􀀔􀀘 􀀖􀀔􀀔􀀙 􀀖􀀔􀀔􀀚
􀀔
􀀗􀀙
􀀗􀀔
􀀖􀀙
􀀖􀀔
􀀕􀀙
􀀕􀀔
􀀙
􀀔
􀀱􀁅􀁖􀁏􀁉􀁘􀀄􀀧􀁅􀁔􀁍􀁘􀁅􀁐􀁍􀁗􀁅􀁘􀁍􀁓􀁒 􀀸􀁓􀁘􀁅􀁐􀀄􀀥􀁔􀁔􀁖􀁓􀁚􀁉􀁈􀀄􀀭􀁗􀁗􀁙􀁅􀁒􀁇􀁉
Labuan International Financial Exchange
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
fi rst exchangeable sukuk. For the fi rst time, LFX issued a Listing Sponsor licence to a foreign fi nancial 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
fi nancial institutions.
52
􀀧􀁌􀁅􀁖􀁘􀀄􀀕􀀙􀀄􀀞􀀄􀀰􀀪􀀼􀀄􀀑􀀄􀀱􀁅􀁖􀁏􀁉􀁘􀀄􀀧􀁅􀁔􀁍􀁘􀁅􀁐􀁍􀁗􀁅􀁘􀁍􀁓􀁒􀀄􀁍􀁒􀀄􀀹􀀷􀀨􀀄􀀦􀁍􀁐􀁐􀁍􀁓􀁒􀀄􀀌􀀧􀁓􀁒􀁚􀁉􀁒􀁘􀁍􀁓􀁒􀁅􀁐􀀄􀁅􀁒􀁈􀀄􀀭􀁗􀁐􀁅􀁑􀁍􀁇)
􀀖􀀔􀀔􀀖 􀀖􀀔􀀔􀀗 􀀖􀀔􀀔􀀘 􀀖􀀔􀀔􀀙 􀀖􀀔􀀔􀀚
􀀭􀁗􀁐􀁅􀁑􀁍􀁇
􀀔􀀒􀀜 􀀔􀀒􀀝 􀀔􀀒􀀜
􀀕􀀒􀀙 􀀕􀀒􀀛
􀀜􀀒􀀘
􀀖􀀒􀀕
􀀕􀀔􀀒􀀘
􀀖􀀒􀀜
􀀕􀀖􀀒􀀗
􀀧􀁌􀁅􀁖􀁘􀀄􀀕􀀚􀀄􀀞􀀄􀀰􀀪􀀼􀀄􀀑􀀄􀀰􀁍􀁗􀁘􀁉􀁈􀀄􀀭􀁒􀁗􀁘􀁖􀁙􀁑􀁉􀁒􀁘􀁗􀀄􀀌􀀧􀁓􀁒􀁚􀁉􀁒􀁘􀁍􀁓􀁒􀁅􀁐􀀄􀁅􀁒􀁈􀀄􀀭􀁗􀁐􀁅􀁑􀁍􀁇)
􀀖􀀔􀀔􀀖 􀀖􀀔􀀔􀀗 􀀖􀀔􀀔􀀘 􀀖􀀔􀀔􀀙 􀀖􀀔􀀔􀀚
􀀗
􀀛
􀀕􀀔
􀀕􀀝
􀀖􀀙
􀀗􀀗
􀀗
􀀙 􀀚 􀀛
􀀭􀁗􀁐􀁅􀁑􀁍􀁇
Business Activities of Labuan IOFC
LOFSA ANNUAL REPORT 2006
55
Trust Companies
The total number of trust companies registered in Labuan IOFC in 2006 stood at 21 (2005: 20). Refl ective 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 offi cers approved by LOFSA had
increased to 62 (2005: 51).
Table 21 : Trust Companies – Key Data
2003 2004 2005 2006 Annual
change
Number of Trust Companies 20 20 20 21 2006
USD’000 (%)
Operating Income 5,472 5,980 7,251 9,366 29.2
Profi t Before Tax 2,264 2,696 3,150 3,840 21.9
54
enhancing
strengths
58 Supervisory Framework
59 Regulatory Environment
60 Legislative Changes
61 Anti-Money Laundering and Counter-Financing for Terrorism
Supervision of Offshore Financial Institutions
LOFSA ANNUAL REPORT 2006
57
The resilience of the fi nancial 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 fi nancial institutions and detect any weaknesses that can
undermine Labuan IOFC’s fi nancial 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 fi nancial 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 fi nancial institutions and complexity of products and services in the Labuan
IOFC as well as changes in the international fi nancial 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 fi nancial
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 fi nancial centre. In relation to this, LOFSA was accorded commendable
rating on all areas jointly evaluated by the Asia/Pacifi c 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 fi nancial
strength and soundness of the offshore fi nancial 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
fi nancial 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 profi le of the offshore fi nancial institutions, with more
focus on areas that pose higher risks.
Supervision of Offshore Financial Institutions
LOFSA ANNUAL REPORT 2006
59
58
In implementing the RBSF, LOFSA issued a self-assessment questionnaire to each offshore fi nancial 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-fi nancing 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.
Concurrent with the self-assessment questionnaire, the offshore fi nancial 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 signifi cant business activity and the capability of the offshore fi nancial 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 fi nancial institutions were also assessed to
ensure that these practices are embedded in all aspects of operations at every level in the offshore fi nancial institutions.
Based on the supervisory activities carried-out on the offshore fi nancial 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 fi nancial
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 Offi ce 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.
LOFSA continued to monitor closely the operations and affairs of offshore fi nancial 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
fi nancial 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 fi nancial
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 fi nancial 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 offi cers.
LOFSA also played a signifi cant 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 benefi ts and incentives accorded to offshore companies. In addition, they could diversify their business, open offi ces 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/Pacifi c Group on Anti-Money Laundering and the Offshore Group of Banking Supervisors.
Supervision of Offshore Financial Institutions
LOFSA ANNUAL REPORT 2006
61
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 fi eld 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 confi dentiality 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.
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 fi nancial
institutions (OFIs).
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 fi nancing. In line with the recommendation of the Asia/Pacifi c 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 fi rst assessment in 2001.
60
creating
opportunities
Developmental Review
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
LOFSA ANNUAL REPORT 2006
63
LABUAN OFFSHORE FINANCIAL SERVICES AUTHORITY, MALAYSIA ANNUAL REPORT 2006
50
66
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 fi nancial centre, Labuan IOFC offers
a wide range of conventional and Islamic fi nancial 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 fi nancial 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 Pacifi c region
and within convenient time zones of several fi nancial 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 fi nancial landscape,
characterised by increased globalisation, liberalisation of the
international fi nancial markets, lowering of sovereign tax regimes,
higher transparency and corporate governance requirements,
technological advancement and the increased global capital fl ows
have coalesced to render it necessary for Labuan IOFC to reposition
itself in order to remain competitive and relevant.
Offshore fi nancial 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 fl ows will continue to rise
for the foreseeable future for the Asia Pacifi c 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 fl ows.
By providing an effi cient delivery system, Labuan IOFC can
position itself to capture identifi ed segments of the value-chain
of international capital fl ows as well as become the domicile
of choice for intermediaries. Labuan IOFC strategic location in
the heart of the Asia Pacifi c 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 fl ows. 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
Developmental Review
LOFSA ANNUAL REPORT 2006
65
with other countries. The presence of fi nancial and other
service providers, such as offshore bank and trust companies,
in Labuan IOFC offers a ready fi nancial 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
Pacifi c’s preferred jurisdiction for domicile of companies.
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.
Islamic Financial Business
LOFSA has been active in international initiatives to develop
Islamic fi nance. As one of the founding members of the
International Islamic Financial Market, LOFSA has been playing a
signifi cant role in developing standardised trading practices for
Islamic fi nancial instruments. The contribution of LOFSA in the
overall development of intra-OIC investment fl ows 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
Force on Mobilisation of Funds, comprising domestic fi nancial
regulators and intermediaries, provides recommendations and
initiates action plans to spur intra-OIC investment fl ows.
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
fi nancial 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 fi rst
Shariah-compliant Exchangeable Trust Certifi cate (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 fi rst 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 refl ect 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
6444
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 fi nancial 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.
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 signifi cant and
complementary role to ensure the successful implementation
of the MIFC initiative. The fl exibility accorded under the MIFC
to Labuan offshore fi nancial institutions undertaking Islamic
fi nancial services further enhances business opportunities for
Labuan offshore fi nancial institutions. At the same time, Labuan
offshore fi nancial 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 fl exibility
as follows:
• They may open operational offi ces anywhere in Malaysia;
• There is no limitation on the staffi ng and number of
operational offi ces;
Developmental Review
• The operational offi ces can conduct non-ringgit Islamic
fi nancial 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 fi nancial
business window or division, no additional licence fees are
charged on such business; and
• Subject to the approval by the Minister of Finance, offshore
fi nancial institutions undertaking Islamic fi nancial business
through Labuan IOFC may be exempted from the requirement
of having physical presence in Labuan.
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.
LOFSA ANNUAL REPORT 2006
67
ONSHORE REGULATORY
FRAMEWORK
OFFSHORE REGULATORY
FRAMEWORK
Licensed by BNM
Domestic Legislation
Licensed by LOFSA
Offshore Legislation
Islamic Bank
(with ICBU)
International
Islamic Bank
Offshore Islamic
Bank
International
Takaful Operator
Takaful
Operator
(with ICBU)
Offshore Takaful &
Retakaful
Islamic Division of Offshore
Institutions
“International
Currency
Business Unit
(ICBU)”
Zero tax under ITA for 10 years
Enjoy DTA benefi ts with all treaty
partners over 60 countries
Tax under LOBATA
(3% or RM20,000, in perpetuity)
Enjoy DTA benefi ts with all treaty partners
over 60 countries
Licensing Under MIFC
66
Developmental Review
Leveraging on Labuan IOFC’s Preferential Tax Framework
An offshore institution (OI) conducting Islamic fi nancial 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 profi t; or
• Pay a fi xed 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 profi t 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.
• Profi ts 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 benefi ciaries 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 benefi ts of Double Tax Agreements, which Malaysia has signed with more than 60 countries.
LOFSA ANNUAL REPORT 2006
69
6488
Engagement Activities
One of the major critical success factors of Labuan IOFC lies in
its engagement with the members of the fi nancial industry. In
this regard, LOFSA recognises that a highly targeted engagement
programme is essential to compete in a crowded marketplace.
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.
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 fi nance
and to further increase knowledge and awareness of Islamic
fi nance 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 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 fi ve organisations including the International
Centre for Education in Islamic Finance.
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 offi ces 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 profi le in the public domain was also cultivated with
a media communications programme that included interviews
with senior offi cials 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 fi nancial
institutions have also acted as visiting lecturers at the University
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.
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
benefi ts 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
Developmental Review
LOFSA ANNUAL REPORT 2006
71
Box Article
70
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 confi dence and strength.
Being export-oriented economies, trade and manufacturing have always played a signifi cant 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) fl ows into ASEAN was recorded between 1995 and 2005p, of which USD30.5 billion
originated from within ASEAN itself, making up 11.0% of total fl ows.
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 fl ow of goods, services, investment, skilled labour and capital by
2020. Recently, there have been suggestions to expedite the process to 2015, fi ve 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 benefi t greatly from a more systematic and extensive dissemination
of information on specifi c initiatives to encourage further intra-regional trade and investment opportunities. Such information should
be made available to those in trade, industry, commerce and fi nance 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 signifi cant. Malaysia itself is the recipient of USD44.7 billion2, or 16.1%, of total FDI fl ows into the ASEAN
region between 1995 and 2005p. Chart 1 illustrates FDI fl ows into Malaysia within that period. There was a drop in 2001 but the fl ows
increased signifi cantly 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.
Promoting ASEAN Trade and
Investment: The Facilitative Role of
Labuan IOFC
p = projection
1 = ASEAN Secretariat website
2 = ASEAN Secretariat website
3 = 2005 data not available
LOFSA ANNUAL REPORT 2006
73
7522
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) refl ects 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 fl ow 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 specifi c
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 fl ows, which require fl exible regulatory frameworks
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
USD Million
Year
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 fl ows could be channelled.
Labuan IOFC – As Facilitator
Labuan IOFC was established in 1990 with the objective of promoting offshore fi nance 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 Pacifi c region.
Promoting ASEAN Trade and Investment: The Facilitative Role of Labuan IOFC
5,000
10,000
15,000
20,000
25,000
USD Million
0
2003 2004 2005 2006
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
LOFSA ANNUAL REPORT 2006
75
Labuan IOFC offers an integrated range of conventional and Islamic fi nancial products and services, provided by more than 300
fi nancial institutions. Regulations are favourable towards foreign investors, which include levying a maximum tax rate of 3.0% of
net profi ts or a fl at 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 specifi c mechanisms into place that support an active and thriving fi nancial centre.
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 justifi cation as a centre to capture capital fl ows within the region.
Labuan IOFC - Facilitating Trade and Investment Flows
Moving Forward
Labuan IOFC can serve as a regional intermediary for the movement of global capital fl ows. Positioning itself as a link for offshore
fi nance 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.
74
Capital
Exporting
Countries
Labuan IOFC
• Trading and Investment Holding
Companies
• Favourable Incentives
• Serviced By More Than 300
Licensed Institutions
Capital
Importing
Countries

LOFSA ANNUAL REPORT 2006
77
7560
Financial Statements
78 Certifi cate of the Auditor General
79 Statement by the Members
80 Statutory Declaration
81 Income Statement
82 Balance Sheet
83 Statement of Changes in Reserves
84 Cash Flow Statement
85 Notes to the Financial Statements

LOFSA ANNUAL REPORT 2006
79
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 fl ows 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 fl ows for the year ended
on that date.
On behalf of the Members of the Authority,
DR. ZETI AKHTAR AZIZ
CHAIRMAN
AZIZAN ABD RAHMAN
DIRECTOR-GENERAL
Labuan Offshore Financial Services Authority
2 APRIL 2007
78
LABUAN OFFSHORE FINANCIAL SERVICES AUTHORITY
(Established in Malaysia under the Labuan Offshore Financial Services Authority Act, 1996)
I, SABARUDDIN ISMAIL (591208-07-5579), the offi cer primarily responsible for the fi nancial management of LABUAN OFFSHORE FINANCIAL
SERVICES AUTHORITY, do solemnly and sincerely declare that the accompanying balance sheet and statements of income, cash fl ows 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
Statutory Declaration
By The Offi cer Primarily Responsible For The Financial Management of Labuan Offshore Financial Services Authority
LABUAN OFFSHORE FINANCIAL SERVICES AUTHORITY
(Established in Malaysia under the Labuan Offshore Financial Services Authority Act, 1996)
LOFSA ANNUAL REPORT 2006
81
80
Income Statement
For The Year Ended 31 December 2006
Note 2006 2005
RM RM
Revenue 4 19,853,227 17,564,938
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)
Surplus from operations 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
The accompanying Notes form an integral part of the Financial Statements.
LABUAN OFFSHORE FINANCIAL SERVICES AUTHORITY
(Established in Malaysia under the Labuan Offshore Financial Services Authority Act, 1996)
Note 2006 2005
RM RM
ASSETS
Property, plant and equipment 9 3,956,288 3,322,865
Investment in subsidiary companies 10 1 1
Other receivables 11 7,797,836 7,487,679
Total non-current assets 11,754,125 10,810,545
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
RESERVES
Accumulated surplus 24,944,915 22,911,826
LIABILITIES
Employee benefi ts 14 201,214 156,673
Government loans 15 13,000,000 13,000,000
Total non-current liabilities 13,201,214 13,156,673
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
The accompanying Notes form an integral part of the Financial Statements.
Balance Sheet
At 31 December 2006
LABUAN OFFSHORE FINANCIAL SERVICES AUTHORITY
(Established in Malaysia under the Labuan Offshore Financial Services Authority Act, 1996)
LOFSA ANNUAL REPORT 2006
83
82
Statement of Changes In Reserves
For The Year Ended 31 December 2006
Note Staff
Accumulated Welfare
Surplus Fund Total
RM RM RM
Balance at 1 January 2005 as previously stated 19,596,923 272,948 19,869,871
Effect of derecognition of Staff Welfare Fund 20 – (272,948) (272,948)
Balance at 1 January 2005 as restated 19,596,923 – 19,596,923
Surplus for the year 3,314,903 – 3,314,903
Balance at 31 December 2005 22,911,826 – 22,911,826
Balance at 1 January 2006 as previously stated 22,911,826 277,057 23,188,883
Effect of derecognition of Staff Welfare Fund 20 – (277,057) (277,057)
Balance at 1 January 2006 as restated 22,911,826 – 22,911,826
Surplus for the year 2,033,089 – 2,033,089
Balance at 31 December 2006 24,944,915 – 24,944,915
The accompanying Notes form an integral part of the Financial Statements.
LABUAN OFFSHORE FINANCIAL SERVICES AUTHORITY
(Established in Malaysia under the Labuan Offshore Financial Services Authority Act, 1996)
Cash Flow Statement
For The Year Ended 31 December 2006
Note 2006 2005
RM RM
CASH FLOWS FROM/(USED IN) OPERATING ACTIVITIES
Surplus for the year 2,033,089 3,314,903
Adjustments for:
Depreciation of property, plant and equipment 1,160,371 1,140,830
Government grant (4,746,457) –
Other long term employee benefi ts 44,541 19,352
Fee income-in-suspense (557,538) 241,049
Property, plant and equipment written off – 352
Interest income (1,417,266) (888,051)
(Defi cit)/Surplus Before Working Capital Changes (3,483,260) 3,828,435
(Increase)/Decrease in working capital:
Fees receivable 140,018 (47,161)
Other receivables (158,152) 910,469
Fees received in advance 170,198 (332,714)
Other payables and accruals 2,820,177 439,174
Cash (Used In)/Generated From Operations (511,019) 4,798,203
Interest received 184,489 200,000
Net Cash (Used In)/From Operating Activities (326,530) 4,998,203
CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES
Additions to property, plant and equipment (1,793,794) (979,155)
Interest received 676,308 744,916
Net Cash Used In Investing Activities (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
CASH AND CASH EQUIVALENTS AT END OF YEAR 13 41,371,950 26,815,966
The accompanying Notes form an integral part of the Financial Statements.
LABUAN OFFSHORE FINANCIAL SERVICES AUTHORITY
(Established in Malaysia under the Labuan Offshore Financial Services Authority Act, 1996)
LOFSA ANNUAL REPORT 2006
85
84
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 fi nancial services and to develop national objectives, policies and
priorities for the orderly development and administration of offshore fi nancial services in Labuan.
The principal activities of the subsidiary companies are disclosed in Note 10.
There have been no signifi cant changes in the nature of the principal activities of the Authority and its subsidiary companies during
the fi nancial year.
The total number of employees of the Authority at year end was 82 (2005: 69).
The registered offi ce and principal place of operations of the Authority are located at Level 17, Main Offi ce Tower, Financial Park
Complex, Jalan Merdeka, 87000 Federal Territory of Labuan, Malaysia.
The fi nancial statements of the Authority have been approved by the Members of the Authority for issuance on 2 APRIL 2007.
2. BASIS OF PREPARATION
(a) Statement of compliance
The fi nancial 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 fi nancial 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 fi nancial statements upon fi rst 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 fi nancial statements upon
fi rst adoption of this standard as required by paragraph 30(b) of FRS 108 is not disclosed;
Notes to the Financial Statements
LABUAN OFFSHORE FINANCIAL SERVICES AUTHORITY
(Established in Malaysia under the Labuan Offshore Financial Services Authority Act, 1996)
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 fi nancial statements upon fi rst adoption of this standard as required by paragraph 30(b) of
FRS 108 is not disclosed;
(iv) Amendment to FRS 1192004, Employee Benefi ts – 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 signifi cant impact on the fi nancial 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 fi nancial statements.
(b) Basis of measurement
The fi nancial statements have been prepared on the historical cost basis.
(c) Functional and presentation currency
These fi nancial statements are presented in Ringgit Malaysia (RM), which is the Authority’s functional currency.
(d) Use of estimates and judgements
The preparation of fi nancial 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 signifi cant areas of estimation uncertainty and critical judgements in applying accounting policies that have the
most signifi cant effect on the amounts recognised in the fi nancial statements is in respect of the suspension of fees recognised
as income as described in Note 3(c).
LABUAN OFFSHORE FINANCIAL SERVICES AUTHORITY
(Established in Malaysia under the Labuan Offshore Financial Services Authority Act, 1996)
LOFSA ANNUAL REPORT 2006
87
86
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these fi nancial 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 fi nancial and operating policies of an enterprise so as to obtain benefi ts from its activities. In
assessing control, potential voting rights that presently are exercisable are taken into account.
The fi nancial statements of subsidiary companies are included in the consolidated fi nancial 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.
Investments in subsidiary companies are stated in the Authority’s balance sheet at cost less impairment losses, unless the
investment is classifi ed as held for sale (or included in a disposal group that is classifi ed as held for sale).
(b) 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.
LABUAN OFFSHORE FINANCIAL SERVICES AUTHORITY
(Established in Malaysia under the Labuan Offshore Financial Services Authority Act, 1996)
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 signifi cant 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 benefi ts embodied within the part will fl ow 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.
LABUAN OFFSHORE FINANCIAL SERVICES AUTHORITY
(Established in Malaysia under the Labuan Offshore Financial Services Authority Act, 1996)
LOFSA ANNUAL REPORT 2006
89
88
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(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, fi ttings, offi ce equipment and renovation 5 years
Depreciation methods and useful lives are reassesses at the reporting date.
(f) Impairment of assets
The carrying amounts of the Authority’s assets, other than fi nancial assets (other than investments in subsidiary companies),
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 identifi able asset group that
generates cash fl ows 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 fi rst 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 fl ows are discounted to their present value using a pre-tax discount rate
that refl ects current market assessments of the time value of money and the risks specifi c 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.
LABUAN OFFSHORE FINANCIAL SERVICES AUTHORITY
(Established in Malaysia under the Labuan Offshore Financial Services Authority Act, 1996)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(h) Employee benefi ts
Short term employee benefi ts
Short term employee benefi t 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 profi t-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 benefi ts
The Authority’s net obligation in respect of other long term employee benefi ts is the amount of future benefi t 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 fl ow statement
The Authority adopts the indirect method in the preparation of the cash fl ow 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 insignifi cant risks of changes in value.
4. REVENUE
2006 2005
RM RM
Fee income 19,295,689 17,805,987
Movement in fee income-in-suspense 557,538 (241,049)
19,853,227 17,564,938
LABUAN OFFSHORE FINANCIAL SERVICES AUTHORITY
(Established in Malaysia under the Labuan Offshore Financial Services Authority Act, 1996)
LOFSA ANNUAL REPORT 2006
91
90
5. OTHER OPERATING INCOME/(EXPENSES)
Included in other operating income/(expenses) are the following:
2006 2005
RM RM
Other operating income:
Interest income from staff loans 184,489 200,000
Rental income 8,250 11,000
Miscellaneous income 229,169 46,442
Other operating expenses:
Project expenditure incurred under the Ninth Malaysia Plan government grant (4,746,457) –
Auditors’ remuneration (14,000) (15,000)
Members’ remuneration:
Executive (533,422) (1,066,048)
Non-executive (50,400) (52,774)
Rental expenses (689,516) (689,616)
Bad debts written off:
Fees receivable (1,287,039) (286,000)
Amount owing by subsidiary companies (476,155) (458,955)
Property, plant and equipment written off – (352)
6. STAFF COSTS
2006 2005
RM RM
Staff costs 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
Interest received from:
Fixed deposits 1,193,321 613,653
Money at call 39,457 74,398
1,232,778 688,051
LABUAN OFFSHORE FINANCIAL SERVICES AUTHORITY
(Established in Malaysia under the Labuan Offshore Financial Services Authority Act, 1996)
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,
fi ttings, offi ce
Long term equipment Capital
leasehold Motor and work-inland
Buildings vehicles Computers renovation progress Total
RM RM RM RM RM RM RM
Cost
At 1 January 2006 442,000 688,000 690,088 4,026,892 2,491,842 92,620 8,431,442
Additions – – 7,400 248,047 345,687 1,192,660 1,793,794
At 31 December 2006 442,000 688,000 697,488 4,274,939 2,837,529 1,285,280 10,225,236
Accumulated depreciation
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
Net book value
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
Depreciation charge for
the year ended
31 December 2005 – 13,750 59,350 627,207 440,523 – 1,140,830
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).
LABUAN OFFSHORE FINANCIAL SERVICES AUTHORITY
(Established in Malaysia under the Labuan Offshore Financial Services Authority Act, 1996)
LOFSA ANNUAL REPORT 2006
93
92
10. INVESTMENT IN SUBSIDIARY COMPANIES
2006 2005
RM RM
Unquoted shares, at cost 1 1
The subsidiary companies, all incorporated in Malaysia, are as follows:
Effective
Percentage
Name of Company of Ownership Principal Activities
2006 2005
% %
LOFSA Incorporated Sdn Bhd 100 100 Investment holding
Subsidiary company of LOFSA Incorporated Sdn Bhd
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 fi nancial support to the said
subsidiary company.
Consolidated fi nancial 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
Current
Other receivables:
Staff housing loans 422,919 704,063
Staff vehicle loans 183,616 201,270
Staff advances/Sundry debtors 102,903 57,216
Refundable deposits 198,121 146,575
Interest receivable 989,906 433,437
Prepaid expenses 50,682 1,122
1,948,147 1,543,683
LABUAN OFFSHORE FINANCIAL SERVICES AUTHORITY
(Established in Malaysia under the Labuan Offshore Financial Services Authority Act, 1996)
11. OTHER RECEIVABLES (Cont’d)
2006 2005
RM RM
Non-Current
Other receivables:
Staff housing loans 7,442,651 7,036,792
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
2006 2005
RM RM
Fees receivable 1,489,993 1,630,011
Fee income-in-suspense (589,643) (1,147,181)
900,350 482,830
13. CASH AND CASH EQUIVALENTS
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 on hand and at banks 620,849 710,009
41,371,950 26,815,966
The average effective interest rates are as follows:
2006 2005
% %
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).
LABUAN OFFSHORE FINANCIAL SERVICES AUTHORITY
(Established in Malaysia under the Labuan Offshore Financial Services Authority Act, 1996)
LOFSA ANNUAL REPORT 2006
95
94
14. EMPLOYEE BENEFITS
Movements in the liability for other long term employee benefi ts:
2006 2005
RM RM
At 1 January 156,673 137,321
Recognised in income statement 44,541 19,352
At 31 December 201,214 156,673
The liability for other long term employee benefi ts 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. 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
respectively from Bank Negara Malaysia. The loans are unsecured and interest-free. The balance of the fi rst loan and the second loan
are repayable in the year 2010 or such other period as may be mutually agreed by the parties.
16. 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.
2006 2005
RM RM
Deferred income at 1 January – –
Government grant received 16,000,000 –
Less: Amount recognised in income statement (4,746,457) –
Deferred income at 31 December 11,253,543 –
17. 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.
LABUAN OFFSHORE FINANCIAL SERVICES AUTHORITY
(Established in Malaysia under the Labuan Offshore Financial Services Authority Act, 1996)
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.
2006 2005
RM RM
Trust companies security deposits 1,200,000 1,200,000
Management company security deposits 50,000 50,000
1,250,000 1,250,000
19. OTHER PAYABLES AND ACCRUALS
2006 2005
RM RM
Other payables 4,202,239 281,767
Accruals 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 fi xed 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 fi nancial
statements of the Authority and recognised in its separate fi nancial statements. The comparative fi gures have also been restated
to conform to the current year’s presentation.
LABUAN OFFSHORE FINANCIAL SERVICES AUTHORITY
(Established in Malaysia under the Labuan Offshore Financial Services Authority Act, 1996)
LOFSA ANNUAL REPORT 2006
97
96
21. FINANCIAL INSTRUMENTS
Financial instruments are contracts that give rise to both a fi nancial asset of one entreprise and a fi nancial liability or equity instrument
of another enterprise.
Financial Risk Management Objectives and Policies
The operations of the Authority are subject to a variety of fi nancial risks, including credit risk, liquidity risk and cash fl ow risk. The
Authority has agreed to formulate a fi nancial risk management framework with the principal objective to minimise the Authority’s
exposure to risks and/or costs associated with the fi nancing, 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 fi nancial instruments.
Credit risk
The fi nancial 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
that the risk of incurring material losses related to this credit risk is remote.
Liquidity risk
The Authority practises liquidity risk management to minimise the mismatch of fi nancial assets and liabilities and to maintain suffi cient
credit facilities for contingent funding requirement of working capital.
Cash fl ow risk
The Authority reviews its cash fl ow position regularly to manage its exposure to fl uctuations in future cash fl ows associated with its
monetary fi nancial instruments.
Financial assets
The Authority’s principal fi nancial assets are fi xed deposits, money at call, cash on hand and at banks and fee and other receivables.
The accounting policies applicable to the major fi nancial assets are as disclosed in Note 3.
LABUAN OFFSHORE FINANCIAL SERVICES AUTHORITY
(Established in Malaysia under the Labuan Offshore Financial Services Authority Act, 1996)
21. FINANCIAL INSTRUMENTS (Cont’d)
Financial Liabilities and Equity Instruments
Debts and equity instruments are classifi ed as liabilities or equity in accordance with the substance of the contractual arrangement.
Signifi cant fi nancial 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 fi nancial year-end.
Fair Values
Cash and cash equivalents, fee and other receivables and refundable deposits and other payable
The carrying amounts of these fi nancial 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:
2006 2005
RM RM
Approved and contracted for 390,000 99,900
Approved but not contracted for – –
390,000 99,900
23. CONTINGENT LIABILITIES
As disclosed in Note 10 to the fi nancial statements, the Authority undertakes to provide fi nancial supports to its subsidiary company,
Pristine Era Sdn Bhd
LABUAN OFFSHORE FINANCIAL SERVICES AUTHORITY
(Established in Malaysia under the Labuan Offshore Financial Services Authority Act, 1996)
LOFSA ANNUAL REPORT 2006
99
98
24. COMPARATIVE FIGURES
The presentation and classifi cation of the following comparative fi gures have been restated for the effects of the prior year adjustment
as stated in Note 20:
As previously
As restated stated
2005 RM RM
Balance Sheet
Non-Current Assets:
Other receivables 7,487,679 7,510,794
Current Assets:
Other receivables 1,543,683 1,580,312
Cash and cash equivalents 26,815,966 27,033,417
Non-current Liabilities:
Other payables and accruals 1,528,525 1,528,663
Statement of Changes in Reserves
Staff Welfare Fund
At 1 January 2005 – 272,948
At 31 December 2005 – 277,057
Cash Flow Statement
Cash fl ows from/(used in) operating activities
Adjustments for:
Surplus attributable to Staff Welfare Fund – 4,109
Surplus before working capital changes 3,828,435 3,832,544
(Increase)/Decrease in working capital:
Other receivables 910,469 950,830
Other payables and accruals 439,174 439,313
Cash (used in)/generated from operations 4,798,203 4,842,812
Net cash (used in)/from operating activities 4,998,203 5,042,812
Cash fl ows from/(used in) investing activities
Interest received 744,916 744,907
Net cash used in investing activities (234,239) (234,248)
Net increase in cash and cash equivalents 4,763,964 4,808,564
Cash and cash equivalents at beginning of year 22,052,002 22,224,853
Cash and cash equivalents at end of the year 26,815,966 27,033,417
LABUAN OFFSHORE FINANCIAL SERVICES AUTHORITY
(Established in Malaysia under the Labuan Offshore Financial Services Authority Act, 1996)
LOFSA ANNUAL REPORT 2006
100
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
114 Underwriting 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
Listings of Labuan Offshore
Financial Institutions
1 ABN AMRO Bank N.V., Labuan Branch
(Netherlands)
Tel: 087-423008 Fax: 087-421078
E-mail: anthony.rajan@my.abnamro.com
Mr Anthony Rajan M Liguori
2 Affi n Bank Berhad, Labuan Branch
(Malaysia)
Tel: 087-411931 Fax: 087-411973
E-mail: head.treasury@affi nbank.com.my
Mr Tan Kok Toon
3 AmInternational (L) Ltd
(Malaysia)
Tel: 087-425212 Fax: 087-425211
E-mail: paul-ong@ambg.com.my
Mr Paul Ong Whee Sen
4 AmInvestment Bank Berhad,
Labuan Offshore Branch
(Malaysia)
Tel: 087-413133 Fax: 087-425211
E-mail: paul-ong@ambg.com.my
Mr Paul Ong Whee Sen
5 Bank Islam Malaysia Berhad,
Labuan Offshore Branch
(Malaysia)
Tel: 087-451802 Fax: 087-451800
E-mail: engkuafandi@bankislam.com.my
Mr Engku Afandi Engku Taib
6 Bank Muamalat Malaysia Berhad,
Labuan Offshore Branch
(Malaysia)
Tel: 087-412898 Fax: 087-451164
E-mail: helmi@muamalat.com.my
Mr Helmi Izham Harunarashid
7 Bank of America National Association,
Labuan Branch
(United States of America)
Tel: 087-411778 Fax: 087-424778
E-mail: yue_daniel-tc@bankofamerica.com
Mr Daniel Yue Tuck Cheong
8 Barclays Bank Plc, Labuan Branch
(United Kingdom)
Tel: 087-425571 Fax: 087-425575
E-mail: siawloong.miaw@barcap.com
Mr Miaw Siaw Loong
9 BNP Paribas, Labuan Branch
(France)
Tel: 087-422328 Fax: 087-419328
E-mail: siew.ying.yap@asia.bnpparibas.com
Ms Yap Siew Ying
10 Calyon, Labuan Branch
(France)
Tel: 087-408334 Fax: 087-408335
E-mail: booneong.tan@my.calyon.com
Mr Tan Boon Eong
11 Cathay United Bank, Labuan Branch
(Taiwan)
Tel: 087-452168 Fax: 087-453678
E-mail: nyulin@cathaybk.com.tw
Mr Alexander Wu Hsing Hwa
12 CIMB Bank (L) Limited
(Malaysia)
Tel: 087-410302 Fax: 087-410313
E-mail: rositah@bcblab.po.my
Ms Rositah Mariam Sulaiman
As at 31 March 2007
Offshore Banks (Country of Origin)
LOFSA ANNUAL REPORT 2006
78
13 CIMB (L) Limited
(Malaysia)
Tel: 087-451608 Fax: 087-451610
14 Citibank Malaysia (L) Limited
(United States of America)
Tel: 087-421181 Fax: 087-419671
E-mail: clara.ac.lim@citigroup.com
Ms Clara Lim Ai Cheng
15 Credit Suisse, Labuan Branch
(Switzerland)
Tel: 087-425381 Fax: 087-425384
E-mail: alfred.lee@credit_suisse.com
Mr Lee Chee Meng
16 DBS Bank Ltd, Labuan Branch
(Singapore)
Tel: 087-423375 Fax: 087-423376
E-mail: jefferyling@dbs.com
Mr Jeffrey Ling Hee Keong
17 Deutsche Bank AG, Labuan Branch
(Germany)
Tel: 087-439811 Fax: 087-439866
E-mail: raymond.yeoh@db.com
Mr Raymond Yeoh Cheng Seong
18 Dresdner Bank AG, Labuan Branch
(Germany)
Tel: 087-419271 Fax: 087-419272
E-mail: christopher.mersey@dkib.com
Mr Christopher David Mersey
19 ING Bank N.V., Labuan Branch
(Netherlands)
Tel: 087-425733 Fax: 087-425734
E-mail: milly.tan@asia.ing.com
Ms Milly Tan
20 J.P. Morgan Chase Bank, Labuan Branch
(United States of America)
Tel: 087-424384 Fax: 087-424390
E-mail: ishammudin.mansor@jpmorgan.com
Mr Ishammudin Mansor
21 J.P. Morgan Malaysia Ltd
(United States of America)
Tel: 087-459000 Fax: 087-451328
E-mail: ishammudin.mansor@jpmorgan.com
Mr Ishammudin Mansor
22 KBC Bank N.V., Labuan Branch
(Belgium)
Tel: 087-581778 Fax: 087-583787
E-mail: kokchee.kong@kbc.be
Mr Kong Kok Chee
23 Kuwait Finance House (Labuan) Berhad
(Malaysia)
Tel: 087-418777 Fax: 087-418666
E-mail: nawaf@kfh.com.my
Mr Nawaf Almenayekh
24 Lloyds TSB Bank Plc, Labuan Branch
(United Kingdom)
Tel: 087-418918 Fax: 087-411928
E-mail: labuan@lloydstsb.com.my
Ms Chua Ping Ling
25 Macquarie Bank Limited, Labuan Branch
(Australia)
Tel: 087-583080 Fax: 087-583088
E-mail: Gordon.kuik@macquarie.com
Mr Gordon Kuik Teck Wee
26 Maybank International (L) Ltd
(Malaysia)
Tel: 087-414406 Fax: 087-414806
E-mail: punjau@maybank-intl.com
Mr Punjau Sepoi
102
103
27 Mega International Commercial Bank Co., Ltd,
Labuan Branch
(Taiwan)
Tel: 087-581688 Fax: 087-581668
E-mail: icbc@tm.net.my
Mr Tai Chih-Hsien
28 Mizuho Corporate Bank Ltd, Labuan Branch
(Japan)
Tel: 087-417766 Fax: 087-419766
E-mail: kazumasa.domen@mizuho-cb.com
Mr Kazumasa Domen
29 Natixis, Labuan Branch
(France)
Tel: 087-581009 Fax: 087-583009
E-mail: rizal.abdullah@at.nhbp.com
Mr Rizal Abdullah
30 Oversea-Chinese Banking Corporation Limited,
Labuan Branch
(Singapore)
Tel: 087-423381 Fax: 087-423390
E-mail: cbkwan@ocbc.com
Mr Daniel Kwan Chieu Bock
31 Public Bank (L) Ltd
(Malaysia)
Tel: 087-411898 Fax: 087-413220
E-mail: pb11@streamyx.com
Mr Alexander Wong
32 Rabobank Nederland, Labuan Branch
(Netherlands)
Tel: 087-451128 Fax: 087-452328
E-mail: clement.wong@rabobank.com
Mr Clement Wong
33 RHB Bank (L) Ltd
(Malaysia)
Tel: 087-417480 Fax: 087-417484
E-mail: rhbl@streamyx.com
Ms Toh Ay Leng
34 Schroders Malaysia (L) Berhad
(United Kingdom)
Tel: 087-421181 Fax: 087-419671
E-mail: clara.ac.lim@citigroup.com
Ms Clara Lim Ai Cheng
35 Societe Generale, Labuan Branch
(France)
Tel: 087-421676 Fax: 087-421669
E-mail: ibrahim.nasir@sgcib.com
Mr Ibrahim Nasir
36 Standard Chartered Bank Offshore, Labuan Branch
(United Kingdom)
Tel: 087-417200 Fax: 087-417202
E-mail: edward.cs.ng@my.standardchartered.com
Mr Edward Ng Chin Swee
37 Sumitomo Mitsui Banking Corporation
(Japan)
Tel: 087-410955 Fax: 087-410959
E-mail: junichi_ikeno@smbc.co.jp
Mr Junichi Ikeno
38 The Bank of East Asia, Limited, Labuan Branch
(Hong Kong)
Tel: 087-451145 Fax: 087-451148
E-mail: arraisag@hkbea.com
Mr Alvin Gerard Arrais
39 The Bank of Nova Scotia, Labuan Branch
(Canada)
Tel: 087-451101 Fax: 087-451099
E-mail: steven.narendran@scotiabank.com
Mr Steven Narendran
40 The Bank of Tokyo-Mitsubishi UFJ, Ltd,
Labuan Branch
(Japan)
Tel: 087-410487 Fax: 087-410476
E-mail: pulaubtm@tm.net.my
Mr Naoki Sugie
Listings of Labuan Offshore Financial Institutions
As at 31 March 2007
LOFSA ANNUAL REPORT 2006
80
41 The Hongkong and Shanghai Banking Corporation Limited,
Offshore Banking Unit Labuan
(United Kingdom)
Tel: 087-419690 Fax: 087-417169
E-mail: hoimengchew@hsbc.com.my
Mr Chew Hoi Meng
42 The Royal Bank of Scotland, Plc, Labuan Branch
(Scotland)
Tel: 087-423228 Fax: 087-425228
E-mail: rashid.mohamad@rbos.com
Mr Mohd Rashid Mohamad
43 UBS AG, Labuan Branch
(Switzerland)
Tel: 087-421743 Fax: 087-421746
E-mail: ubs_lab@tm.net.my
Ms Zelie Ho Swee Lum
44 United Overseas Bank Limited, Labuan Branch
(Singapore)
Tel: 087-424388 Fax: 087-424389
E-mail: uobmlbn@uob.com.my
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
E-mail: zanariah@arb.com.my
Ms Zanariah Jaafar
104
3 Capital Investment Bank (Labuan) Ltd
(Malaysia)
Tel: 087-581488 Fax: 087-583488
E-mail: cibl@streamyx.com.my
Mr Louise Paul A/L Joseph Paul
4 City Credit Investment Bank Limited
(Hong Kong)
Tel: 087-582268 Fax: 087-581268
E-mail: admin@cccapital.net
Dato’ Abdul Rahman Abdullah
5 ECM Libra Investment Bank Limited
(Malaysia)
Tel: 087-408525 Fax: 087-408527
E-mail: debra_vc@ecmlibra.com
Mr Jeyaratnam A/L Tamotharam Pillai
6 Morgan Stanley Labuan Investment Bank Limited
(Singapore)
Tel: 087-423878 Fax: 087-424878
E-mail: kate.g.richdale@morganstanley.com
Ms Kate G Richdale
7 OSK Investment Bank (Labuan) Limited
(Malaysia)
Tel: 087-581885 Fax: 087-582885
E-mail: oskib@tm.net.my
Mr Ong Leong Huat
8 RUSD Investment Bank Inc
(Saudi Arabia)
Tel: 087-452100 Fax: 087-453100
E-mail: labuan@rusdbank.com
Mr Naseeruddin A Khan
105
Reinsurers (Country of Origin)
1 ACE Tempest Reinsurance Ltd
(Bermuda)
Tel: 087-427018 Fax: 087-429018
E-mail: gerard.sitaramayya@ace-ina.com
Mr Gerard Mario Sitaramayya
2 Allianz SE General Reinsurance Branch Labuan
(Germany)
Tel: 087-442899 Fax: 087-451899
E-mail: Ronnie.Cheah@allianzre.com.sg
Mr Ronnie Cheah
3 Allianz SE Life Reinsurance Branch Labuan
(Germany)
Tel: 087-442899 Fax: 087-451899
E-mail: Duncan.Lord@allianzre.com.sg
Mr Duncan Lord
4 Arab Insurance Group (B.S.C) Labuan Branch
(Bahrain)
Tel: 087-442899 Fax: 087-451899
E-mail: lee.w@arig.com.sg
Mr Lee Yew Wing
5 ASEAN Retakaful International (L) Ltd
(Malaysia)
Tel: 087-451301 Fax: 087-451300
E-mail: abdulhalim@aseanretakaful.com
Mr Abdul Halim Nasri
6 AXA Re Asia Pacifi c Pte Ltd (Labuan Branch)
(France)
Tel: 087-427018 Fax: 087-429018
E-mail: daniel.lim@axa-re.com
Mr Daniel Lim Teck Choon
7 B.E.S.T. Reinsurance - Far East Regional Offi ce
(Tunisia)
Tel: 087-451600 Fax: 087-452600
E-mail: rkarray@bestre.com.my
Mr Riadh Karray
8 C.C.R., Labuan Branch
(France)
Tel: 087-417672 Fax: 087-417675
E-mail: atertzakian@ccr.com.my
Mr Alain Tertzakian
9 China International Reinsurance Company Limited,
Labuan Branch
(Hong Kong)
Tel: 087-417672 Fax: 087-417675
E-mail: kenneth_ng@cireins.com
Mr Kenneth Ng Yu Lam
10 Cologne Reinsurance Company Plc
(Germany)
Tel: 087-417672 Fax: 087-417675
E-mail: sloke@genre.com
Mr Andres Webersinke
11 Converium Ltd, Regional Reinsurance Branch Offi ce
(Switzerland)
Tel: 087-422004 Fax: 087-422005
E-mail: din.merican@converium.com
Mr Mohd Din Merican
12 IAG Re Labuan (L) Berhad
(Australia)
Tel: 087-417672 Fax: 087-417675
E-mail: stuart.anderson@iag.com.au
Mr Stuart William Anderson
13 International General Insurance Company Ltd,
Labuan Branch
(Jordan)
Tel: 087-417672 Fax: 087-417675
E-mail: wsj@iginsure.com
Mr Wasef S Jabsheh
14 Jerneh Asia Reinsurance Limited
(Malaysia)
Tel: 087-427818 Fax: 087-426818
E-mail: jareins@tm.net.my
Mr Tan Yoke Leong
Listings of Labuan Offshore Financial Institutions
As at 31 March 2007
LOFSA ANNUAL REPORT 2006
82
15 Kuwait Reinsurance Company - Far East Regional Offi ce
(Kuwait)
Tel: 087-442899 Fax: 087-451899
E-mail: zabidi@kuwaitre-my.com
Mr Ahmad Zabidi Ismail
16 Labuan Reinsurance (L) Ltd
(Malaysia)
Tel: 087-452886 Fax: 087-425070
E-mail: majid@labuanre.com.my
Mr Majid Mohamad
17 Mitsui Sumitomo Insurance Co. Ltd
(Japan)
Tel: 087-452748 Fax: 087-452750
E-mail: d-kajita@ms-ins.com
Mr Takao Yasukochi
18 Mitsui Sumitomo Reinsurance Limited
(Ireland)
Tel: 087-452748 Fax: 087-452750
E-mail: t-tsuchiya@msre.com.my
Mr Takashi Tsuchiya
19 Partner Reinsurance Company Ltd
(Bermuda)
Tel: 087-417672 Fax: 087-417675
E-mail: emil.bergundthal@partnerre.com
Mr Emil Bergundthal
20 SCOR Reinsurance Asia-Pacifi c Pte Ltd, Labuan Branch
(France)
Tel: 087-417672 Fax: 087-417675
E-mail: LKTeo@scor.com
Mr Teo Lai Kim
21 Singapore Reinsurance Corporation Limited
(Singapore)
Tel: 087-417672 Fax: 087-417675
E-mail: mervyn.low@singre.com.sg
Mr Mervyn Low Cheng Chwee
22 Sirius International Insurance Corporation (publ),
Labuan Branch
(Sweden)
Tel: 087-417672 Fax: 087-417675
E-mail: songkng.yap@siriusgroup.com
Mr Yap Song Kng
106
23 Sompo Japan Insurance Inc, Labuan Branch
(Japan)
Tel: 087-417672 Fax: 087-417675
E-mail: funai@sompojapanre.com.hk
Mr Yasuhiro Funai
24 Swiss National Insurance Company (Labuan Branch) Ltd
(Switzerland)
Tel: 087-417672 Fax: 087-417675
E-mail: phekchoo@streamyx.com
Ms Cheah Phek Choo
25 Tokio Marine Global Re Limited
(Ireland)
Tel: 087-583001 Fax: 087-583002
E-mail: keith.maruyama@tmgre.com
Mr Keiichi Maruyama
26 Trust International Insurance B.S.C. (c), Labuan Branch
(Bahrain)
Tel: 087-417672 Fax: 087-417675
E-mail: labuan@trustgroup.net
Mr Nabil Kotran
27 Virginia Surety Company, Labuan Branch
(United States of America)
Tel: 087-442899 Fax: 087-451899
E-mail: viswanath.kandasamy@my.thewg.com
Mr Viswanath C Kandasamy
28 XL Re Ltd Labuan
(Bermuda)
Tel: 087-417672 Fax: 087-417675
E-mail: scott.ryrie@xlgroup.com
Mr Scott Ryrie
29 B.E.S.T. Reinsurance, Family Retakaful Offi ce
(Tunisia)
Tel: 087-451600 Fax: 087-452600
E-mail: rkarray@bestre.com.my
Mr Riadh Karray
107
General Insurers (Country of Origin)
1 ASEAN Retakaful International (L) Ltd
(Malaysia)
Tel: 087-451301 Fax: 087-451300
E-mail: abdulhalim@aseanretakaful.com
Mr Abdul Halim Nasri
2 Federal Insurance Company, Labuan Branch
(United States of America)
Tel: 087-417672 Fax: 087-417675
E-mail: mdelrosso@chubb.com
Mr Mario Del Rosso
3 HIH Casualty and General Insurance (Labuan) Limited
(Australia)
Tel: 087-423828 Fax: 087-417242
Mr Ooi Woon Chee (Liquidator)
4 MAA International Assurance Ltd
(Malaysia)
Tel: 087-422007 Fax: 087-422008
E-mail: jbeltran@maa.com.my
Mr James Beltran
5 MNI Offshore Insurance (L) Ltd
(Malaysia)
Tel: 087-417672 Fax: 087-417675
E-mail: amin@maybank.com.my
Dato’ Aminuddin Md Desa
6 PT. Asuransi Jasa Indonesia, Labuan Branch
(Indonesia)
Tel: 087-417672 Fax: 087-417675
E-mail: syarifudin@jasindonet.com
Mr Syarifudin Jajang
Life Insurers (Country of Origin)
1 Mayban Life International (Labuan) Limited
(Malaysia)
Tel: 087-582588 Fax: 087-583588
E-mail: afarouka@maybank.com.my
Mr Ahmed Farouk Aripen
Captives (Country of Origin)
1 Asian Forum Inc
(Malaysia/Philippines/Indonesia)
Tel: 087-417672 Fax: 087-417675
E-mail: rppalmiery@gsis.gov.ps
Mr Reynaldo P Palmiery
2 APS Risk Management Sdn Bhd
(Japan)
Tel: 087-427018 Fax: 087-429018
E-mail: N/A
Mr Makoto Sawaeda
3 AWCK International Insurance Company Ltd
(Hong Kong)
Tel: 087-427018 Fax: 087-429018
E-mail: elaine@reestaylorhk.com
Ms Elaine Cheung
4 BGC Insurance (L) Ltd
(Australia)
Tel: 087-417672 Fax: 087-417675
E-mail: srobertson@bgcinsurance.com
Mr Stephen Robertson
5 BIB Asia (L) Berhad
(Malaysia)
Tel: 087-427018 Fax: 087-429018
E-mail: schou@bib.hongleong.com.my
Mr Chou Sean Chong
Listings of Labuan Offshore Financial Institutions
As at 31 March 2007
LOFSA ANNUAL REPORT 2006
6 Brighton Assurance Company Ltd
(Malaysia)
Tel: 087-442899 Fax: 087-451899
E-mail: raymond.wong@asia.equitytrust.com
Mr Raymond Wong
7 Blakford Insurance Ltd
(Malaysia)
Tel: 087-426686 Fax: 087-426010
E-mail: khliu@pacifi c-world.com
Mr Liu Kim Hock
8 Central Assurance Limited
(Australia)
Tel: 087-442899 Fax: 087-451899
E-mail: raymond.wong@asia.equitytrust.com
Mr Raymond Wong
9 Energas Insurance (L) Limited
(Malaysia)
Tel: 087-417672 Fax: 087-417675
E-mail: raziya@petronas.com.my
Ms Raziyah Yahya
10 GAP Cover Insurance Inc
(Malaysia)
Tel: 087-417672 Fax: 087-417675
E-mail: management@ectrust.com.my
Mr Peter Kent Searle
11 Genting (Labuan) Limited
(Malaysia)
Tel: 087-427018 Fax: 087-429018
E-mail: gbinfo@genting.com.my
Dr R Thillainathan
12 Genting Risk Management (Labuan) Limited
(Malaysia)
Tel: 087-427018 Fax: 087-429018
E-mail: gbinfo@genting.com.my
Dr R Thillainathan
108
13 GHR Risk Management (Labuan) Limited
(Malaysia)
Tel: 087-427018 Fax: 087-429018
E-mail: gbinfo@genting.com.my
Dr R Thillainathan
14 IRM Limited
(Malaysia)
Tel: 087-442899 Fax: 087-451899
E-mail: raymond.wong@asia.equitytrust.com
Mr Raymond Wong
15 KLK Assurance (Labuan) Limited
(Malaysia)
Tel: 087-417672 Fax: 087-417675
E-mail: admin@klk.com.my
Mr Tham Chee Phing
16 Lion Insurance Company Limited
(Malaysia)
Tel: 087-427018 Fax: 087-429018
E-mail: gohkb@lion.com.my
Mr Wang Wing Ying
17 New World Insurance Company (L) Limited
(Hong Kong)
Tel: 087-416122 Fax: 087-422122
E-mail: heiwong@nwriskmgt.com
Mr Wong Hei
18 Nichiryo (Malaysia) Sdn Bhd
(Japan)
Tel: 087-417672 Fax: 087-417675
E-mail: sase@nipponkoa.com.sg
Mr Shigeru Sase
19 NWS International Insurance Limited
(Hong Kong)
Tel: 087-416122 Fax: 087-416128
E-mail: heiwong@nwriskmgt.com
Mr Wong Hei
109
20 Pacifi c Insurance (L) Ltd
(Indonesia)
Tel: 087-442899 Fax: 087-451899
E-mail: benny_setiawan@rgni.com
Mr Benny Setiawan
21 R H Insurance Ltd
(Malaysia)
Tel: 087-427018 Fax: 087-429018
E-mail: cjng@rhg.po.my
Mr Peter Ng Choong Joo
22 Risk Retention Partners Limited
(Malaysia)
Tel: 087-442899 Fax: 087-451899
E-mail: raymond.wong@asia.equitytrust.com
Mr Raymond Wong
23 Sime Darby Insurance Pte Ltd
(Malaysia)
Tel: 087-417672 Fax: 087-417675
E-mail: martingm@simedarby.com
Mr Martin Giles Manen
24 Something Re. Co., Ltd
(Japan)
Tel: 087-427018 Fax: 087-429018
E-mail: raymond.wong@asia.equitytrust.com
Mr Atsushi Kasahara
25 The Four Nine Asia Sdn Bhd
(Japan)
Tel: 087-442899 Fax: 087-451899
E-mail: tmiyake@fournine.co.jp
Mr Takaharu Miyake
26 The Mutual Assurance Co. Plc
(Malaysia)
Tel: 087-442899 Fax: 087-451899
E-mail: raymond.wong@asia.equitytrust.com
Mr Raymond Wong
27 Twenty-One Insurance Company (Labuan) Ltd
(Japan)
Tel: 087-442899 Fax: 087-451899
E-mail: tomita@cosmos-cpa.or.jp
Mr Kenjiro Noda
28 Warisan Captive Incorporated
(Malaysia)
Tel: 03-20310828 Fax: 03-20310829
E-mail: joseph@tanchong.com.my
Mr Tan Eng Guan
Insurance Brokers (Country of Origin)
1 Advisers Worldwide (Malaysia) Limited
(Australia)
Tel: 087-427018 Fax: 087-429018
E-mail: gregw@profi nvest.com.au
Mr Gregory Joseph Whimp
2 Agilent Reinsurance Brokers Limited
(Indonesia)
Tel: 087-427018 Fax: 087-429018
E-mail: ian.lim@agilentlimited.com
Mr Ian Lim Teck Soon
3 Alexander Beard (Malaysia) Limited
(United Kingdom)
Tel: 087-427018 Fax: 087-429018
E-mail: jackie.evans@abg-my.com
Ms Jacqueline Evans
4 Al Wasl Insurance Brokers Limited
(United Arab Emirates)
Tel: 087-442899 Fax: 087-451899
E-mail: hassan@al-wasl.com
Mr Syed Hassan Mujtaba Kazmi
5 ArmenWoodBerg Incorporated
(Sweden)
Tel: 087-417672 Fax: 087-417675
E-mail: lwood@armenwoodberg.com
Mr Armen Alex Babayan Fard
Listings of Labuan Offshore Financial Institutions
As at 31 March 2007
LOFSA ANNUAL REPORT 2006
6 Arthur J. Gallagher Asia (L) Bhd
(United States of America)
Tel: 087-417672 Fax: 087-417675
E-mail: silvius_vonlindeiner@ajg.com
Mr Silvius Von Lindeiner
7 Asure Re Broker Pte Ltd
(Korea)
Tel: 087-427018 Fax: 087-429018
E-mail: ytchou24@singnet.com.sg
Mr Y T Zhu
8 BIB Asia (L) Berhad
(Malaysia)
Tel: 087-427018 Fax: 087-429018
E-mail: schou@bib.hongleong.com.my
Mr Chou Sean Chong
9 BMS Asia Intermediaries Limited
(United Kingdom)
Tel: 087-427018 Fax: 087-429018
E-mail: john.mawson@bmsgroup.com
Mr John Mawson
10 Citystate Risk Management (L) Bhd
(Singapore)
Tel: 087-417672 Fax: 087-417675
E-mail: tzewen@citystategroup.com.sg
Mr Leow Tze Wen
11 Delphi International Insurance Broker Ltd
(Sweden)
Tel: 087-427018 Fax: 087-429018
E-mail: delphi@pd.jaring.my
Mr Hans Lennart Bjornered
12 EuroAsian Reinsurance Broker Corporation
(Russia)
Tel: 087-417672 Fax: 087-417675
E-mail: shevyakova@euroasia-broker.com
Ms Fadeeva Irina Vjacheslavovna
13 FEIC (Asia) Limited
(United Kingdom)
Tel: 087-417672 Fax: 087-417675
E-mail: colin@seic-asia.com
Mr Colin Richard Irwin
110
14 Financial Partners International (Labuan) Ltd
(United Kingdom)
Tel: 087-427018 Fax: 087-429018
E-mail: eric.jordan@fi nancial-partner.biz
Mr Eric Jack Jordan
15 GAA Direct Limited
(United Kingdom)
Tel: 087-427018 Fax: 087-429018
E-mail: carl@gaafunds.com
Mr Carl Butler
16 Global Strategies (L) Ltd
(United Kingdom)
Tel: 087-417672 Fax: 087-417675
E-mail: alan.king@gsworldwide.com
Dr Alan F King
17 Guy Carpenter & Co Labuan Ltd
(United States of America)
Tel: 087-417672 Fax: 087-417675
E-mail: Duncan.Garland@guycarp.com
Mr Duncan Garland
18 Haakon (Asia) Ltd
(Switzerland)
Tel: 087-417672 Fax: 087-417675
E-mail: po@haakon.ch
Mr Paul Karl Ludwig
19 Heath Lambert Asia Pacifi c Ltd
(United Kingdom)
Tel: 087-417672 Fax: 087-417675
E-mail: lee@lfap.com.my
Mr Lee Jeffrey Warner
20 Infi nity Financial Solutions Ltd
(United Kingdom)
Tel: 087-427018 Fax: 087-429018
E-mail: benbennett@infi nsolutions.com
Mr Benjamin Bennett
21 Inter-Alliance International (South East Asia) Ltd
(British Virgin Islands)
Tel: 087-427018 Fax: 087-429018
E-mail: info@inter-alliance.com.my
Mr Robin Eric Deal
111
22 Inter-Alliance International Corporate Benefi ts Ltd
(Malaysia)
Tel: 087-427018 Fax: 087-429018
E-mail: iailbn@tm.net.my
Mr Robin Eric Deal
23 International Insurance Brokers Limited
(Singapore)
Tel: 087-427018 Fax: 087-429018
E-mail: wunph@singnet.com.sg
Mr Wun Pak Hay
24 J.B. Boda Insurance Services (L) Berhad
(Singapore)
Tel: 087-427018 Fax: 087-429018
E-mail: anayak@jbboda.com.my
Ms Anuradha Umesh Nayak
25 JCC Reinsurance Ltd
(United Kingdom)
Tel: 087-417672 Fax: 087-417675
E-mail: jeremy@jccre.com
Mr Jeremy C Camps
26 JLT Re Labuan Ltd
(Hong Kong)
Tel: 087-417672 Fax: 087-417675
E-mail: Julian_Hodge@jltasia.com
Mr Julian Hodge
27 K.M.Dastur & Company Private Limited
(India)
Tel: 087-442899 Fax: 087-451899
E-mail: mkhairaz@kmd.ae
Mr Mahmood Ahmed Khairaz
28 Mason LaRoche International Ltd
(United Kingdom)
Tel: 087-427018 Fax: 087-429018
E-mail: kl@masonlaroche.com
Mr Clive Graham Macdonald
29 Miller Insurance Services (Labuan) Limited
(United Kingdom)
Tel: 087-417672 Fax: 087-417675
E-mail: jo.garnett@miller-insurance.com.my
Mr Jonathan Philip Garnett
30 Montpelier (Labuan) Ltd
(United Kingdom)
Tel: 087-419661 Fax: 087-419662
E-mail: efshqkl@po.jaring.my
Mr Stuart Robert Williamson
31 Montpelier Nordic Ltd
(Sweden)
Tel: 087-411236 Fax: 087-411235
E-mail: roger.spetz@iiafs.com
Mr Roger Eric Spetz
32 New World Risk Management (L) Ltd
(Bermuda)
Tel: 087-416122 Fax: 087- 422122
E-mail: heiwong@nwriskmgt.com
Mr Wong Hei
33 Orion International Ltd
(United Kingdom)
Tel: 087-427018 Fax: 087-429018
E-mail: stevenb@orioninternational.net
Mr Steven Robert John Baker
34 Pacifi c World Reinsurance Brokers Limited
(Malaysia)
Tel: 087-426686 Fax: 087-426010
E-mail: pwg@tm.net.my
Mr Paul Lam Sai Kwong
35 Pana Management (L) Ltd
(Singapore)
Tel: 087-427018 Fax: 087-429018
E-mail: panakl@tm.net.my
Mr Yee San Siong
Listings of Labuan Offshore Financial Institutions
As at 31 March 2007
LOFSA ANNUAL REPORT 2006
112
36 PI Ltd
(United Kingdom)
Tel: 087-442899 Fax: 087-451899
E-mail: admin1@pioffshore.com
Mr Roger Gumbrell
37 PWS East Asia (L) Ltd
(Singapore)
Tel: 087-417672 Fax: 087-417675
E-mail: aff@pws.com.my
Mr Ahmad Farouk Faizi
38 Questor Capital (Labuan) Limited
(Malaysia)
Tel: 087-417672 Fax: 087-417675
E-mail: warren.r@questor-capital.com
Mr Warren Bruce Rodrigues
39 Select Asset Management (L) Limited
(United Kingdom)
Tel: 087-417672 Fax: 087-417675
E-mail: admin@selectassetmanagement.com
Mr Harold Tsiamis
40 Three Sixty Financial Inc
(United Kingdom)
Tel: 087-427018 Fax: 087-429018
E-mail: justinmoorhouse@threesixtyfi nancial.net
Mr Justin Moorehouse
41 Uni Financial Reinsurance Services (L) Ltd
(Singapore)
Tel: 087-427018 Fax: 087-429018
E-mail: leongwk@unifi nancialre.com
Mr Leong Weng Kee
42 Willis Re Labuan Limited
(Bermuda)
Tel: 087-417672 Fax: 087-417675
E-mail: jonesan@willis.com
Mr Adrian Nicholas Jones
Insurance Managers (Country of Origin)
1 Brighton Management Limited
(Malaysia)
Tel: 087-442899 Fax: 087-451899
E-mail: AnnieU@brightonmanager.com
Ms Annie Undikai
2 Labuan Insurance Management Services Limited
(Malaysia)
Tel: 087-427018 Fax: 087-429018
E-mail: jocelyn_yeo@labuancaptiveinsurance.com
Ms Jocelyn Yeo
3 Mitsui Sumitomo Reinsurance Limited
(Ireland)
Tel: 087-452748 Fax: 087-452750
E-mail: y-aoki@msre.com.my
Mr Yasushi Aoki
4 MNI Offshore Insurance (L) Limited
(Malaysia)
Tel: 087-417672 Fax: 087-417675
E-mail: amin@maybank.com.my
Dato’ Aminuddin Md Desa
5 New World Insurance Management (L) Limited
(Malaysia)
Tel: 087-416122 Fax: 087-422122
E-mail: heiwong@nwriskmgt.com
Mr Wong Hei
6 Pacifi c World Insurance Managers Limited
(United States of America)
Tel: 03-20310828 Fax: 03-20310829
E-mail: pwg@tm.net.my
Mr William M Cameron
113
Underwriting Managers (Country of Origin)
1 ASEAN Retakaful International (L) Ltd
(Malaysia)
Tel: 087-451301 Fax: 087-451300
E-mail: abdulhalim@aseanretakaful.com
Mr Abdul Halim Nasir
2 Brighton Management Limited
(Malaysia)
Tel: 087-442899 Fax: 087-451899
E-mail: AnnieU@brightonmanager.com
Ms Annie Undikai
3 Catlin Labuan Limited
(Bermuda)
Tel: 087-417672 Fax: 087-417675
E-mail: MinYing.Low@catlin.com
Mr Raymond Wong Shu Yoon
4 Labuan Insurance Management Services Limited
(Malaysia)
Tel: 087-427018 Fax: 087-429018
E-mail: jocelyn_yeo@labuancaptiveinsurance.com
Ms Jocelyn Yeo
5 Lloyd’s Labuan Limited
(United Kingdom)
Tel: 087-442 899 Fax: 087-451 899
E-mail: simon.wilson@lloyds.com.sg
Mr Simon Wilson
6 Marsh Management Services (L) Ltd
(Bermuda)
Tel: 087-417672 Fax: 087-417675
E-mail: vic.pannuzzo@marsh.com
Mr Vittorio Pannuzzo
7 Mitsui Sumitomo Reinsurance Limited
(Ireland)
Tel: 087-452748 Fax : 087-452750
E-mail: y-aoki@msre.com.my
Mr Yasushi Aoki
8 MNI Offshore Insurance (L) Limited
(Malaysia)
Tel: 087-417672 Fax: 087-417675
E-mail: amin@maybank.com.my
Dato’ Aminuddin Md Desa
9 New World Insurance Management (L) Limited
(Malaysia)
Tel: 087-416122 Fax: 087-422122
E-mail: heiwong@nwriskmgt.com
Mr Wong Hei
10 Pacifi c World Insurance Managers Limited
(United States of America)
Tel: 03-2031 0828 Fax: 03-2031 0829
E-mail: pwg@tm.net.my
Mr William M Cameron
11 Richard Oliver International (Labuan) Limited
(Singapore)
Tel: 087-593828 Fax: 087-417242
E-mail: nghh@willis.com
Ms Ng Hwee Hong
Listings of Labuan Offshore Financial Institutions
As at 31 March 2007
LOFSA ANNUAL REPORT 2006
Labuan Trust Companies
1 Amanah Raya (Labuan) Limited
Tel: 087-421663 Fax: 087-421662
E-mail: zainuddin@arb.com.my
Mr Zainuddin Suhaimi
2 Al-Aman Trust Services Limited
Tel: 087-423828 Fax: 087-417242
E-mail: raymond.wong@asia.equitytrust.com
Mr Raymond Wong
3 BIMB Trust Limited
Tel: 087-451806 Fax: 087-451808
E-mail: azulhazmi@bankislam.com.my
Dr Aimi Zulhazmi Abd Rashid
4 CIMB Trust Limited
Tel: 087-414252 Fax: 087-411855
E-mail: azli.noor@cimb.com
Mr Nor Azli Mohd Noor
5 EC Trust (Labuan) Bhd
Tel: 087-452858 Fax: 087-453616
E-mail: management@ectrustco.com
Mr Peter Kent Searle
6 Ernst & Young Trust Ltd
Tel: 087-413524 Fax: 087-414526
E-mail: shih_mei.liau@my.ey.com
Ms Liau Shih Mei
7 Equity Trust (Labuan) Limited
Tel: 087-423828 Fax: 087-417242
E-mail: raymond.wong@asia.equitytrust.com
Mr Raymond Wong
8 Integrated Agents Trust Ltd
Tel: 087-417810 Fax: 087-424220
E-mail: joyce.ng@iatl.com.my
Ms Joyce Ng
19142
9 ITMC Fiduciary Limited
Tel: 087-416518 Fax: 087-417655
E-mail: itmc@itmcfi duciary.com
Mr Colin Paul Seah
10 KPMG Labuan Trust Company Limited
Tel: 087-415467 Fax: 087-414781
E-mail: arthurchin@kpmg.com.my
Mr Arthur Chin Shoon Choong
11 Law & Commerce Trust Limited
Tel: 087-421644 Fax: 087-421646
E-mail: ahmad@simplyoffshore.com
Mr Ahmad Kamil Mohd Yusop
12 LGT Trust Labuan Ltd
Tel: 087-443118 Fax: 087-441288
E-mail: moritz.gubler@lgt.com
Mr Moritz Gubler
13 Mayban International Trust (Labuan) Ltd
Tel: 087-414406 Fax: 087-410741
E-mail: punjau@maybank-intl.com
Mr Punjau Sepoi
14 Noblehouse International Trust Ltd.
Tel: 087-410745 Fax: 087-419755
E-mail: cck@noblehouse-labuan.com
Mr Chin Chee Kee
15 PB Trust (L) Ltd
Tel: 087-412336 Fax: 087-451193
E-mail: pbtrust@tm.net.my
Ms Ng Siew Chin
16 Portcullis Trustnet (Labuan) Limited
Tel: 087-451310 Fax: 087-451311
E-mail: CheeThong.Foo@portcullis-trustnet.com
Mr Foo Chee Thong
115
Fund Management Companies (Country of Origin)
1 Alliance Asset Management (L) Limited
(Malaysia)
Tel: 03-26944888 Fax: 03-26943200
E-mail: limbs@alliancebg.com.my
Ms Lim Bong Shih
2 AmanahRaya Asset Management (Labuan) Ltd
(Malaysia)
Tel: 03-20557388 Fax: 03-20788187
E-mail: zainul@arb.com.my
Mr Zainul Abidin Ahmad
3 Arcap Inssef Ltd
(Malaysia)
Tel: 087-414252 Fax: 087-411855
E-mail: rashdan.ibrahim@arcap-inssef.com
Mr Rashdan Ibrahim
4 Arthur J Stewart Capital Limited
(Malaysia)
Tel: 087-423828 Fax: 087-417242
E-mail: infomy@asia.equitytrust.com
Mr Tan Lip Lin
5 Aurex Management & Investment (L) Limited
(Switzerland)
Tel: 087-421663 Fax: 087-421662
E-mail: rn@aurex.ch
Mr Roger Notter
6 Avenue Asset Management Services (L) Ltd
(Malaysia)
Tel: 03-20892900 Fax: 03-20892901
E-mail: tllye@ecmlav.com
Mr Lye Thim Loong
17 RHB International Trust (L) Ltd
Tel: 087-417480 Fax: 087-417484
E-mail: rhbit@streamyx.com
Ms Noreen Wong Ming Li
18 Shearn Skinner Trust Company Ltd
Tel: 087-414073 Fax: 087-413281
E-mail: sstc@tm.net.my
Ms Lillian Chau Siew Ha
19 SitiTrust Administrator Limited
Tel: 087-421663 Fax: 087-421662
E-mail: cttrust@streamyx.com
Ms Siti Hawa Saat
20 Trustco Labuan Ltd
Tel: 087-453288 Fax: 087-451288
E-mail: trustco@po.jaring.my
Mr Geoffrey Chang Tze Weng
21 ZI Labuan Trust Company Limited
Tel: 087-451688 Fax: 087-453688
E-mail: azizan.som@ziltco.com.my
Mr Azizan Mohd Som
Listings of Labuan Offshore Financial Institutions
As at 31 March 2007
LOFSA ANNUAL REPORT 2006
19164
7 Bellador Advisory Services (L) Ltd
(British Virgin Islands)
Tel: 087-418318 Fax: 087-419318
E-mail: jameskirby@belladorgroup.com
Mr James Kirby
8 Canaan Asset Management Limited
(Hong Kong)
Tel: 087-423828 Fax: 087-417242
E-mail: john.dryden@caninv.com
Mr John David Dryden
9 Capitalwerks (Labuan) Limited
(Malaysia)
Tel: 087-451688 Fax: 087-453688
E-mail: azizan.som@ziltco.com.my
Mr Azizan Mohd Som
10 CCIB Asset Management Limited
(Hong Kong)
Tel: 087-418868 Fax: 087-418858
E-mail: paulchen@ccibam.net
Mr Paul Chen Ting-Kang
11 CFC Seymour Ltd
(Singapore)
Tel: 087-582802 Fax: 087-428802
E-mail: f.vantuyll@asia.equitytrust.com
Mr Frederick Ernest van Tuyll van Serooskerken
12 EAssetManagement (Labuan) Pte Ltd
(Malaysia)
Tel: 03-21649029 Fax: 03-21649039
E-mail: eassetmanagement@gmail.com
Mr Lance W Roberts
13 E & S Assets Management Company Limited
(Malaysia)
Tel: 087-421663 Fax: 087-421662
E-mail: cttrust@streamyx.com
Ms Siti Hawa Saat
14 Five Dragons (Labuan) Limited
(United Kingdom)
Tel: 087-414252 Fax: 087-411855
E-mail: azli.noor@cimb.com
Mr Nor Azli Mohd Noor
15 Fullerton Investment Ltd
(Malaysia)
Tel: 087-423828 Fax: 087-417242
E-mail: infomy@asia.equitytrust.com
Dr Wong Kai Fatt
16 Fulton Capital Management Ltd
(Singapore)
Tel: 087-451806 Fax: 087-451808
E-mail: ramlanahmad@fultoncapital.com.sg
Mr Ramlan Ahmad
17 Intrinsic Capital Management (L) Ltd
(Malaysia)
Tel: 087-414073 Fax: 087-413281
E-mail: intrinsic@streamyx.com
Dr Aziz Abu Hassan
18 International Islamic Asset Management LLC
(Hong Kong)
Tel: 087-582268 Fax: 087-581268
E-mail: admin@cccapital.net
Dato’ Abdul Rahman Abdullah
19 Namirah Capital Management Ltd
(Singapore)
Tel: 087-451688 Fax: 087-453688
E-mail: azizan.som@ziltco.com.my
Mr Azizan Mohd Som
20 Portsmouth Securities Limited
(United Kingdom)
Tel: 087-426801 Fax: 087-426802
E-mail: info@portsmouthsecurities.com
Mr Roy George Charles Smith
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21 Trident Investment Ltd
(Australia)
Tel: 087-414252 Fax: 087-411855
E-mail: azli.noor@cimb.com
Mr Nor Azli Mohd Noor
22 United Base Global Assets Limited
(Malaysia)
Tel: 087-414252 Fax: 087-411855
E-mail: jude@ubventure.com
Mr Jude Anthony
23 Washington Square Investment Management
(Asia Pacifi c) Limited
(United Kingdom)
Tel: 087-451688 Fax: 087-453688
E-mail: steve.basirdin@wsqim.com
Mr Steve Basirdin
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
E-mail: sstc@tm.net.my
Chairman: Mr Chin Chee Kee
Secretary: Ms Lilian Chau Siew Ha
2 Association of Offshore Banks Labuan
Level 8(D), Main Offi ce Tower
Financial Park Labuan, Jalan Merdeka
87000 F T Labuan, Malaysia
Tel: 087-452778 Fax: 087-452779
E-mail: aoblbu@tm.net.my
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 Offi ce Tower, Financial Park Labuan
Jalan Merdeka, 87000 F T Labuan, Malaysia
Tel: 087-439400 Fax: 087-426652
E-mail: liia@tm.net.my
Chairman: Mr Jeremy C Camps
Secretary: Mr Steve Baker
Labuan International Financial Exchange
1 Labuan International Financial Exchange Inc
Unit Level 7(B), Main Offi ce Tower
Financial Park Labuan, Jalan Merdeka
87000 F T Labuan, Malaysia
Tel: 087-451359 Fax: 087-451379
Website: www.lfx.com.my
Ms Rusmin Jaafar
Listings of Labuan Offshore Financial Institutions
As at 31 March 2007
LOFSA ANNUAL REPORT 2006
Listing Sponsors
1 Citibank Malaysia (L) Limited
Tel: 087-421181 Fax: 087-419671
E-mail: clara.ac.lim@citigroup.com
Ms Clara Lim Ai Cheng
2 ECM Libra Avenue Securities Sdn Bhd
(formerly known as Avenue Securities Sdn Bhd)
Tel: 03-21781888 Fax: 03-21781848
E-mail: robertti@ecmlav.com
Mr Robert Ti
3 K & N Kenanga Holdings Berhad
Tel: 03-21647178 Fax: 03-21610691
E-mail: fazri@kenanga.com.my
Mr Fazri Mohd Zain
4 AmInternational (Labuan) Limited
Tel: 087-413133 Fax: 087-425211
E-mail: paul-ong@ambg.com.my
Mr Paul Ong Whee Sen
5 Aseambankers Malaysia Berhad
Tel: 03-20723431 Fax: 03-20784220
E-mail: rohaya@aseam.com.my
E-mail: leemei@aseam.com.my
Ms Rohaya Mohd Yusof
Ms Yong Lee Mei
6 Bank Islam Malaysia Berhad, Labuan Offshore Branch
Tel: 087-451802 Fax: 087-451800
E-mail: engkuafandi@bankislam.com.my
Mr Engku Afandi Engku Taib
7 EQ Funds Services (Asia) Limited
(formerly known as Insinger Funds)
Tel: 087-423828 Fax: 087-417242
E-mail: vijayan.ramanjulu@asia.equitytrust.com
Mr Vijayan Ramanjulu
8 Alliance Merchant Bank Berhad
Tel: 03-26927788 Fax: 03-26919028
E-mail: hml@alliancemerchant.com.my
Ms Hwang Mei Lyn
9 CIMB Bank (Labuan) Limited
(formerly known as Bumiputra-Commerce Bank (L) Limited)
Tel: 087-410305 Fax: 087-410313
E-mail: rositah@bcblab.po.my
Ms Rositah Mariam Sulaiman
10 OSK Investment Bank (Labuan) Limited
Tel: 087-581885 Fax: 087-582885
E-mail: yeoh.kokhoe@osk.com.my
Mr Yeoh Kok Hoe
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119
Trading Agents
1 Aseambankers Malaysia Berhad
Tel: 03-20723431 Fax: 03-20784220
E-mail: rohaya@aseam.com.my
E-mail: leemei@aseam.com.my
Ms. Rohaya Mohd Yusof
Ms. Yong Lee Mei
2 Bank Islam Malaysia Berhad, Labuan Offshore Branch
Tel: 087-451802 Fax: 087-451800
E-mail: iamnazir@bankislam.com.my
Mr Iam Nazir Ibrahim
3 CIMB Bank (Labuan) Limited
(formerly known as Bumiputra-Commerce Bank (L) Limited)
Tel: 087-410305 Fax: 087-410313
E-mail: rositah@bcblab.po.my
Ms Rositah Mariam Sulaiman
Listings of Labuan Offshore Financial Institutions
As at 31 March 2007
Labuan Offshore Financial Services Authority
Level 17, Main Offi ce Tower
Financial Park Complex
Jalan Merdeka
87000 Federal Territory Labuan, Malaysia
Tel No : (+6 087) 591 200
Fax No : (+6 087) 428 200
communication@lofsa.gov.my
www.lofsa.gov.my
 davido.extraxim@gmail.com