LABUAN: Labuan International Business and Financial Centre (Labuan IBFC) continues to attract financial services firms from across the globe, with more than 800 entities currently operating there.
Labuan Financial Services Authority (Labuan FSA) director-general Datuk Danial Mah Abdullah attributed the encouraging number to the surge or 50 per cent increase in the approval of licensing applications in the first half of this year.
“Notwithstanding the challenges and movement restrictions due to the Covid-19 outbreak, we are glad to continue to have growth, an increase in licences approved during the first half of this year.
“Having said that, we remain cautious on the outcome in the second half of the year but optimistic that we will pull through this ‘Covid-19 rollercoaster year’ on a positive note,” he said in his welcome speech at the third Asian Captive Conference (ACC) held virtually Friday.
Cognisant of the Covid-19 situation, he said, Labuan FSA has provided regulatory reliefs aimed at alleviating the operational difficulties of the market.
“We will continue to support the market players during this difficult and challenging time as we navigate the ‘new normal’ together; we are always engaging with our players on this,” he said.
He said Labuan IBFC as a midshore jurisdiction takes the approach of proportionality in regulation and market engagement, noting this philosophy is appropriate during these times of change and uncertainty, and will serve the jurisdiction well moving forward.
“Labuan IBFC is a ‘whitelisted’ jurisdiction by the European Union (EU) and deemed largely compliant by the Organisation for Economic Co-operation and Development (OECD).
“As such, coupled with Labuan FSA’s continued commitment to adhere to the highest regulatory and supervisory standards, we are optimistic that the global financial services industry would continue to regard Labuan IBFC positively even during these unprecedented times,” he said.
Mah said captive insurance has grown in size, attributing 31.4 per cent of the total gross premiums underwritten in Labuan IBFC, amounting to USD267.9mil with 72.8 per cent of the total captive premiums from international markets.
“This is in line with the status of Labuan IBFC as a regional wholesale risk intermediating centre; in fact, for the first half of 2020, 64.5 per cent of total gross written premiums of the reinsurance industry originated from international markets.
“We expect this percentage to increase as we develop Labuan even further as a centre of risk management and reinsurance through innovation; for instance, Labuan IBFC is the only jurisdiction in Asia that offers protected cell companies (PCC),” he said.
Mah said it was a natural progression that as the Labuan community of financial institutions continue to grow, more intra Labuan IBFC trade is affected.
“This is a natural progression of a jurisdiction with more than 800 licensees, with the insurance market representing nearly 30 per cent or 220.
“As we mature as a financial centre, cross-pollination of businesses is part of a natural development cycle that reinforces a vibrant intra-Labuan business ecosystem for all institutions to partake in,” he added.
Meanwhile, Labuan IBFC Inc chief executive officer, Farah Jaafar-Crossby said the growth in licenced entities is evidence of Labuan IBFC’s relevance as intermediaries look for safe harbour jurisdictions that are well regulated to international standards set by global multilateral organisations.
“Specifically in reinsurance, Labuan IBFC continued to see growth in the insurance industry with 11 new licences being approved of which seven were captive insurance entities, reinforcing its jurisdictional reign in the Asia captive market,” she said.
The ACC 2020 themed “Agility in the Covid Climate”, it is a special virtual edition and collaboration by Labuan IBFC and Pan-Asia Risk & Insurance Management Association (Parima). This year, the ACC is hosted as part of the Parima Resilience Week of events.