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As Malaysia's self-governing financial centre, Labuan Island is off Borneo, with the Brunei Darussalam as one of its neighbours. It has attracted many of the world's largest banks to establish their operations on the island. The island has good communications with several daily direct flights to the international airports of Kota Kinabalu and Kuala Lumpur.

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Labuan IBFC provides a comprehensive range of financial services and  products to customers worldwide as it offers:

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Low tax; Extensive double tax agreements

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Proven political and economic stability

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Business friendly environment

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Strong governmental support

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Established legal systems and pro-active legislation

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High level of investments  protection

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No exchange controls




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Trust business in Labuan has huge potential. Trust created in Labuan may be for a period or in perpetuity. Registration of trust is not mandatory in Labuan thus its confidentiality is guaranteed in accordance with the relevant laws.

The laws also allow the re-domiciliation of foreign trusts to Labuan and vice-versa. The term of the trust may determine its proper law and the subsequent change of that proper law, thus enabling a trust to first test the suitability of a particular jurisdiction and change to another should the need arises.

Statutory recognition has been given to the role of Protectors and the letter of wishes and there are enough provisions on the protection of assets held under trusts.

Labuan banks may carry on a wide range of banking business in foreign currencies including investment banking business, Islamic banking business, digital banking business and any such other activities as prescribed by the Minister of Finance.
Labuan banks are required to maintain substantive physical presence in Labuan and are not permitted, among others, to open an account for a customer, whose identity is not known to the banks and dealing in Malaysian currency except for defraying administrative expenses

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The law on mutual funds regulates the dealing of securities in Labuan and provides for the establishment of a facility for the listing of securities on an exchange. This led to the establishment of the Labuan Financial Exchange (“LFX”) on July 30, 1999. Mutual funds may be established either in the form of a Labuan company, unit trust or a partnership. Mutual funds are further categorized as either private fund or public fund. Public fund requires registration with LFSA and private fund requires only notification to the LFSA.

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Mutual Funds

The Labuan legal framework has recently provided for the registration of foundations. Foundations can be used either for wealth and succession planning or charity. Foundations are alternative to trusts and they can be registered either under the Labuan Foundation Act 2010 or the Labuan Islamic Financial Services and Securities Act 2010.

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Leasing is indeed another growing sector in Labuan with several international players already using Labuan for this purpose. Labuan companies incorporated or registered in Labuan, leasing companies registered under the Banking and Financial Institution Act 1989 and special-purpose vehicles (SPVs) incorporated in Labuan to facilitate inter-company leasing transactions are eligible to apply for leasing licenses.

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The insurance sector in Labuan had shown tremendous growth in recent years. The insurance laws in Labuan provide for the establishment of a complete spectrum of insurance activities such as direct insurance for life and general, offshore reinsurance, captive insurance, insurance management, underwriting and insurance broking. Captive insurance is gaining popularity with more residents and non-residents conglomerates alike resorting to self-insurance.

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The circular on Innovative financial services (IFS) allows Labuan company to participate in several fintech activities which include digital currency activities, robo-advisory services, blockchains or distributed ledger, InsurTech or any other IFS related services. Labuan company which intends to undertake IFS activities would require prior approval from Labuan FSA.

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Innovative Financial Solutions

Labuan Company is a popular vehicle when setting up a business in Labuan, although limited liability partnerships are gaining momentum. A Labuan company may have a single shareholder. Other attractions include a single director and the ability to re-domicile Labuan companies from Labuan elsewhere or vice-versa. Labuan companies are required to keep their statutory books in Labuan and an audit is not mandatory under certain instances.

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Labuan Companies

A limited liability partnership is an alternative entity to a Labuan company. A limited partnership consists of not less than two partners of whom one must be a general partner and at least one shall be a limited partner. A limited partnership may be in the form of a general offshore limited partnership, a professional partnership, and a project partnership, thus making the partnership ideal vehicle for projects or ventures meant for a specific period.

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Limited Liability Partnership

One of the recent attractions of Labuan is the provision on PCC which may be used either for purpose of insurance for captive insurance business or the business of mutual funds. A PCC is one legal entity which can create one or more cells under it thus enabling the PCC to segregate its assets into different cells protecting each cell from the liabilities of any of the other cells.

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Protected Cell Companies (PCC)

Malaysia's only International Ship Registry (“MISR”) was recently established in Labuan. Labuan companies maybe formed for purposes of owning ships and such ships maybe registered at the MISR. Subject to the due completion of documents submitted and fulfilment of the required survey the Certificate of Survey, provisional and permanent maybe issued in seven working days by the registry.

*The legislation is subject to amendments from time to time

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International Ship Registration

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With globalization, it is crucial for businesses to be cost efficient, operates in a jurisdiction with the least bureaucracy yet provides all possible opportunities. Labuan Companies are used as / for:

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Fund management and fund-related companies

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For wealth and succession planning

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Tax planning purposes, amongst others

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