21 December 2022Analysis

Labuan IBFC continues to see captive growth

A new report on the Labuan International Business and Financial Centre (IBFC) has shown that the centre continues to grow, with captives viewed as one of three emerging segments for future growth.

International Investment’s Labuan Special Report 2022-23 pointed out that as a growing captive domicile in Asia Pacific, Labuan IBFC’s captive sector continued to gain momentum, with 65 captives established and total gross premiums registering at $423.3m as at the third quarter of 2022.

The other two emerging segments for the Centre are Islamic finance and digital financial services.

The report noted that this year, on the regulatory front, Securities Commission Malaysia and Labuan FSA, the Centre’s single regulator, signed a memorandum of understanding to pave the way for greater regulatory, enforcement, and supervisory cooperation between the two regulators. Labuan FSA also signed a corruption-free pledge for high integrity and good governance.

Mid-year saw the launch of the Labuan IBFC Strategic Roadmap 2022-2026 and Market Report 2021 by Labuan FSA. The regulatory body commented: “It is imperative that Labuan IBFC builds on the momentum of past achievements and further enhance the Centre’s capabilities, market reach and prominence to the next level. In this context, consultations with industry players and key stakeholders were undertaken in formulating the Labuan IBFC Strategic Roadmap 2022-2026 – a blueprint for growth trajectory of the Centre for the next five years.”

The roadmap embodies strategic initiatives to expand target sectors that are critical to the Centre’s growth, namely, digital financial business, captives and Islamic finance as well as regulatory modernisation essential to ensure ongoing market stability, certainty and orderliness. It is envisaged that with the implementation of the initiatives, Labuan IBFC will evolve into a dynamic, sustainable international business hub of choice for Asia.

Labuan FSA also rolled out a new risk-based insurance solvency regime, comprising a set of risk-based capital (RBC) regulations for its insurance industry. This RBC approach is contemporary and risk-focused, and is timely to be practised especially for Labuan IBFC as it has a rapidly expanding international insurance market.