By Jailani Hasan
LABUAN, Sept 8 (Bernama) -- The Labuan International Business and Financial Centre’s (Labuan IBFC) five-year Strategic Roadmap 2022-2026 charts the continued growth and building on the position of strength of Labuan IBFC.
Labuan Financial Services Authority (Labuan FSA) director-general Nik Mohamed Din Nik Musa said the roadmap articulates the priorities and new initiatives to be pursued over the short and medium term with the objectives to create greater business sustainability and efficiency with defined niches, to achieve higher market relevancy and inclusiveness, and synergy between Labuan IBFC and the Federal Territory of Labuan.
“The approach is two-pronged to reach the international market virtually as well as physically face-to-face.
“As Islamic or sustainable finance is on the rise and capitalising on Malaysia’s success in this area, it is envisaged that Labuan will play a significant role as a fundraising and investment hub in the global digital space, with a niche in environmental, social and governance (ESG) and shariah-compliant activities,” he said in his keynote address on ‘Evolving and Impacting the Post-Pandemic World: Future Development in Financial Sector’ on the second day of the 24th Malaysian Finance Association International Conference 2022 at Dorsett Grand Hotel here today.
He said new players, namely, the digital assets and fintech players are already interested to be part of this exciting emerging market.
Nik Mohamed Din said Labuan is underpinned by a comprehensive set of laws and regulations governing both conventional and Islamic financial services under two separate Labuan Financial Services and Securities Acts.
“Made possible today by the availability of virtual listing using blockchain technology, global investors who are looking for new asset classes including ESG and shariah-compliant investment products can look to Labuan where those seeking financing can raise funds via securities token offering otherwise known as asset or commodity-backed tokens such as gold, real estate and carbon credit.
He said Labuan could become the gateway for Islamic Digital Asset Centre or in short, IDAC, targeting primarily “out-out” business.
“IDAC is on track to launch its first Islamic/ESG Digital Exchange in Labuan this month, possibly to be the world’s first of such exchange.
“In particular, small and medium enterprises interested in raising funds cost-effectively and tapping the ESG and Islamic investors from Southeast Asia and the Middle East, for example, can leverage on Labuan’s IDAC.
He said as the world places greater emphasis and focus on sustainable finance, the outbreak of COVID-19 has sparked a chain reaction in the captive insurance industry.
He added that the World Economic Forum Global Risks Report 2021 has ranked climate change as the most likely and impactful threat to stability and cyber risk is considered a top global risk for the insurance sector.
“Hence, Labuan is well positioned to create another niche market for itself as an insurance captive hub.
“Risk managers are currently looking for better alternatives and captive insurance to enable corporations with extensive risk portfolios to better bundle and diversify them, as well as have direct access to global insurance and reinsurance markets.
“By self-insuring high-frequency, low-severity risks through a captive, a corporate can reduce transaction costs and focus risk transfer on lower-frequency, higher-severity risks for more efficient risk management.
Among the initiatives, Labuan FSA is positioning itself as takaful captive’s hub, a unique proposition not found in other parts of the world,” Nik Mohamed Din said.
He said Labuan IBFC is now home to 226 insurance and insurance-related entities, including 64 captives and as of the second quarter of 2022, the total gross premium of the Labuan insurance industry was recorded at US$933.3 million (US$1=RM4.50).
Nik Mohamed Din said a total of US$350.7 million worth of premiums was underwritten by Labuan captive insurance in the first half of 2022 and about 65 per cent of these premiums are from the international market.
He said Asian markets have contributed more than 55 per cent of the premiums underwritten by Labuan captives.
“Besides Islamic digital asset and captive hub as our two emerging niches, other existing businesses that are growing well are leasing, Labuan international trading commodity company and digital services providers,” he said.
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