Offshore banking in Labuan

Labuan consists of Labuan Island itself, and six smaller islands. As well as a favoured destination for tourists, especially scuba divers, this Malaysian territory is known as an offshore support hub for oceanic oil drilling. But what gives the location particular renown amongst the international financial sector is the offshore banking in Labuan.

Elements of Labuan offshore banking

Offshore banking in Labuan is centred around the Bank Negera Malaysia, or the Central Bank of Malaysia. There are also various other banking and related institutions involved, ranging from finance companies, commercial banks, merchant banks and Islamic banks. The banking system is by far the largest component of the overall finance system, accounting for almost 70% of the total turnover.

The Central Bank, dating to 1959, has various stated objectives. Principal amongst these are issuing Malay currency and maintaining a reserve in order to safeguard its value. The bank also acts as the government’s chief financial advisor and banker. The Central Bank promotes monetary stability and is dedicated to maintaining a sound financial structure at all times. It is also a force in the influencing of the credit situation in this part of Asia, with a view to giving the advantage to Malaysia.

In a nutshell, the operations of the Central Bank are all about promoting economic growth, alongside the stability of prices, and maintaining fiscal stability, especially during these difficult economic times around the globe.

The offshore banking carried out in Labuan can only be done by an offshore company, or a foreign offshore company registered for that purpose. It can also be actioned by a branch of a licensed Malaysian bank, such as the Central Bank.

How to apply for an offshore banking licence

In order to be permitted to perform offshore banking in Labuan, an application must be made to the Labuan Offshore Financial Services Authority. At this stage a guarantee must be made, including offering minimal capital funds of RM 10 million. For offshore banking processes, an annual fee is payable to the Central Bank of RM60,000 no later than 15 January.

United Kingdom - Excite Network Copyright ©1995 - 2022