Malaysian central bank unveils Labuan plans
Malaysian central bank unveils Labuan plans
KUALA LUMPUR (AFP): Malaysia's top banking official has invited the world's best banks to make home on the eastern Labuan island to turn the tiny offshore financial center into the biggest in the region, a report published yesterday said.
Labuan is a tax-free haven in the hub of dynamic Asia-Pacific economies and offers among the best transaction opportunities and fiscal incentives in the world, Ahmad Mohd Don, governor of the central Bank Negara was reported saying.
"Specifically, Labuan is almost equidistant from Kuala Lumpur, Bangkok, Hong Kong, Jakarta, Manila and Singapore," Ahmad said in the interview with the Malaysian Industrial Development Authority published by The Star newspaper.
However, only banks with huge capital adequacy, unblemished records and ability to withstand stringent operating rules would be allowed on the four-year-old financial market, Ahmad said.
"At present, we would only consider an application from a bank which is among the largest banks in an Asian or ASEAN country," Ahmad said.
ASEAN, or the Association of Southeast Asian Nations, groups Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand.
Ahmad said Labuan was in an ideal time zone for conducting business around the clock and the legal framework for business was simple, with administrative procedures kept to a minimum.
"Corporate tax is only three percent while dividends paid by an offshore company, interest earned on deposits with an offshore bank and interest earned on loans to Malaysians are not subject to withholding tax," Ahmad said.
He added that there were no stamps, inheritance, death or estate duties.
Wages, office, housing and living costs were also lower than Singapore, Hong Kong or Tokyo, Ahmad said.
He said offshore banks were completely free of exchange control restrictions when dealing with foreigners and had young, trainable and English-conversant local workers at their disposal.
Officials said the tight entry laws were among reasons why only 36 foreign financial houses and three local ones have been permitted so far to operate on the tax-free haven neighboring Borneo Island.
There were also some 400 offshore companies conducting other businesses on Labuan, which has seen a total of about two billion ringgit (US$800 million) in development over the past four years, officials said.
The government has also proposed an internal stock market and monetary exchange to attract financial houses to the island.
Ahmad said applicants should have a track record of sound management, at least three years of good financial performance, no violation of banking or other laws and should be supported and supervised regularly by their home authorities.