The Labuan International Business and Financial Centre’s Strategic Roadmap 2022-2026

14 September 2022

1. Maintain market stability, resilience and credibility;
2. Stable and well-regulated market;
3. Greater synergy between Labuan IBFC and the growth of Labuan island;
4. Holistic contemporary product offerings; and
5. Higher market relevancy. 

• Thrust 1: Spurring market innovation and vibrancy;
• Thrust 2: Promoting market facilitation and visibility; and
• Thrust 3: Enhancing Labuan IBFC’s complementary roles to Malaysia. 

• Thrust 4: Effecting relevant and proportionate regulations; and
• Thrust 5: Effecting pre-emptive supervision and enforcement. 

1. Transforming Labuan IBFC into a Digital Financial Hub:

• Enhance the scope and operational requirements for Labuan banking activities;
• Formulate digital assets regulatory requirements including tokenisation of non-securities via digital platform;
• Develop and enhance Labuan exchanges’ scope and functions, including promoting environmental, social, and governance (ESG);
• Promote formation of centralised facilities for digital authentication for the Labuan market;
• Effect end-to-end digitisation of licensing and registration; and
• Develop and enhance existing requirements for dealings on digital assets and digital exchange platforms; 

2. Intensifying Labuan insurance market growth:

• Underwrite specialised risks of Labuan entities;
• Develop industry-wide retention policy and market cession schemes;
• Review and harmonise the varieties of Labuan captive structures to ensure effectiveness and relevancy are at par with international market development;
• Review and expand functions of captive managers to effectively assist captive insurers in their business operations;
• Undertake a detailed study to expand the scope of business of Protected Cell Companies;
• Explore the possibility of sector-based tiering of insurance intermediaries against the practice of another international financial centre; and
• Undertake a feasibility study to introduce new or specialised “underwriter” licences to cater for growing demands for underwriting of specialised risks; 

3. Promoting international Islamic finance:

• Attract new digital prospects in banking and other traditional financial sectors;
• Service new sectors through takaful captives and Shariah-compliant tokenisation;
• Institutionalise globally social finance via digitalisation such as Pension, Hajj, Waqf and Zakat; and
• Complement the global Islamic infrastructure; 

4. Revitalising niche and prospective segments:

• Promote commercial use of Protected Cell Companies to administer mutual funds;
• Enhance the attractiveness of the Labuan International Commodity Trading Company (LITC) including operational requirements for oil and gas and non-oil and gas; and
• Develop digital leasing structure by identifying possible types of leasing assets that can be digitised for commercial purposes. 

1. Upscaling Labuan IBFC’s ecosystem and infrastructure:

• Develop aggregation/distribution platform to encourage cross-sectoral business transaction to match the supply and demands of business in Labuan IBFC; and
• Undertake a feasibility study to develop ‘protection’ schemes to enhance investors’ confidence; 

2. Enhancing Labuan IBFC’s visibility and branding:

• Enhance strategic communication;
• Participate actively in international events and strengthen collaboration with other international financial centres as well as domestic stakeholders, including engagement with standard setting bodies, MoU partners and promotional agencies; and
• Focus on marketing strategy emphasising on targeted key brands for specific sectors. 

• Utilise captive structures by GLCs, GLICs, co-operations for better risk management;
• Support international trade and investments in specific business niches through digital platform that have been proposed on digital activities;
• Introduce counter-cyclical fiscal measures for relevant resident borrowers with Labuan banks especially for financing related to national interest; and
• Labuan digital banking to serve financing needs of the unserved or underserved Small-Medium Enterprises. 

1. Continued legal and regulatory upscaling:

• Review the current legal requirements to accommodate for proportionate regulatory and supervisory approach;
• Effect forward-looking legal requirements in tandem with international regulatory developments and market innovation; and
• Undertake measures to ensure that the legal ecosystem remains effective and relevant in safeguarding financial stability and market integrity; 

2. Developing risk-sensitive, fit-for-purpose regulations to cater for emerging concerns:

• Enhance risk-based capital framework for the insurance market in line with international standards developments;
• Review capital adequacy framework and prudential requirements for the banking sector in line with the Basel standards;
• Formulate key regulations for digital financial services, such as asset tokenisation, digital trading platform operators and digital exchanges; and
• Develop market conduct regulations for key and digital market intermediaries to promote fair and responsible market practices; 

3. Securing good ratings for incoming international assessments on Labuan IBFC:

• Undertake adequate preparation for OECD’s BEPS 2.0 and Automatic Exchange of Information and AML/CFT assessments expected over 2022-2026; and
• Firm-up and ensure cohesion in the Labuan tax policy under post-substance environment. 

• Modernise supervisory approach through adoption of supervisory technology for monitoring, surveillance and enforcement;
• Enhance supervisory capabilities and skillsets needed for new digital businesses; and
• Strengthen home-host supervisory relationship for more effective monitoring of banking and insurance international groups.