Top executives of the Labuan International Business and Financial Centre have been on a tour of major cities across Asia since late April, touting the island as the place to set up shop.
According to a Wall Street Journal report, the pitch at a recent presentation in Hong Kong included a glossy 36-page book ticking off the perks of setting up a Labuan-based trust, leavened by photos of vintage Ferraris and Lamborghinis.
Labuan keeps no public register of trusts and private foundations established within its perimeter. Investment vehicles on the island face no tax.
The WSJ report said the roadshow, Labuan’s third in its 26-year-history as a financial centre, came at a tense time for the offshore industry.
The “Panama Papers” — a massive document leak from a Panamaniam law firm made public in April — named a number of high-profile public figures around the world who have quietly parked cash outside their countries using offshore firms.
Labuan’s bid for attention also coincided with an escalating controversy in Malaysia over government investment fund 1MDB, which is under investigation in six countries over the “alleged misappropriation of billions of dollars,” the report said.
Labuan officials, the WSJ report said, have welcomed calls for increased transparency in the offshore industry.
“You can’t sell secrecy anymore, and we were never secretive,” it quoted Danial Mah Abdullah, the deputy director-general of the Labuan Financial Services Authority, as saying.
The Labuan authorities believe now is a good time to promote the island’s focus on Asian businesses and the region’s fast-growing ranks of wealthy individuals.
More than 70 per cent of the companies registered in Labuan originate from Asia. The cost of operation in Labuan, the Labuan promoters say, is one-third that of Hong Kong or Singapore.
They are also using Malaysia’s status as a centre for Islamic finance as a selling point. Business services and structures are available in both conventional and Shariah-compliant forms, the report added.
“Established in 1990, Labuan is a small player in a region known for its business-friendly financial centres. The London-based lobby Tax Justice Network says Labuan offers a level of secrecy about such things as company ownership similar to that of Hong Kong or Singapore.
“The tax-transparency lobby estimates Labuan accounts for less than 0.1 per cent of the global market for offshore financial services, compared with nearly 4 per cent for Hong Kong, which ranks second on a tax-havens index the lobby compiled last year.”
Singapore ranks fourth, ahead of the Cayman Islands. Labuan ranks 18th, behind Japan and Germany.
The WSJ quoted Danial as saying Labuan did not wish to compete with the likes of Hong Kong and Singapore, but to complement them.
Labuan was home to a total of 11,630 companies, banks and leasing companies at the end of 2014, according to its latest annual report. That was up 45 per cent from the end of 2010.