Labuan IBFC turns to progressive approach in embracing digital finance
By Digital News Asia December 13, 2019
- 2019 saw over 30 licenses approved to applicants seeking to operate as digital entities
- Labuan IBFC’s tax neutrality and currency agnosticism adds to the appeal as a digital hub
“LABUAN International Business and Financial Centre’s (Labuan IBFC’s) “digital family” continues to grow in recognition of the progressive approach the centre has taken in embracing the digital revolution by being as facilitative as possible to enable innovative digital business to take root in Labuan,” said Labuan Financial Services Authority (Labuan FSA) director-general, Danial Mah Abdullah (pic,above) at the inaugural Connecting Digital Ecosystems in Asia 2019 (CoDE Asia 2019) conference in Kuala Lumpur yesterday.
Mah added: “To this extent, the centre has used legacy licenses like money broker, credit token licenses to provide the regulatory umbrella for the digital business to be carried out.
“Now that is innovation by itself. Thus, the centre has a ‘toolbox’ of solutions to meet the needs of the rapidly expanding digital industry, whether from the supply or demand side.”
He went on to add that the digital business model must be legitimate, meeting international standards of compliance, transparency and prudential requirements. Thus, prospects would need to obtain Labuan FSA’s prior approval for any proposed digital business if the activities fall within the ambit of Labuan Financial Services Securities Act 2010 or Labuan Islamic Financial Services Securities Act 2010.
Labuan IBFC’s digital journey began in 2017, with eight licenses up to 2018. 2019 has seen an exponential growth in the number of players in the centre with more than 30 licenses approved to operate as digital entities.
These businesses range from financial services such as digital banking and insurtech to digital intermediaries such as robo-advisory, digital asset exchanges, crypto trading platforms, blockchain tokens as well as e-payment systems.
“Our bespoke and curated approach is an ideal match to the demands of a fast-evolving digital marketplace,” said Farah Jaafar-Crossby (pic, right), chief executive officer of Labuan IBFC Inc, the jurisdiction’s market development agency.
She added Labuan IBFC’s tax neutrality and currency agnosticism adds to the appeal as a digital hub, especially since the digital marketplace is inherently borderless in its application.
“We have seen a significant increase in interest in our digital ‘toolbox’ from regional and also international entities,” she said and cited Memoranda of Understanding signed between Labuan IBFC Inc with China Construction Bank, as well as Huobi Group of China, both in relation to the advancement and development of Labuan IBFC’s digital ecosystem.
She added the fast-growing ecosystem in the jurisdiction had also prompted the establishment of an industry-led Labuan Fintech Association, which is open to any party interested in participating and contributing to Labuan IBFC’s growing “digital family”.
Labuan IBFC which will celebrate its 30th year of establishment in 2020, is home to more than 6,000 active companies which include top-ranked financial institutions comprising 55 banks, 217 insurance companies, 61 corporate service providers, more than 300 leasing companies and 43 commodity trading companies.
Labuan IBFC entities employ more than 6,000 people, making the IBFC the largest employer compared to other industries in Labuan.
The Connecting Digital Ecosystems in Asia 2019 (CoDE Asia 2019) conference was attended by more than 250 delegates and featured a lineup of regional industry players and subject matter experts, discussing topics catered towards developing a holistic digital ecosystem in the region.