KUALA LUMPUR (April 14): Labuan Financial Services Authority (FSA), through Labuan International Business and Financial Centre (IBFC), has delivered commendable growth in 2022, mainly driven by the digitalisation of its incorporations.

Its director general Nik Mohamed Din Nik Musa said there has been surging interest in Labuan’s digital market and exchanges, especially with more digital financial services providers using Labuan IBFC’s platform.

“There was strong demand for new licenses (for approval) to set up new digital businesses.

“The licences [issued] have been rising (for the past few years), so I think the people or companies are either pivoting or reinventing themselves to become more digital,” Nik Mohamed Din told a press conference after delivering Labuan IBFC's 2022 market report performance.

He said that there is a rising trend of financial technology (fintech) firms partnering with companies from different fields to apply for digital licenses.

Last year, Labuan IBFC’s company incorporations grew 17% to 532 incorporations, from 455 in 2021.

Incorporations from Asia and the Pacific region increased by 24% to 350, mainly from Singapore and India.

He noted that Labuan's financial sector has been growing and did not experience significant shrinkage during global economic turmoil and crisis. 

“Notwithstanding this (economic crisis), we continued to see growing interest in the banking business as reflected by three new banking institutions approved, of which two were granted to undertake digital banking business,” he said.

Labuan IBFC has approved 20% or 29 digital financial services (DFS) in 2022, bringing the total number of DFS to 111.

Its Islamic banking financing grew 25% to US$2.1 billion (RM9.2 billion) in 2022, of which Islamic financing constituted 10.2% of the total industry’s loan.

Islamic banking assets also showed healthy growth with a noticeable increase of 21% to US$2.3 billion in 2022.

Meanwhile, the international commodity trading sector recorded the largest trading amount of US$51 billion, reflecting a significant growth of 31% in 2022.

“Total commodities traded were mainly crude oil and liquefied natural gas (LNG), which grew by 40% to US$48.3 billion, in tandem with recovery in global oil and LNG prices,” he said.

As such, this significantly lifted the profitability of Labuan international commodity trading companies by 55% to US$5.5 billion, which was the highest profit recorded in five years.

On the back of the reopening of international borders and increasing air passenger traffic, Labuan IBFC has approved 18 new leasing companies and 144 new subsequent leasing transactions in 2022. 

“Consequently, new aviation asset leased grew more than 240% to US$5.8 billion (in 2022),” he added.

According to Nik Mohamed Din, Labuan IBFC is optimistic on the outlook of the federal territory’s market in 2023, as it foresees a growth in digitalisation that will potentially have a far-reaching influence on the market.

“We are optimistic because we are not tied to only one economy as we are operating in the international space as well.

“I think with the increasing digital financial services where businesses can be done from anywhere around the world — this will help to catch up with areas which may see a slowdown,” he added.