LABUAN, MALAYSIA â€¢

LABUAN, MALAYSIA •

MISSION STATEMENT

LOFSA shall act as a

one-stop agency to realise

the Government’s vision

to develop Labuan as a

premier IOFC by ensuring

the highest level of

integrity, commitment

and professionalism.

Contents

CHAIRMAN’S STATEMENT

CORPORATE PROFILEMembers of the Authority 09

Establishment of LOFSA 10

Objectives and Functions 10

International Memberships 10

Organisational Structure 11

OPERATIONAL REVIEWOffshore Companies 13

Trust Companies 14

Offshore Insurance 14

Offshore Banking 18

Offshore Investment Banking 20

Islamic Banking 20

Offshore Leasing 22

Offshore Fund Management 22

Labuan International Financial Exchange 22

DEVELOPMENTAL REVIEWLabuan International Offshore Financial Centre (IOFC) 25

Legislative Changes and Regulatory Strength 25

Business Incentives 25

Islamic Financial Services 26

Labuan International Shipping Registry (LISR) 27

Role of Labuan IOFC in Achieving the Financial

Sector Masterplan (FSMP) 27

CORPORATE HIGHLIGHTS

FINANCIAL STATEMENTSStatement by the Members 34

Statutory Declaration 35

Certificate of the Auditor General 36

Income Statement 37

Balance Sheet 38

Statement of Changes in Equity 39

Cash Flow Statement 40

Notes to the Financial Statements 41

APPENDICESGuidelines 51

Listings of Offshore Institutions 53


50

33

29

5

8

12

24

CHAIRMAN’S STATEMENT

On behalf of the Authority, I am pleased to present

the Annual Report and Audited Financial

Statements of the Labuan Offshore Financial

Services Authority (LOFSA) for the year 2003. Despite a more

challenging international environment, activities in the

International Offshore Financial Centre (IOFC) in Labuan

continued to expand steadily and its performance

strengthened. This improved performance has been achieved

within an enhanced regulatory and supervisory framework

of Labuan IOFC. While preserving financial stability, it

has also facilitated an expansion in offshore financial

services activities, with the expansion in cross-border

transactions and improvement in the financial performance

of the offshore companies.

The number of offshore companies in Labuan IOFC has

continued to increase in 2003, with 494 new offshore

companies registered, bringing the total number to 4,065.

The representation of offshore companies is from more than

70 countries and reflects the international stature of Labuan

IOFC since its inception in 1990.

The potential for growth in company registration and

other offshore businesses has attracted two additional

trust companies, bringing the total number licensed

in 2003 to 20. Trust companies in Labuan reported

an increase of 12.3% in their aggregate operating

income in 2003 amounting to RM21.0 million. Total

profit before tax for the trust companies also increased

by 6.2% to RM8.6 million in 2003.

The offshore banking industry recorded an increase of

48.8% in pre-tax profit, amounting to USD166.8 million

in 2003. This also reflected the improvement in asset

quality, with a decline in the non-performing loans ratio

to 6.2% in 2003, from 10.7% in 2002. Three new

offshore investment banking licences were approved

and issued in 2003. This contributed to the increase in

total assets of the offshore investment banking industry

to USD66.8 million in 2003, from USD6.6 million in

2002. The offshore investment banking industry recorded

a profit of USD1.3 million in 2003, a turnaround from a

loss of USD14,000 in 2002 .

Offshore leasing remained the key growth component

in Labuan’s offshore financial activities. Sixteen new

leasing companies were licensed in 2003, representing

an increase of 47.1% to a total of 50 leasing companies

in 2003. The industry recorded a significant growth

of 116.3% in its cumulative amount of lease financing

during the year to USD6.3 billion, from USD2.9 billion

in 2002. The total lease financing for 2003 also improved

considerably, by 243.1% to USD3.4 billion, from USD991.0

million in 2002.

The offshore insurance industry, which has been

recording steady growth for a number of years now,

has attracted 13 new licensees during the year under

review. Growth in total industry assets increased

significantly by 30.4% to USD914.0 million in

2003, compared with USD701.0 million in 2002. In

offshore general insurance and reinsurance, gross

premium grew by 19.5% to USD408.2 million in 2003.

The insurance industry has potential to expand further

in 2004, as reflected by the entry of an additional

international insurance company to provide life

reinsurance business in Labuan.

LOFSA is encouraged by the favourable performance

across the various offshore financial services sectors

and will continue to promote a conducive business

environment in Labuan IOFC through the implementation

of action plans based on the Financial Sector Masterplan.

In 2003, several initiatives were undertaken to further

spur the development of Labuan IOFC. These initiatives

included the flexibility for Labuan offshore companies

to establish marketing offices in Johor Bahru. For this

purpose, LOFSA has issued a set of guidelines on

marketing offices. The participation of Labuan institutions

in Johor Bahru will support the Government’s efforts

to develop Johor as a growth area, particularly in

transhipment and transportation activities.

LABUAN OFFSHORE FINANCIAL SERVICES AUTHORITY 05

LOFSA remains strategically focused on the development

of Labuan IOFC as an Islamic financial centre. In

addition to being a founding member of the

International Islamic Financial Market (IIFM) in 2001,

LOFSA is also an observer member of the Islamic

Financial Services Board (IFSB) in 2003. IFSB is a

standard-setting entity that serves as an international

body to develop prudential standards for Islamic finance.

To facilitate the promotion of Islamic financial services

in Labuan, LOFSA issued a circular on ‘Islamic Financial

Business in Labuan IOFC’ on 1 October 2003. Among

others, it requires the mandatory establishment of

a Shariah Supervisory Council or the engagement

of the services of similar councils recognised internationally.

Complementing the international affiliation of Labuan

IOFC in the development of Islamic finance, offshore

institutions undertaking Islamic business activities in

Labuan are now able to pay business zakat on their

income in lieu of income tax. In this regard, amendments

have been made to the Labuan Offshore Business

Activity Tax Act 1990 (LOBATA). The option for payment

of zakat provided by the LOBATA is part of the overall

series of incentives given to attract Islamic offshore

institutions to operate in Labuan IOFC. The initiatives

to develop Islamic finance is an integral part of an

ongoing effort to develop the IOFC as a regional

offshore centre, offering niche Islamic finance products

and services. The Islamic-based assets of offshore

banks increased by 28.1% to USD596.2 million in 2003,

while total deposits rose by 33.6% to USD196.9

million in 2003.

The continued development and enhancement of the

regulatory and supervisory framework of Labuan IOFC

represents an integral part of LOFSA’s responsibilities. In 2003,

the Labuan Offshore Securities Industry (Amendment) Act

2003 (LOSIA) came into effect. The amendments to LOSIA

included provisions relating to private funds and allowed

fund managers to manage and administer foreign funds

in Labuan. With the amendments, the Labuan International

Financial Exchange (LFX) is empowered to self-regulate the

exchange and trading activities, including the suspension of

trading where appropriate. In addition, all intermediaries

are required to have professional indemnity cover to protect

the interests of investors.

To reinforce LOFSA’s regulatory and supervisory framework

and give greater impetus to the international initiative

against money laundering activities, the Anti-Money

Laundering (Invocation of Part IV (No.2)) Order 2003 was

invoked on 15 April 2003. The provision relates to the

reporting obligations of institutions licensed or registered to

carry on, among others, offshore banking, insurance and

trust company business.

LOFSA has further enhanced its supervisory role

by adopting the compliance requirements based

on the CAMELS (Capital, Asset Quality, Management,

Earnings, Liquidity and Sensitivity) and EMAS (Earnings,

Management, Asset Quality and Solvency) framework

to supervise the offshore banks and insurance

companies respectively. The compliance division in

LOFSA has been strengthened with the recruitment

of additional staff and training resources. In 2003,

offsite monitoring and external examinations were

intensified as part of the overall supervisory framework

provided in the LOFSA Act 1996.

Measures were also undertaken to raise the awareness

of the staff of offshore institutions in adopting

prudential standards and appropriate risk management

in their business operations. During the year, LOFSA hosted

several conferences including a two-day Anti-Money

Laundering and Financial Fraud Conference.

Moving forward, LOFSA will continue to facilitate

quality businesses to establish operations in Labuan IOFC.

To improve corporate governance and internal

controls, LOFSA will review the existing regulatory and

supervisory structure to ensure transparency in the

management and operations of offshore financial

institutions. LOFSA will continue to cooperate with

international organisations through the National

Coordinating Committee (NCC) of Malaysia in

combating money-laundering activities. LOFSA will

also embark on a comprehensive internal risk management

framework to enhance its organisational efficiency.

CHAIRMAN‘S STATEMENT

06 LABUAN OFFSHORE FINANCIAL SERVICES AUTHORITY

Going forward, LOFSA plans to accelerate its developmental

and promotional activities internationally. With the

growing importance of intra-regional trade, regional

development programmes will be undertaken to offer

Labuan IOFC as an attractive, viable and cost-efficient

jurisdiction for expanding offshore financial services

opportunities from the Asia-Pacific region and other

established IOFCs.

LOFSA will continue to develop Islamic financial

activities to position Labuan IOFC as the regional

Islamic financial centre in the Asia-Pacific region. LOFSA

will endeavour to increase the significance of Islamic

finance assets to meet the objectives as outlined in

the Financial Sector Masterplan. An important area

of focus is the development of the Labuan Islamic

capital market. The offshore legal framework will be

reviewed through the promulgation of Islamic financial

services legislation. In line with the significant growth

of the reinsurance sector in Labuan, retakaful will

be promoted as part of the overall development of

Islamic financial services.

As the supervisory authority of LFX, LOFSA will

further develop the web-based exchange, which

is an important component of the IOFC financial

landscape. LFX provides listing and trading facilities

for various types of financial instruments. To enhance its

international stature, LFX will increase its strategic

alliances with other international bourses by allowing

dual listing and trading of financial instruments. In

2003, LFX had three new listings of financial

instruments, bringing the total number of listings to

13 with total market capitalisation of USD2.3 billion.

LFX is expected to increase its market capitalisation

with more listings by sovereign and corporate issuers

in 2004.

To improve its services to the offshore industry, LOFSA

is enhancing its processing capabilities by leveraging

on information technology. In 2004, an electronic

data submission system for company registration

will be implemented, which will allow LOFSA to

accept documents submitted electronically by trust

CHAIRMAN‘S STATEMENT


companies. The introduction of the new submission

system will enable LOFSA to better serve the offshore

trust companies as the lodgement intermediaries in

company registration.

I am also pleased to announce the financial performance

of LOFSA for the year ended 31 December 2003.

LOFSA recorded total income of RM15.0 million,

sustaining the performance of the previous year.

After taking into consideration the increased expenses,

a smaller surplus of RM2.0 million was recorded in

2003, compared with the surplus of RM3.2 million

achieved in 2002. Operating expenses increased

from RM5.5 million in 2002 to RM6.3 million in

2003, attributed to the costs of implementing

developmental projects, including the Labuan International

School, for the benefit of Labuan IOFC.

On behalf of the Members of the Authority, I would like

to acknowledge the contributions of the management and

staff of LOFSA for another good year. Appreciation is also

extended to government departments and agencies, offshore

institutions and professional service providers for their

unwavering support.

On behalf of the Authority, I wish to take this opportunity to

place on record our appreciation to Dato’ Noorazman A. Aziz,

whose tenure as Director-General ended on 30 April 2003.

I also wish to record our appreciation to Datuk Haji Mohd

Noor Moktar, whose term as a Member of the Authority

ended in October 2003. On behalf of the Authority, I am

also pleased to welcome Puan Rosnah Omar, who was

appointed the Director-General effective 1 July 2003, and

Tuan Haji Jamaludin Hasan, who was appointed a Member

of the Authority on 1 November 2003. As we advance

forward, the Authority, will continue to direct its energies to

sustaining the development of Labuan IOFC as a premier

offshore financial centre in the region.

Zeti Akhtar Aziz

Chairman

30 April 2004

Corporate Profile


Members of the Authority 09

Establishment of LOFSA 10

Objectives and Functions 10

International Memberships 10

Organisational Structure 11


(Sitting from left to right)Rosnah Omar, Dr Zeti Akhtar Aziz, Datuk Ali Abdul Kadir(Standing from left to right)Dato’ Md Nor Md Yusof, Mr Cheah Kong Lee, Encik Abdul Alim Abdullah, Dato’ Mohd Azlan Hashim,Datuk Oh Chong PengNot Present : Tuan Haji Jamaludin Hasan

1 Director-General effective from 1 July 20032 Authority Member effective from 1 November 2003* Dato’ Noorazman A. Aziz (Director-General until 30 April 2003)* Datuk Haji Mohd Noor Moktar (Term ended effective October 2003)

Members of the Authority

Under the Labuan Offshore Financial Services Authority Act 1996, Members of the Authority are appointed by the Minister

of Finance for a term not exceeding three years after which they are eligible for reappointment. The Members,

of diverse business and professional backgrounds, are representatives of the Government and the private sector.

◆ Dr Zeti Akhtar Aziz (Chairman)

◆ Rosnah Omar (Director-General) 1

◆ Dato’ Mohd Azlan Hashim

◆ Datuk Oh Chong Peng

◆ Dato’ Md Nor Md Yusof

◆ Datuk Ali Abdul Kadir

◆ Encik Abdul Alim Abdullah

◆ Mr Cheah Kong Lee

◆ Tuan Haji Jamaludin Hasan 2

*

CORPORATE PROFILE

◆ The Labuan Offshore Securities Industry Act

1998; and

◆ Any other laws relating to offshore financial

services in Labuan;

2) Ensures that offshore financial transactions are

conducted in accordance with the laws;

3) Processes applications for the conduct of business in

Labuan IOFC;

4) Carries out research and commission studies to

deepen and widen the scope of the offshore

financial services industry in Labuan;

5) Conducts promotional programmes and other

activities to enhance the development and growth

of Labuan IOFC;

6) Makes recommendations for the creation and

improvement of facilities to enhance the attraction

of Labuan as a centre for offshore financial services;

7) Cooperates with offshore financial institutions and

industry associations in Labuan to promote and

improve offshore financial services; and

8) Advises the Government generally on matters

relating to offshore financial services in Labuan.

International Memberships

LOFSA is a member of several international organisations

that are aimed at ensuring a high level of regulatory

standard amongst offshore jurisdictions. These organisations

are the Offshore Group of Collective Investment Schemes

Supervisors (OGCISS), Offshore Group of Insurance

Supervisors (OGIS), International Association of Insurance

Supervisors (IAIS), Offshore Group of Banking Supervisors

(OGBS) and International Organisation of Securities

Commissions (IOSCO).

LOFSA is also a member of the International Islamic Financial

Market (IIFM), Islamic Financial Services Board (IFSB) and the

Asia Pacific Group on Anti-Money Laundering.

Establishment of LOFSA

The Labuan Offshore Financial Services Authority (LOFSA) was

established under the Labuan Offshore Financial Services

Authority Act 1996 on 15 February 1996 and commenced

operations in March of the same year. Before LOFSA’s

establishment, Labuan IOFC, which was set up in 1990, was

managed and supervised by a number of government

agencies. The existence of LOFSA as the single regulatory

authority has provided leadership and strategic focus for the

development of the IOFC.

Objectives and Functions

LOFSA has developed a two-pronged strategy for the

development of Labuan IOFC: the creation of an

integrated offshore financial centre offering a wide range

of offshore products, including Islamic finance, and the

provision of a legal and supervisory framework for the

development of a globally competitive offshore industry.

LOFSA undertakes the following in implementing this

strategy:

◆ Develops national objectives, policies and priorities for

the orderly development and administration of the

offshore financial services industry;

◆ Supervises the activities and operations of the

offshore financial services industry; and

◆ Oversees the promotional and developmental

aspects of the IOFC.

The multi-faceted functions of LOFSA, which cover

legislative, supervisory as well as developmental

aspects, are as follows:

1) Administers, enforces, carries out and gives effect

to the provisions of:

◆ The Offshore Banking Act 1990;

◆ The Offshore Insurance Act 1990;

◆ The Offshore Companies Act 1990;

◆ The Labuan Trust Companies Act 1990;

◆ The Labuan Offshore Trusts Act 1996;

◆ The Labuan Offshore Limited Partnership Act

1997;


CORPORATE PROFILE


CORPORATE PROFILE

Organisational Structure

LOFSA’s goal is to be efficient and effective in its delivery of services to the offshore community and potential clients within

the regulatory framework, while complying with international standards. To achieve this goal, the organisational structure

has been reorganised effective 1 January 2004.

Director–GeneralRosnah Omar

StrategicPlanningand ICT

DepartmentDr. Azmir Agel

CorporateServices

Department

IskandarMohd. Nuli

Business andFinance

Department

Danial MahAbdullah

Insurance andShipping

Department

Sabaruddin Ismail

Developmentand Promotions

Department

Danial MahAbdullah

MEMBERS OFAUTHORITY

MINISTER OFFINANCE

Audit Committee

Risk ManagementCompany Secretary

Planning

CorporateCommunications

Research &Statistics

InformationCommunicationTechnology (ICT)

Human Resource& Administration

Legal

Supervision &Compliance

General Services

InsuranceManagement

Shipping Registry

Development &Promotion

ConventionalStructure

IslamicStructure

Finance

Business

Registration

Regulation &Policy

Operational Review

Offshore Companies 13Trust Companies 14Offshore Insurance 14Offshore Banking 18Offshore Investment Banking 20Islamic Banking 20Offshore Leasing 22Offshore Fund Management 22Labuan International Financial Exchange 22



Introduction

The year 2003 represented another year of growth for

Labuan International Offshore Financial Centre (IOFC).

Labuan continued to be an attractive jurisdiction to

conduct offshore business. This was reflected by the

increase in the number of offshore companies and

positive performance of trust companies, insurance,

banking and other sectors of the IOFC.

Offshore Companies

The number of new offshore companies incorporated

in Labuan IOFC increased from 486 in 2002 to 494 in

2003, representing a growth of 1.6%. This brought the

total number of offshore companies in Labuan IOFC to

4,065 as at end-2003 (2002 : 3,571). The continued

growth in 2003 was achieved despite the selective

promotional activities undertaken by LOFSA and

offshore institutions during the year.

The offshore companies in Labuan originated from more

than 70 countries in the world. Of the total number

Chart 1 : Offshore Companies - Growth

of offshore companies, 46.6% was from countries in

the ASEAN and Pacific region, including Malaysia

(17.9%), Australia (10.5%), Indonesia (8.5%) and

Singapore (6.1%). The high number of offshore companies

from the ASEAN and Pacific region meets LOFSA’s

objective to promote Labuan IOFC as an offshore centre

Nu

mb

er

YearIncorporated/Registered

1996 1997 1998 1999 2000 2001 2002 2003

4500

4000

3500

3000

2500

2000

1500

1000

500

0

937

1,611

1,9432,211

2,721

3,085

3,571

4,065

Chart 2 : Offshore Companies -Breakdown of Origin by Regions

Far East20.2%

Europe11.9%

Middle East& Africa1.1%

Americas15.3%

Others 4.9%

Asean &Pacific46.6%

OPERATIONAL REVIEW

Table 2: Offshore Insurance – Paid Up Capital

Held By 2001 2002 2003

USD’000 % Share USD’000 % Share USD’000 % Share

Malaysian 183,268 75.8 184,044 69.0 187,016 70.4

Foreign 58,397 24.2 82,532 31.0 78,602 29.6

Total 241,665 100.0 266,576 100.0 265,618 100.0


Type of Licence 2001 2002 2003

Life 2 2 2

General 3 4 4

Composite 1 2 2

Reinsurance 22 20 23

Captive 19 21 23

Insurance Manager 7 5 5

Underwriting Manager 8 9 8

Broker 36 36 36

Total 98 99 103

Table 1: Offshore Insurance - Number of Insurance andInsurance-Related Licences

OPERATIONAL REVIEW

for investors in that region. Offshore companies from

the Far East region constituted the next biggest group

at 20.2% of the total number of offshore companies.

Trust Companies

The number of trust companies increased by two in 2003,

bringing the total number to 20. Trust companies recorded

an aggregate operating income of RM21.0 million, an

increase of 12.3% (2002 : 6.9%) from RM18.7 million

achieved in 2002. Total profit before tax also increased by

6.2% (2002 : 11.0%) from RM8.1 million in 2002 to RM8.6

million in 2003. The overall net operating margin remained

strong at 41.0% in 2003, albeit lower than the 43.3%

achieved in 2002.

The trust industry employed a total of 201 employees in 2003,

an increase of 12.3% from 179 in 2002. The number of

Malaysians employed by trust companies increased from 163

in 2002 to 187 in 2003, while the number of non-Malaysians

was reduced from 16 in 2002 to 14 in 2003. The increase in

the number of employees in 2003 was due to the two new

trust companies and an expansion in the business activities

of the industry.

Arising from amendments to the Labuan Trust Companies

Act 1990, which came into effect in February 2003, trust

companies have been re-incorporated as offshore entities

under the Offshore Companies Act 1990 to conduct trust

company business. As a result of the conversion, trust

companies are now eligible to enjoy the benefits accorded

to offshore companies, including tax incentives.

Offshore Insurance

Thirteen new applications to carry out insurance and insurance-

related activities in Labuan IOFC were approved during 2003,

compared with 14 in the previous year. Of the 13 new licences

approved, five were reinsurers, four captives, one

underwriting manager and three insurance brokers.

Although nine companies ceased operations or

surrendered their licences during the year, there was an

overall growth of 4.0% in the total number of licences

from 99 in 2002 to 103 in 2003.

In terms of country of origin, the ASEAN and Pacific region

made up the largest group with 46.6% or 48 of the 103

insurance and insurance-related licensees. They were mainly

from Malaysia (31), Singapore (7) and Australia (6). Licensees

from Europe formed the next largest group at 29.1% (30) of

the total number.

The industry’s total paid-up capital remained relatively

unchanged at USD265.6 million (2002 : USD266.6 million).

The proportion of Malaysian shareholding increased by 1.6%

to USD187.0 million (2002 : USD184.0 million). Following

the closure of foreign-owned insurance companies due to

business rationalisation, foreign shareholding reduced slightly

by 4.8% to USD78.6 million (2002 : USD82.5 million). As a

result, Malaysian total shareholding increased to 70.4%

(2002 : 69.0%) against 29.6% (2002 : 31.0%) of total

shareholding owned by non-residents.


OPERATIONAL REVIEW

Assets 2001 2002* 2003

USD’000 % Share USD’000 % Share USD’000 % Share

Fixed Asset 13,812 2.4 20,691 3.0 19,825 2.2

Due from Ceding/Related Companies 66,062 11.7 106,569 15.2 186,029 20.4

Fixed Deposits/Money Market 150,628 26.6 342,097 48.8 441,749 48.3

Cash and Bank Balances 45,771 8.1 56,985 8.1 63,793 7.0

Investment 176,149 31.1 63,740 9.1 57,444 6.3

Others 114,436 20.2 110,875 15.8 145,135 15.9

Total 566,858 100.0 700,957 100.0 913,975 100.0

* Restated

Table 3: Offshore Insurance – Total Assets

Total assets of the industry continued to grow significantly

by 30.4% from USD701.0 million in 2002 to USD914.0

million in 2003. The distribution of assets remained

relatively unchanged from the previous year with

fixed deposits/money market constituting the largest

share (48.3% of total assets), followed by funds due

from ceding/related companies (20.4%) and cash and

bank balances (7.0%).

The offshore general insurance business in Labuan IOFC

continued its growth in gross premium during the year,

albeit at a slower rate of 19.5% (2002 : 66.2%), to

USD408.2 million (2002 : USD341.6 million). The increase

was attributed to new entrants and new business

underwritten by the insurance companies in Labuan. In

terms of market share, the fire sector continued to

dominate the portfolio in 2003 with 47.6% (2002 : 47.9%),

followed by the motor sector with 13.1% (2002 : 12.7%)

and the marine sector with 13.0% (2002 : 11.9%).

Other sectors remained relatively unchanged.

The overall net retention ratio (net premium over gross

premium) of the industry decreased slightly from 77.6% in

2002 to 75.7% in 2003. The reduction in the overall

net retention ratio was due to a relatively smaller increase

in net premium of 16.5% during the year under review

or USD308.8 million (2002 : USD265.1 million), compared

with that of gross premium.

Year Fire Marine Engineering Motor Miscellaneous Total

USD’000

2001 97,548 24,977 20,118 28,469 34,454 205,566

2002 163,687 40,753 33,625 43,407 60,134 341,606

2003 194,336 52,882 38,573 53,350 69,036 408,177

% Change

2001 76.7 58.4 82.4 27.1 1.5 48.6

2002 67.8 63.2 67.1 52.5 74.5 66.2

2003 18.7 29.8 14.7 22.9 14.8 19.5

% Share

2001 47.5 12.2 9.8 13.8 16.8 100.0

2002 47.9 11.9 9.8 12.7 17.6 100.0

2003 47.6 13.0 9.5 13.1 16.9 100.0

Table 4: Offshore Insurance - Distribution of Gross Premiums

OPERATIONAL REVIEW



USD’000

2001 74,056 19,209 11,567 27,356 25,868 158,056

2002 129,777 32,966 17,657 37,846 46,813 265,059

2003 146,317 41,316 22,073 46,003 53,095 308,804

% Change

2001 79.3 44.5 61.5 23.1 (9.0) 40.6

2002 75.2 71.6 52.6 38.3 81.0 67.7

2003 12.7 25.3 25.0 21.6 13.4 16.5

% Share

2001 46.9 12.2 7.3 17.3 16.4 100.0

2002 49.0 12.4 6.7 14.3 17.7 100.0

2003 47.4 13.4 7.1 14.9 17.2 100.0

Table 5: Offshore Insurance - Distribution of Net Premiums


2001 75.9 76.9 57.5 96.1 75.1 76.9

2002 79.3 80.9 52.5 87.2 77.8 77.6

2003 75.3 78.1 57.2 86.2 76.9 75.7

Table 6: Offshore Insurance - Net Retention Ratio (%)

Year Earned Premium Income Net Claims Commission Management Underwriting Incurred Expenses Margin

USD’000 USD’000 % USD’000 % USD’000 % USD’000 %

2001 134,145 129,731 96.7 40,606 30.3 8,550 6.4 (44,742) (33.4)

2002 234,896 153,130 65.2 64,145 27.3 10,779 4.6 6,842 2.9

2003 289,150 165,037 57.1 77,140 26.7 12,159 4.2 34,814 12.0

Table 7: Offshore Insurance - Underwriting Experience

The motor sector continued to record the highest

net retention ratio at 86.2% (2002 : 87.2%), followed

by marine at 78.1% (2002 : 80.9%) and fire at

75.3% (2002 : 79.3%).

The ratio of net claims incurred to earned premium

income (gross premium less cessions and reserves

for unexpired risks) continued to improve from 65.2%

in 2002 to 57.1% in 2003. However, gross claims

paid out in 2003 increased by 17.7% from USD131.0

million in 2002 to USD154.2 million in 2003. After

adding provision for outstanding claims and deducting

recoveries, net claims incurred in 2003 were USD165.0

million (2002 : USD153.1 million). A strong underwriting

profit of USD34.8 million (2002 : USD6.8 million), or

an underwriting margin of 12.0% (2002 : 2.9%),

was achieved in 2003. This was mainly due to the

23.1% increase in earned premium income and lower

growth of net claims incurred during the year.

Direct life insurers sold 36 new investment-linked

policies in 2003 (2002 : 55). Policies sold to Malaysians

during the year under review amounted to USD1.1

million both in terms of sum insured (2002 : USD1.6

OPERATIONAL REVIEW


Year New Policies Policies In Force

Malaysian Others Malaysian Others

Number of Policies 642 32 1,306 50

USD’000

Sum Insured 30,667 1,028 35,186 1,354

Single Premium 29,424 943 33,690 1,289


USD’000

Sum Insured 1,600 1,196 39,778 2,553

Single Premium 1,545 1,138 38,626 2,431


USD’000

Sum Insured 1,116 671 36,497 2,823

Single Premium 1,088 639 34,761 2,689

Table 8: Offshore Life Insurance - Statistics on Investment-Linked Policy

2003

2002

2001

Table 9: Offshore Insurance – Employment

2001 2002 2003

Malaysian Non- Total Malaysian Non- Total Malaysian Non- TotalMalaysian Malaysian Malaysian

Senior Management 44 33 77 53 46 99 58 37 95

Middle Management 65 28 93 69 32 101 73 23 96

Supervisory 44 3 47 59 5 64 66 8 74

Others 88 23 111 94 8 102 81 5 86

Total 241 87 328 275 91 366 278 73 351

Staff Position

million) and single premium (2002 : USD1.5 million).

Policies sold to foreigners amounted to USD0.7 million

(2002 : USD1.2 million) in terms of sum insured and

USD0.6 million (2002 : USD1.1 million) in single

premium. As for life reinsurance business, the

reinsurers recorded a sum insured of USD3.1 billion in

2003 (2002 : USD1.7 billion) with total premium of

USD7.4 million (2002 : USD4.4 million).

Captives are established as part of a risk management

programme or to reduce reliance on the traditional

insurance market. In 2003, four new captives

were established in Labuan IOFC while two ceased

business. As a result, the total number of captives

increased from 21 to 23. The captives originated

mainly from Malaysia, Australia, Hong Kong, Indonesia,

Japan and Thailand. For the year under review, gross

premium received for captive business was USD17.4

million, an increase of 26.1% (2002 : 61.5%) from

USD13.8 million in 2002.

In regard to insurance brokerage, premiums processed

increased by 6.2% from USD189.9 million in 2002 to

USD 201.6 million in 2003. Of the total premiums

processed, 82.5% (2002 : 62.7%) were for general

insurance with the balance for life insurance. The increase

in total premium processed by brokers for general

insurance was mainly due to greater foreign business

placed with insurers and reinsurers in Labuan and

Malaysia. Of the 36 offshore insurance brokers in

Labuan IOFC in 2003, a majority (14) originated from

the United Kingdom, followed by Singapore (5),

Malaysia (5), Sweden (3), the United States of America

(2), Hong Kong (2) and other countries in Asia and Europe.

OPERATIONAL REVIEW


As at end of 2002 2003

2001 2002 2003 % Change

Number of Banks Licensed 54 54 56 0.0 3.7

Number of Banks in Operations 54 50 53 (7.4) 6.0

Total Deposits (USD million) 3,657.4 5,865.6 3,702.0 60.4 (36.9)

Malaysian Offshore Banks 1,545.1 3,919.0 2,308.5 153.6 (41.1)

Foreign Offshore Banks 2,112.3 1,946.6 1,393.5 (7.8) (28.4)

Total Loans (USD million) 11,237.2 10,478.6 10,857.6 (6.7) 3.6

Malaysian Offshore Banks 2,440.6 2,835.5 3,036.8 16.2 7.1

Foreign Offshore Banks 8,796.6 7,643.1 7,820.8 (13.1) 2.3

Number of Employees 498 459 468 (7.8) 2.0

Malaysian Offshore Banks 143 153 160 7.0 4.6

Foreign Offshore Banks 355 306 308 (13.8) 0.7

Table 10: Offshore Banks – Key Data

The number of employees in the offshore insurance

sector reduced by 4.1% to 351 employees (2002 :

366 employees), even though there was a net increase

of four new licensees in 2003. The reduction in

manpower was due to the decline in the number

of expatriates at senior management level, following

the closure of several insurance companies during

the year. Of the total number of employees in

2003, 278 (2002 : 275) were Malaysians and 73

(2002 : 91) were non-Malaysians.

Offshore Banking

The offshore banking industry in Labuan IOFC recorded a

significant increase of 48.8% in pre-tax profit from USD112.1

million in 2002 to USD166.8 million in 2003, even though

there was a reduction in total income by 28.6% to USD1.0

billion in 2003 (2002 : USD1.4 billion). This was because the

industry succeeded in reducing total expenses by 38.5% to

USD0.8 billion (2002 : USD1.3 billion).

The total number of offshore banks and investment banks

as at end of 2003 was 56. These comprised 14 domestic-

owned and 42 foreign-owned banks. Of the domestic-owned

banks, 12 were subsidiaries and two were branches, while

the foreign-owned banks consisted of seven subsidiaries and

35 branches.

There was a reduction in the deposits of the offshore banking

industry in 2003. The deposits in Malaysian-based banks

reduced by 41.1% from USD3.9 billion in 2002 to USD2.3

billion in 2003, while the deposits in foreign offshore banks

declined by 28.4% from USD1.9 billion in 2002 to USD1.4

billion in 2003. The total deposits of non-bank customers

contracted by 36.9% from USD5.9 billion in 2002 to USD3.7

billion in 2003. These withdrawals were mainly used to fund

investments abroad. Non-resident depositors made up the

major portion of depositors, with 59.8% or USD2.2 billion

(2002 : 68.3% or USD4.0 billion) of total deposits.

Total loans outstanding turned around to record an increase

of 3.6% from USD10.5 billion in 2002 to USD10.9 billion in

2003. This was largely due to the increase in loans to non-

residents, which rose by 20.6% from USD2.8 billion in 2002

to USD3.3 billion in 2003. In terms of market share, loans to

residents reduced from 73.7% in 2002 to 69.4% in 2003.

Malaysian-based offshore banks continued to show an

improvement in their loans portfolio with an increase of 7.1%

to USD3.0 billion (2002 : USD2.8 billion). In 2003, the foreign

offshore banks’ loans portfolio also improved by 2.3% to

USD7.8 billion.

The non-performing loans (NPL) of the offshore banking

industry reduced by 45.5% from USD1.1 billion in 2002

OPERATIONAL REVIEW


2001 2002 2003

USD million

Total Deposits 3,657.4 5,865.6 3,702.0

Of which:

Residents 1,397.4 1,857.6 1,488.1

% Share 38.2 31.7 40.2

Non-Residents 2,260.0 4,008.0 2,213.9

% Share 61.8 68.3 59.8

Total Loans Outstanding 11,237.2 10,478.6 10,857.6

Of which:

Residents 8,792.4 7,727.4 7,539.8

% Share 78.2 73.7 69.4

Non-Residents 2,444.8 2,751.2 3,317.8

% Share 21.8 26.3 30.6

Table 11: Offshore Banks – Deposits and Loans of Non Bank Customers

Table 12: Offshore Banks – Selected Indicators

2001 2002 2003

Return on Assets (%) (0.9) 0.6 1.0

Pre-tax Profit per Employee (USD’000) (307.2) 244.2 356.4

Staff Cost per Employee (USD’000) 25.5 26.1 26.0

Average Assets per Bank (USD million) 326.8 376.7 305.6

Pre-tax Profit (Loss) (USD million) (153.0) 112.1 166.8

Total Assets (USD million) 17,646.0 18,836.3 16,199.0

Staff Cost (USD million) 12.7 12.0 12.2

Number of Employees 498 459 468

Number of Banks in Operations 54 50 53

Number of Banks Licensed 54 54 56

to USD0.6 billion as at end of 2003, mainly as a result

of the disposal of non-performing assets. This improved

the NPL ratio to 6.2% (2002 : 10.7%) and reduced

the loan loss provision to USD483.2 million in 2003

(2002 : USD805.8 million).

Total assets of offshore banks declined by 14.0%

from USD18.8 billion in 2002 to USD16.2 billion in 2003,

mainly attributable to a decrease in the amount due from

other banks, short-term papers, cash and notes. Coupled

with the industry’s higher pre-tax profit, this led to an

improvement in return on assets from 0.6% in 2002 to 1.0%

in 2003. As a result of the reduction in total assets, average

assets per bank decreased by 18.9% to USD305.6 million

(2002 : USD376.7 million).

The main source of funds for the offshore banking

industry came from borrowings from head office

and branches amounting to 53.7% or USD8.7 billion of

the total resources as at end of 2003, while deposits

accounted for 22.9% of total resources. The funds

continued to be mainly used for loans and advances,

accounting for 67.0% or USD10.9 billion of the total

uses of funds. As there was a higher growth in loans

relative to deposits, the industry had a resource gap

during the year under review totalling USD7.2 billion

(2002 : USD4.6 billion).

The manufacturing sector remained the biggest borrower in

2003, taking up 26.0% or USD2.8 billion of total loans

outstanding (2002 : 28.9% or USD3.0 billion). The

OPERATIONAL REVIEW


2001 2002 2003 Annual Change

USD million %

Sources:

Deposits 3,657.4 5,865.6 3,702.0 (2,163.6) (36.9)

Deposits and Placements of Banks and 1,609.1 2,519.4 2,389.1 (130.3) (5.2)

Other Financial Institutions

Balances due to Head Office and 9,673.7 8,692.3 8,704.4 12.1 0.1

Branches Outside Malaysia

Others 2,706.0 1,759.1 1,403.5 (355.6) (20.2)

Total 17,646.2 18,836.4 16,199.0 (2,637.4) 14.0

Uses:

Cash and Short-Term Funds 507.4 1,395.1 1,137.9 (257.2) (18.4)

Balances due from Head Office and 2,680.5 3,956.3 1,471.7 (2,484.6) (62.8)

Branches Outside Malaysia

Investments 2,041.8 2,151.8 2,273.2 121.4 5.6

Loans and Advances 11,237.1 10,478.6 10,857.6 379.0 3.6

Fixed Assets 8.4 7.6 6.9 (0.7) (9.2)

Others 1,171.0 847.0 451.7 (394.3) (46.6)

Total 17,646.2 18,836.4 16,199.0 (2,637.4) 14.0

Table 13: Offshore Banks – Sources and Uses of Funds

transport, storage and communications sector was the

second largest borrower at 17.0% or USD1.8 billion (2002 :

12.2% or USD1.3 billion) of total loans. Overall lending

increased during the year under review to the following

sectors: agriculture, hunting, forestry and fishing; electricity,

gas and water; wholesale and retail trade, restaurant and

hotel; and transport, storage and communications. Exposure

of offshore banks to the mining and quarrying sector;

manufacturing sector; property sector; and finance,

insurance, and business services sector, was reduced.

In line with the increase in the number of offshore banks,

there was an increase in the number of employees from 459

in 2002 to 468 in 2003. Malaysians comprised 90.8% of

the total number of employees and the number of

Malaysians at senior and middle management levels was

40 and 99 respectively.

Offshore Investment Banking

Of the total number of 56 offshore banks in 2003, nine

were offshore investment banks, including three

approved during the year. Unlike offshore banks, offshore

investment banks are not allowed to accept deposits. The

additional number of offshore investment banks has helped

to significantly increase the total assets of the industry to

USD66.8 million in 2003 (2002 : USD6.6 million). As a result,

return on assets turned around from negative 1.5% in 2002

to 1.9% in 2003. Average assets per bank increased from

USD2.2 million in 2002 to USD11.1 million in 2003. The

offshore investment banking industry made a turn around

during the year under review with a pre-tax profit of USD1.3

million (2002 : loss of USD14,000).

In terms of composition of assets, investments comprised

41.5% or USD27.7 million of the total assets of the offshore

investment banks. The banks’ lending activities were focused

on the finance, insurance and business services sector,

amounting to 38.5% of total loans outstanding, while the

transportation, storage and communications sector

accounted for 22.3% of total loans.

Islamic Banking

The total number of full-fledged Islamic financial institutions

in Labuan IOFC increased from three in 2002 to five

in 2003. Together with the conventional banks

offering Islamic financial windows, this has contributed

to the increase in total assets by 28.1% to USD596.2

million in 2003 (2002 : USD465.4 million). As a result,

OPERATIONAL REVIEW


Total Loans Outstanding

As at end of

2001 2002 2003

USD million

Agriculture, Hunting, Forestry & Fishing 321.4 442.5 550.8 108.3 5.1

Mining & Quarrying 610.9 571.4 550.8 (20.6) 5.1

Manufacturing 3,429.7 3,032.2 2,825.2 (207.0) 26.0

Electricity, Gas & Water 1,225.9 1,218.0 1,387.0 169.0 12.8

Property of which:

Real Estate 319.0 270.5 206.7 (63.8) 1.9

Construction 152.7 124.7 144.6 19.9 1.3

Housing 31.6 50.4 48.6 (1.8) 0.4

Wholesale & Retail Trade & Restaurants & Hotels 257.1 165.5 169.8 4.3 1.6

Transport, Storage & Communications 1,915.9 1,275.8 1,845.6 569.8 17.0

Financing, Insurance & Business Services 725.6 868.9 794.0 (74.9) 7.3

Other Services 0.0 0.8 10.8 10.0 0.1

Miscellaneous 2,247.4 2,457.9 2,322.8 (135.1) 21.4

Total 11,237.2 10,478.6 10,856.7 378.1 100.0

Table 14: Offshore Banks – Direction of Lending

AnnualChange % Share

(2003)Loans by Sectors

Table 15: Offshore Banks – Employment

Staff Position2001 2002 2003

Malaysian Non- Total Malaysian Non- Total Malaysian Non- TotalMalaysian Malaysian Malaysian

Senior Management 39 21 60 38 16 54 40 16 56

Middle Management 96 21 117 97 18 115 99 21 120

Supervisory Staff 148 4 152 131 4 135 135 4 139

Others 169 0 169 155 0 155 151 2 153

Total Staff 452 46 498 421 38 459 425 43 468

the market share of Islamic banking assets to the total

assets of the banking industry in Labuan IOFC grew

from 2.5% in 2002 to 3.7% in 2003. This indicates

an increased acceptance of Islamic financial services

offered from Labuan IOFC.

Total deposits also increased significantly by 33.6%

or USD49.5 million from USD147.4 million in 2002

to USD196.9 million in 2003. Deposits by non-bank

customers formed 42.2% of total resources of the

offshore Islamic banks, with deposits and placements of

banks and other financial institutions making up 40.2%.

These funds were mainly used for financing purposes

(72.5%) and investments (25.6%).

Total outstanding loans continued to record an upward trend,

increasing from USD298.1 million in 2002 to USD338.4

million in 2003. Of this amount, 66.7% were extended to

non-residents. The financing was granted mainly to the

manufacturing sector, which accounted for 26.6% of total

outstanding loans, followed by the electricity, gas and water

sector with 9.2%.

OPERATIONAL REVIEW


Offshore Leasing

The leasing industry in Labuan IOFC grew by 33.3% in 2003

with the approval of 16 new leasing companies (2002 : 12).

Twelve of the 16 new leasing companies were established

to cater for the oil and gas industry, while the remaining

leasing companies were involved in the lease of aircrafts,

specialised survey and heavy-duty engineering equipment.

The cumulative amount of lease financing increased

significantly by 116.3% (2002 : 52.2%) to USD6.3 billion

(2002 : USD2.9 billion). In 2003, the amount of new lease

financed was USD3.4 billion, a significant jump of 243.1%,

compared with USD991.0 million in 2002.

Offshore Fund Management

The full potential of the fund management industry in

Labuan IOFC has yet to be realised. The total approved

fund size of private funds increased from USD1.7 billion

in 2002 to USD1.9 billion in 2003, despite the reduction in

the number of private funds from 22 in 2002 to 16 in 2003.

The total approved fund size of public funds declined to

USD130 million as a result of the closure of one public fund

in 2003.

The number of fund managers increased from 12 in 2002 to

14 in 2003. In terms of country of origin, eight of these

fund managers were from Malaysia, two from British Virgin

Islands and one each from Canada, Hong Kong, Singapore

and Switzerland.

Labuan International Financial Exchange (LFX)

The year 2003 started on a positive note for LFX with the

secondary listing of the USD265 million RHB Secured Bonds

issued by Rashid Hussain Berhad. The listing indicates the

growing awareness of companies, domestic as well as

international, in the business opportunities offered by LFX

and Labuan IOFC.

LFX took another step towards greater international

acceptance with the primary listing of the Am-Macquarie

Sovereign Plus Fund, managed by Australian fund

management group Macquarie Investment Services Limited.

The Am-Macquarie Fund has enhanced LFX’s position as an

offshore exchange that offers a primary platform for the listing

of a wide range of financial products. An open-ended fund

with a maximum size of AUD40 million (approximately USD20

million), the Am-Macquarie Fund is the first primary listing

of an investment fund on LFX.

The year ended with the secondary listing of a USD300 million

1.0% Guaranteed Exchangeable Notes issued by the Genting

Berhad Group through its Labuan offshore subsidiary to fund

the group’s future overseas investments. The listings

throughout the year are testament to the growing confidence

of the domestic and international capital market in LFX.

With these three new listings, the number of listings on LFX

totalled 13 instruments. They comprised three primary and

ten secondary listings, consisting of three Shariah-compliant

instruments, four conventional debt securities and six mutual

funds, with a total market capitalisation of USD2.3 billion as

at end-December 2003.

Table 17: Mutual Fund - Fund Size

2001 2002 2003

USD Million

Private Fund 551.0 1,700.0 1,850.5

Public Fund 250.0 250.0 130.0

Total 801.0 1,950.0 1,980.5

2001* 2002 2003

23 34 50

% Change

43.8 47.8 47.1

USD Million

1,900.0 2,891.0 6,254.0

% Change

31.0 52.2 116.3

* Restated

Table 16: Offshore Leasing – Growth

Asset Leased(Cumulative)

In Operation

OPERATIONAL REVIEW


LFX has taken various initiatives to further establish

itself in the international capital market, in particular

the Islamic capital market. One of these initiatives

was the signing of a Memorandum of Understanding

with the Bahrain Stock Exchange (BSE) to facilitate

the dual listing of instruments on both exchanges and

the sharing of information on listed products.

The arrangement has already seen results with the

recent listing of the USD600 million Malaysia Global

Sukuk on BSE. The Sukuk had an earlier secondary

listing on LFX. The Bahrain authorities are expected

to reciprocate in the near future with listings of

Sukuks issued by them on LFX.

Another initiative towards tapping the Middle East market

is the pending establishment of a formal working

relationship between LFX and the Bahrain-based

International Islamic Financial Market. There will be

more of such formal working arrangements with offshore

exchanges worldwide as LFX seeks to be recognised

as a leading offshore exchange in Asia, bringing

together investors from other parts of the world and

the region. As part of its plans to become more global

in its operations, LFX is enhancing its clearing

and settlement capabilities by creating a link with

international clearing and settlement systems. The

appointment of a second service provider for LFX’s

depository and settlement services is being finalised.

Labuan International Offshore Financial Centre (IOFC) 25

Legislative Changes and Regulatory Strength 25

Business Incentives 25

Islamic Financial Services 26

Labuan International Shipping Registry (LISR) 27

Role of Labuan IOFC in Achieving The Financial

Sector Masterplan (FSMP) 27

Developmental Review



Labuan International Offshore Financial Centre (IOFC)

In the competitive world of international offshore finance,

Labuan IOFC provides the offshore community with a business

environment that is investor-friendly and cost-efficient,

without compromising international standards of prudence.

The Labuan Offshore Financial Services Authority (LOFSA) is

intent on developing Labuan as an offshore centre with a

reputation for quality and integrity, a place where genuine

entities can undertake their business on confidential basis

and with the knowledge that standards are maintained in

accordance with international regulations.

The comprehensive regulatory framework provides offshore

companies in Labuan with a conducive environment

for offshore banking, insurance and other offshore

activities. Investors are also given alternatives for

conducting business and investing in the form of Islamic

finance. LOFSA aims to promote Labuan IOFC as a

regional Islamic financial centre and a range of initiatives

are being put in place towards this end.

Legislative Changes and Regulatory Strength

Recognising the need for a sound regulatory and

supervisory framework for Labuan IOFC, LOFSA continually

reviews relevant legislation to ensure that they are current

and in line with international developments.

The year 2003 saw the amendment of the Labuan

Offshore Securities Industry Act 1998 (LOSIA). The

LOSIA amendments, which came into effect in May 2003,

included provisions relating to private funds and allowed

fund managers to manage and administer foreign funds

in Labuan. The amendments also empowered the

Labuan International Financial Exchange (LFX) to suspend

trading, self-regulate the exchange and trading activities.

In addition, the Minister of Finance may issue rules and

regulations pertaining to instruments that can be listed

on LFX. Furthermore, all intermediaries are required

to have professional indemnity cover to protect

the interests of investors.

During the year under review, greater emphasis was

given to the international initiative against money

laundering activities with the invocation of the Anti-Money

Laundering (Invocation of Part IV (No.2)) Order 2003 on

15 April 2003. The provision relates to the reporting

obligations of institutions licensed or registered to carry

on, among others, offshore banking, insurance and trust

company business. To further curb money laundering

activities, awareness is being increased through training

and education programmes.

To safeguard the nation against any terrorist activities

that may occur within or even beyond the jurisdiction of

Malaysia, section 125A has been inserted into the Penal

Code, making it an offence to harbour or attempt to

harbour any person in Malaysia or any person residing in

a foreign state at war or in hostility against the King.

A related legislation is the Mutual Assistance in Criminal

Matters Act 2002 (MACMA), which came into effect on

1 May 2003. It was introduced to provide for mutual

assistance in criminal and connected matters between

Malaysia and other countries. The new sections of the

Penal Code and MACMA provide LOFSA with additional

avenues for cooperation with other supervisory and

regulatory authorities, locally and internationally, to increase

compliance and improve security for the offshore industry.

LOFSA plans to review existing legislation such as the Labuan

Offshore Financial Services Authority Act 1996, Offshore

Companies Act 1990, Offshore Insurance Act 1990 and

Labuan Offshore Trust Act 1996. A new legislation to

regulate and facilitate Islamic offshore financial services is

also being considered.

Business Incentives

One of Labuan IOFC’s objectives is to complement financial

activities in the domestic Malaysian market and contribute

towards the government’s initiatives in making Malaysia a

regional financial centre. Licensed offshore institutions are

allowed to establish marketing offices in Kuala Lumpur,

DEVELOPMENTAL REVIEW

subject to LOFSA’s approval. Effective 15 November 2003,

all offshore companies may apply to set up marketing offices

in Johor Bahru, while licensed offshore institutions may set

up marketing offices in both Johor Bahru and Kuala Lumpur.

This measure is to support the government’s efforts to develop

Johor Bahru further, particularly in international transhipment

and transportation activities.

To implement the above, LOFSA issued the ‘Guidelines on

the Establishment of Marketing Office in Kuala Lumpur and

Johor Bahru’, which superseded earlier guidelines issued in

July 1995 and July 1998. The new guidelines cover the role,

staffing and operational aspects of a marketing office.

However, offshore companies are required to maintain a

physical presence in Labuan, with the exception of insurance

brokers and captives.

LOFSA is developing an electronic company registration

system, called the Electronic Document Submission and

Payment System (EDSP), to enable trust companies in Labuan

IOFC to serve their clients in a more efficient and cost-effective

manner. Work on the EDSP, a web-based system for

submitting company documents to LOFSA, began in the

second half of 2003 and is expected to complete in 2004.

The system will create a paperless environment, accessible

24 hours a day, 365 days a year for submission of documents

from anywhere in the world. EDSP will bring about greater

convenience for the trust companies, as the centralised

database for documents will result in faster submission of

forms, easier monitoring and retrieval. The system will also

improve the trust companies’ accessibility to, and interaction

with, LOFSA in matters relating to information flow and

processes, coordination and enforcement.

Another incentive has been provided to the offshore

life insurance business in Labuan IOFC. With effect

from 1 April 2003, Malaysian resident individuals,

employed outside Malaysia, were allowed to purchase

investment-linked insurance products denominated

in a foreign currency of any amount from licensed

offshore life insurers in Labuan. This is subject to the

condition that the purchases are financed by their

funds placed with overseas banks and prior permission

from the Controller of Foreign Exchange Malaysia is

obtained before making such an investment.

Islamic Financial Services

In 2003, LOFSA became an observer member of the Islamic

Financial Services Board (IFSB). IFSB, an association of central

banks, monetary authorities and other institutions, is

entrusted with the development and promulgation of

internationally accepted prudential regulatory standards and

best practices.

With regard to products and services, LOFSA issued

the ‘Directive on Islamic Financial Business in Labuan

IOFC’ in October 2003. This is to assure potential

Islamic investors that the products and services offered

by offshore financial institutions (OFIs) are Shariah-

compliant. Under the directive, OFIs offering Islamic

financial products and services have to:

◆ Submit to LOFSA their business and development plans

of their Islamic financial business in Labuan.

◆ Establish a Shariah Supervisory Council (SSC) or engage

the services of other SSCs available in the market.

◆ Maintain separate accounts for their conventional and

Islamic financial business.

◆ Submit to LOFSA separate statistical returns on their

conventional and Islamic financial business.

◆ Channel all funds pooled in the Islamic banking and

investment portfolio into Shariah-compliant activities.

On the issue of tax incentives, offshore companies carrying

on Islamic activities will be given an income tax rebate

equivalent to the amount of zakat paid to religious authority.

The rebate will be subject to a maximum of 3% of net profit

or RM20,000. Prior to this, offshore companies pay both

corporate tax required by law and business zakat as part

of their religious obligations. Amendments to the

Labuan Offshore Business Activity Tax Act 1990 have

been made to enable the payment of zakat from the

year of assessment 2004. This will attract companies

particularly from Islamic countries where zakat, and

not income tax, is paid on business income.

LOFSA continues to adopt a consultative approach

in developing the Islamic finance market in Labuan

through the establishment of several developmental

committees. The committees have identified key

areas and products, such as trade finance, cash waqf,

takaful and Islamic capital market. LOFSA is also





enhancing the role of the Shariah Advisory Council

in developing Islamic finance in Labuan IOFC.

Labuan International Shipping Registry (LISR)

In line with the government’s announcement in Budget 2002,

LOFSA is developing the framework to establish LISR. A

suitable model has been formulated and major policy issues

are being resolved in reviewing the viability of LISR. Under

LISR, potential ship-owners will be offered a world-class and

modern international shipping registry that will eventually

leverage on information technology to provide a practical

and flexible shipping register. Ship-owners will also benefit

from the array of ancillary services and the competitive fiscal

and other incentives available in Labuan IOFC.

Role Of Labuan IOFC In Achieving the Financial

Sector Masterplan (FSMP)

For a more structured implementation of the

recommendations relating to Labuan IOFC in FSMP,

LOFSA has formulated a Corporate Action Plan

detailing steps and measures for the period 2004–

2010. The plan is divided into three phases as depicted

in Chart 1 below.

The strategies in the plan will be implemented within the

LILAC Framework, which was formulated to cover five key

areas critical to the development of Labuan, namely LOFSA,

IOFC, Labuan, Action Plans and Corporate Governance. This

framework is illustrated in Chart 2.

Time Frame Target

Phase I2004-2005

Phase II2006-2008

Phase III2009-2010

Chart 1: Implementation of the Action Plan for Labuan IOFC

Further strengthening of key financial andbusiness activities. Add growth and depth toidentified markets and businesses. Enhance

reputation and credibility of LOFSA and IOFC.

Strengthen Labuan capacity, and develop strategic,financial and business activities to enable Labuan

IOFC to enhance its competitiveness and todevelop new market and build new business.

A fully develop IOFC with international positioningin areas of comparative and competitive advantage.Superior performance through low cost operating

environment and economy of scale withinternational linkages.


LOFSA has established Key Performance Indicators (KPIs)

for each industry in Labuan IOFC. These KPIs, benchmarked

against established jurisdictions to assess the achievements

and competitiveness of Labuan IOFC, will include growth

in the number of offshore companies and financial

institutions operating in Labuan as well as their business

volume and scope of activities.

The development of Labuan IOFC is carried out by way

of cooperation and collaboration between LOFSA, the

offshore financial institutions and other regulatory

authorities. LOFSA’s focus for the offshore financial

Chart 2 : LILAC (LOFSA, IOFC, Labuan, Action Plan and Corporate Governance)- Goals and Strategy

STRATEGY GOALS

LOFSA

IOFC

LABUAN

ACTION PLAN

CORPORATEGOVERNANCE

To establish best practices system and structureLabuan IOFC to be known as an IOFC with genuinebusiness with proper risk management framework.

To be credible and competent regulatorAs a one-stop regulator authority for Labuan IOFC,

on par with international organisations.

To be vibrant centre with a niche in Islamic financeThere are more than 60 offshore and international

financial jurisdictions globally, Labuan IOFC must focuson its competitive edge capitalising on its niche.

To be a conducive place to work and stay throughdevelopment efforts of Labuan CorporationLabuan island must be a place that would be able to

offer international lifestyle and world class infrastructure.

Milestones which map out the future strategiesand directions of Labuan IOFC

The milestones will be a monitoring tool to ensure thestrategies are fully implemented.

industry is to provide offshore financial institutions with

the necessary regulatory and operational structure to

facilitate their business in a cost-efficient manner. The

role of government agencies is to provide the various

infrastructure needs to make Labuan a modern and

attractive place to stay and conduct business. Labuan is also

being developed as a centre of educational excellence

with the establishment of a number of tertiary and

professional education institutions. With the continued

support of the Government and the cooperation of other

government agencies, Labuan IOFC will move forward to

become a successful international offshore financial centre.



Corporate Highlights



7 – 12 January

Labuan Offshore Financial Services Authority (LOFSA)

conducted seminars on “Opportunities in the Labuan

International Offshore Financial Centre (IOFC)” for

accountants and lawyers in Taipei, Taiwan.

22 January

Fifty members of the Kota Kinabalu branch, Malaysian

Institute of Accountants (MIA), attended a talk by LOFSA

on “The Advantages of Labuan IOFC”.

27 January

LOFSA participated in the National Seminar on the

Manufacturing Sector, organised by the Malaysian

Industrial Development Authority (MIDA), in Kuala Lumpur.

18 – 26 February

LOFSA participated in an exhibition held in conjunction

with the Non-Aligned Movement Summit at the Putra

World Trade Centre, Kuala Lumpur.

22 February – 1 March

LOFSA participated in the International Islamic Finance

Forum in Dubai.

23 February – 1 March

LOFSA joined the trade and investment delegation

organised by MIDA to Bangkok, Manila and Jakarta. The

mission was led by Dato’ Seri Rafidah Aziz, Minister of

International Trade and Industry.

6 – 7 March

The Sarawak Chamber of Commerce and Industry (SCCI)

and LOFSA organised a half-day seminar for SCCI

members and large multinational companies in Kuching.

A special briefing session was conducted in the evening

for the MIA Kuching branch.

20 March

Seri Paduka Baginda Yang Di Pertuan Agong Tuanku

Syed Sirajuddin Ibni Al-Marhum Tuanku Syed Putra Jamalullail

graciously consented to visit LOFSA. During the visit,

His Majesty and the royal entourage were given a

briefing on Labuan IOFC.

20 – 23 May

LOFSA attended the Offshore Group of Insurance Supervisors

meeting in Jersey, the Channel Islands.

29 May

LOFSA participated in the International Monetary Fund

Offshore Financial Centre roundtable discussion in

Washington D.C.

9 – 13 June

LOFSA was part of the Malaysian delegation to the meeting

of the Brunei, Indonesia, Malaysia and the Philippines – East

Asian Growth Area (BIMP-EAGA) in Palawan, Philippines.

1 July

Rosnah Omar was appointed the Director-General of LOFSA.

23 July

Cabinet Ministers of the Sabah State Government were

briefed by LOFSA during their visit to Labuan IOFC.

29 July

LOFSA delivered a paper on “The Anti-Money Laundering

Measures in Labuan – Offshore Perspective“ in Kuala Lumpur.

7 – 12 August

LOFSA participated in the MIDA Trade Investment Mission,

led by the Minister of International Trade and Industry, to

Seoul, South Korea.



20 August

A presentation on the role of LOFSA and the IOFC was

conducted for government departments and agencies

in Labuan IOFC.

22 August

Malaysian Rating Corporation Berhad briefed offshore

financial institutions and staff of LOFSA on “The Rating

of Islamic Capital Market Instruments”.

25 August

LOFSA and offshore financial institutions conducted a

seminar on “Business Opportunities in Labuan as an IOFC”

for the local business community in Kuching.

1 – 3 September

LOFSA presented a paper, “Home of Financial Institutions

in Asia-Pacific and Initiatives from Labuan IOFC”, at the

Islamic Finance and Investment Conference in Cape

Town, South Africa.

4 – 8 September

LOFSA conducted a promotional trip to Dubai and

Bahrain and attended the 6th International Islamic

Financial Market Board meeting in Bahrain.

9 –12 September

LOFSA participated in the BIMP-EAGA Senior Officers

and Ministerial Meetings in Davao City, Philippines.

11 – 12 September

Members of the Federation of Malaysian Manufacturers

(FMM) in Ipoh and Kuala Lumpur were briefed by LOFSA

on “Business Opportunities in Labuan IOFC”.

16 – 19 September

LOFSA participated in the 6th Annual Meeting of the Asia

Pacific Group in Macau, China.

22 September

LOFSA participated in the International Monetary Fund/World

Bank annual meeting in Dubai and met several key Islamic

financial institutions.

23 September

LOFSA participated in the MIDA seminar on the

manufacturing sector for the southern region in Johor

Bahru.

25 – 28 September

A presentation entitled “A case for Labuan as a

Regional Centre for Islamic Finance and Takaful

Business” was made by LOFSA at the International Takaful

Conference in London, England.

26 - 29 September

LOFSA participated in the Islamic Banking & Takaful

Week held in Kuala Lumpur to promote Islamic financial

services available in the IOFC.

29 – 30 September

LOFSA participated in a presentation on “The Globalisation

of Construction Services” at the Construction Industry

Development Board Conference in Kuala Lumpur.

30 September

Participants of the 22nd Central Banking Course in Kuala

Lumpur were briefed by LOFSA on “Labuan as the

Premier Offshore Financial Centre in the Asia-Pacific Region”.

1 – 2 October

LOFSA participated in the Annual General Meeting of

the Offshore Group of Insurance Supervisors and

the International Association of Insurance Supervisors

Conference in Singapore.

2 – 3 October

The Annual Offshore Conference and Industry Dinner

was held at the Convention Hall, Financial Park Complex,

Labuan. The conference, based on the theme “Strategic

Development of Labuan as an IOFC”, attracted more than

120 participants from Malaysia, Brunei and Singapore.

14 October

LOFSA briefed participants on “Business Opportunities

in Labuan as an IOFC” at the Ernst & Young Annual Tax

Seminar 2003 in Kuala Lumpur.




14 – 17 October

LOFSA, together with selected offshore financial

institutions, promoted Labuan IOFC to the Balikpapan

City Chamber of Commerce and representatives from

BIMP-EAGA, Jakarta, at a seminar in Balikpapan,

Indonesia.

15 – 16 October

LOFSA participated in the Organisation of Islamic Countries

Summit and Business Forum in Kuala Lumpur.

16 October

LOFSA attended the meeting of the International Offshore

Securities Commissions Organisation in Seoul, South Korea.

20 – 21 October

In collaboration with Institute Bank-Bank Malaysia,

LOFSA organised the “Money Laundering and Financial

Fraud” conference in Labuan, which attracted more than

120 participants.

23 October

LOFSA participated in a seminar on Labuan IOFC in Johor

Bahru organised by the Port of Tanjung Pelepas.

27 October

LOFSA participated in a meeting on the economic system

in Malaysia organised by the National Economic Action

Council in Kuala Lumpur.

4 November

LOFSA held a briefing in Sungai Petani on “Maximising

Benefits from Labuan IOFC” for potential investors from the area.

7 – 8 December

LOFSA presented a paper on “Globalisation Effects On Islamic

Banking and Finance – Labuan IOFC” at the 10th Anniversary

of the World Islamic Banking Conference in Bahrain.

7 – 12 December

LOFSA participated in the South East Asian Central Banks –

Financial Stability Institute (SEACEN-FSI) workshop for Bank

Supervisors and Regulators in Kuala Lumpur.

8 – 12 December

LOFSA participated in the Asia Pacific Group (APG)

Typologies Workshop 2003 on Money Laundering &

Terrorism Financing and the APG training for examiners

and supervisors held in Kuala Lumpur.

Financial Statements

Statement by the Members 34

Statutory Declaration 35

Certificate of the Auditor General 36

Income Statement 37

Balance Sheet 38

Statement of Changes in Equity 39

Cash Flow Statement 40

Notes to the Financial Statements 41



STATEMENT BY THE MEMBERSOF THE LABUAN OFFSHORE FINANCIAL SERVICES AUTHORITY

We, DR. ZETI AKHTAR AZIZ and ROSNAH OMAR, being two of the Members of LABUAN OFFSHORE FINANCIAL

SERVICES AUTHORITY state that, in the opinion of the Members of the Authority, the accompanying balance sheet and

statements of income, cash flows and changes in equity are properly drawn up in accordance with the provisions of the

Labuan Offshore Financial Services Authority Act, 1996 and the applicable approved accounting standards in Malaysia so as

to give a true and fair view of the state of affairs of the Authority as of 31 December 2003 and of its operating results and

cash flows for the year ended on that date.

On behalf of the Members of the Authority,

ZETI AKHTAR AZIZ

CHAIRMAN

ROSNAH OMAR

DIRECTOR-GENERAL

Labuan, Malaysia

5 March, 2004

LABUAN OFFSHORE FINANCIAL SERVICES AUTHORITY(Established in Malaysia under the Labuan Offshore Financial Services Authority Act, 1996)

FINANCIAL STATEMENTS




STATUTORY DECLARATIONBY THE OFFICER PRIMARILY RESPONSIBLE FOR THE FINANCIAL MANAGEMENT OF LABUAN OFFSHORE FINANCIAL SERVICES

AUTHORITY

I, SABARUDDIN BIN ISMAIL, the officer primarily responsible for the financial management of LABUAN OFFSHORE

FINANCIAL SERVICES AUTHORITY, do solemnly and sincerely declare that the accompanying balance sheet and statements

of income, cash flows and changes in equity are, to the best of my knowledge and belief, correct and I make this solemn

declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act,

1960.

SABARUDDIN BIN ISMAIL

Subscribed and solemnly declared by the above

named SABARUDDIN BIN ISMAIL at LABUAN,

MALAYSIA on this 5th day of March, 2004.

Before me,

COMMISSIONER FOR OATHS




CERTIFICATE OF THE AUDITOR GENERALON THE FINANCIAL STATEMENTS OF THE

LABUAN OFFSHORE FINANCIAL SERVICES AUTHORITYFOR THE YEAR ENDED 31 DECEMBER 2003

The financial statements of Labuan Offshore Financial Services Authority for the year ended 31 December 2003 have been

audited by my representative. These financial statements is the responsibility of the management. My responsibility is to

audit and to express an opinion on these financial statements.

2. The audit has been carried out in accordance with the Audit Act 1957 and in conformity with approved auditing standards.

Those standards require the audit be planned and performed to obtain reasonable assurance whether the financial

statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the

amounts and disclosures in the financial statements. Evaluation is also make on the accounting principles used and the

overall of financial statements presentation.

3. In my opinion, the financial statements give a true and fair view of the financial position of Labuan Offshore Financial

Services Authority as at 31 December 2003 and of the results of its operations and its cash flow for the year then

ended in accordance with approved accounting standards.

(CHE GAYAH BINTI MD SHAHID)

for AUDITOR GENERAL OF

MALAYSIA

PUTRAJAYA

25 MARCH 2004




INCOME STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2003

Note 2003 2002

RM RM

Revenue 14,131,492 14,042,011

Other operating income 4 287,560 283,056

Staff costs (6,171,369) (5,559,246)

Depreciation of property, plant and equipment 7 (609,896) (612,442)

Other operating expenses 4 (6,255,007) (5,561,742)

Surplus from operations 1,382,780 2,591,637

Income from other investments 5 624,737 620,277

Surplus for the year 6 2,007,517 3,211,914

The accompanying Notes form an integral part of the Financial Statements.




BALANCE SHEETAS OF 31 DECEMBER 2003

Note 2003 2002

RM RM

ASSETS

Property, plant and equipment 7 3,882,042 2,769,782

Investment in subsidiary companies 8 1 1

Current AssetsFee receivables 9 652,680 717,180Other receivables and prepaid expenses 9 10,146,451 10,865,807Cash and bank balances 10 17,545,252 14,614,109

28,344,383 26,197,096

Current LiabilitiesFees received in advance 11 1,427,190 852,397Refundable deposits 12 700,000 –Other payables and accrued expenses 13 932,247 955,010

3,059,437 1,807,407

Net Current Assets 25,284,946 24,389,689

Long-term LiabilitiesGovernment loans 14 (13,000,000) (13,000,000)

Net Assets 16,166,989 14,159,472

Represented by:

Accumulated surplus 16,166,989 14,159,472





STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2003

Accumulated Surplus

RM

Balance as of 1 January 2002 10,947,558

Surplus for the year 3,211,914

Balance as of 31 December 2002 14,159,472

Surplus for the year 2,007,517

Balance as of 31 December 2003 16,166,989





CASH FLOW STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2003

Note 2003 2002RM RM

CASH FLOWS FROM/(USED IN) OPERATING ACTIVITIESSurplus for the year 2,007,517 3,211,914Adjustments for:

Depreciation of property, plant and equipment 609,896 612,442Bad debts written off 666,251 262,730Property, plant and equipment written off 2,548 54,586Interest income (865,969) (847,577)

Surplus Before Working Capital Changes 2,420,243 3,294,095

(Increase)/Decrease in:Fee receivables (107,620) (509,180)Amount owing by subsidiary companies (494,131) –Other receivables and prepaid expenses 1,109,695 (2,071,816)

Increase/(Decrease) in:Fees received in advance 574,793 491,897Refundable deposits 700,000 –Other payables and accrued expenses (22,763) 89,025

Cash From Operations 4,180,217 1,294,021

Interest received 241,232 142,767

Net Cash From Operating Activities 4,421,449 1,436,788

CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIESProceeds from disposal of property, plant and equipment – 124,090Additions to property, plant and equipment (1,724,704) (1,090,647)Interest received 234,398 620,277

Net Cash Used In Investing Activities (1,490,306) (346,280)

NET INCREASE IN CASH AND CASH EQUIVALENTS 2,931,143 1,090,508

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 14,614,109 13,523,601

CASH AND CASH EQUIVALENTS AT END OF YEAR 16 17,545,252 14,614,109





NOTES TO THE FINANCIAL STATEMENTS

1. GENERAL INFORMATION

The Labuan Offshore Financial Services Authority was established on 15 February 1996. The main activities of the Authority

are to promote and develop Labuan, Malaysia as a center for offshore financial services and to develop national objectives,

policies and priorities for the orderly development and administration of offshore financial services in Labuan.

The principal activities of the subsidiary companies are disclosed in Note 8.

There have been no significant changes in the nature of the activities of the Authority and its subsidiary companies

during the financial year.

The total number of employees of the Authority at year end was 61 (2002: 57).

The registered office and principal place of operations of the Authority are located at Level 17, Main Office Tower,

Financial Park Complex, Jalan Merdeka, 87000 Federal Territory of Labuan, Malaysia.

2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

The financial statements of the Authority have been approved by the Board of Members for issuance on 5 March 2004.

The financial statements of the Authority have been prepared in accordance with the provisions of the Labuan Offshore

Financial Services Authority Act, 1996 and the applicable approved accounting standards of the Malaysian Accounting

Standards Board (MASB).

3. SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Accounting

The financial statements of the Authority have been prepared under the historical cost convention.

(b) Revenue

Revenue comprises incorporation and registration fees of offshore companies, annual licence fees for offshore banks

and insurance companies and other related fees received and receivable. Revenue is recognised when services are

provided or upon anniversary date of incorporation or registration of offshore companies. When fee receivables are

doubtful, recognition of fees are suspended until it is realised on a cash basis.

(c) Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.

Gains or losses arising from the disposal of an asset is determined as the difference between the net disposal proceeds

and the carrying amount of the asset, and is recognised in the income statement.




The carrying amounts of property, plants and equipment are reviewed at each balance sheet date to determine

whether there is any indication of impairment. An impairment loss is recognised whenever the carrying amount of an

item of property, plant and equipment exceeds its recoverable amount. The impairment loss is charged to the income

statement.

Leasehold land with a lease period of 999 years and capital work in progress are not depreciated. All other property,

plant and equipment are depreciated on the straight-line method to their residual value at rates based on the

estimated useful lives of the various assets.

The annual depreciation rates are as follows:

Buildings 2%

Motor vehicles 25%

Computers 331/3%

Office equipment, furniture and renovation 20%

(d) Investment in Subsidiary Companies

Investment in subsidiary companies is stated in the Authority’s financial statements at cost. Where there is an

indication of impairment in the value of the assets, the carrying amount of the investment is assessed and

written down immediately to its recoverable amount.

Allowance is made when the members of the Authority are of the opinion that a permanent diminution in

value of an investment has occurred.

As permitted under MASB 11, Consolidated Financial Statements and Investments in Subsidiaries,

consolidated financial statements were not presented as the investments in the subsidiary companies are

intended to be held on a temporary basis.

(e) Receivables

Fee and other receivables are stated at nominal value as reduced by the appropriate allowances for estimated

irrecoverable amounts. Allowance for doubtful debts is made based on estimates of possible losses which

may arise from non-collection of certain receivable accounts.

(f) Cash Flow Statement

The Authority adopts the indirect method in the preparation of the cash flow statement.

Cash equivalents are short-term, highly liquid investment with maturities of three months or less from the date of

acquisition and are readily convertible to cash with insignificant risks of changes in value.





4. OTHER OPERATING INCOME/(EXPENSES)

Included in other operating income/(expenses) are the following:

5. INCOME FROM OTHER INVESTMENTS

6. INCOME TAX EXPENSE

No provision for taxation is made as the Authority has been exempted under the Income Tax (Exemption) (No.33) Order

1997 [PU(A) 221/97] and Income Tax (Exemption) (Amendment) (No.2) Order 2003 [PU(A) 198/2003] until the year of

assessment 2005.

2003 2002

RM RM

Interest income from staff loans 241,232 227,300

Expenses:

Members’ remuneration:

Executive (1,072,945) (1,121,777)

Non-executive (48,600) (51,300)

Bad debts written off:

Fee receivables (172,120) (262,730)

Amount owing by subsidiary companies (494,131) –

Property, plant and equipment written off (2,548) (54,586)

2003 2002

RM RM

Interest received from:

Fixed deposits 619,145 611,064

Money at call 5,592 9,213

624,737 620,277





7. PROPERTY, PLANT AND EQUIPMENT

As of 31 December 2003, the strata title of a building apartment with a carrying value of RM134,933 (2002: RM138,133)

has not yet been issued to the Authority.

Included in property, plant and equipment of the Authority are fully depreciated property, plant and equipment which are

still in use, with a cost of RM3,313,000 (2002 : RM1,730,000).

Net Book Value

2003 2002

RM RM

Long leasehold land 442,000 442,000

Buildings 608,373 622,133

Motor vehicles 72,775 125,913

Computers 298,612 177,955

Office equipment,furniture andrenovation 1,778,658 458,295

Capital workin progress 681,624 943,486

Total 3,882,042 2,769,782

At Atbeginning end

of year Additions Disposals Reclassification of yearRM RM RM RM RM

At Charge Atbeginning for the end

of year year Disposals of yearRM RM RM RM

Long leasehold land 442,000 – – – 442,000 – – – –

Buildings 688,000 – – – 688,000 65,867 13,760 – 79,627

Motor vehicles 443,213 – – – 443,213 317,300 53,138 – 370,438

Computers 2,230,095 291,341 – – 2,521,436 2,052,140 170,684 – 2,222,824Office equipment, 956,439 751,739 (28,403) 943,486 2,623,261 498,144 372,314 (25,855) 844,603

furniture andrenovation

Capital work inprogress 943,486 681,624 – (943,486) 681,624 – – – –

Total 5,703,233 1,724,704 (28,403) – 7,399,534 2,933,451 609,896 (25,855) 3,517,492

Cost Accumulated Depreciation





8. INVESTMENT IN SUBSIDIARY COMPANIES

2003 2002

RM RM

Unquoted shares, at cost 900,000 900,000

Impairment loss (899,999) (899,999)

1 1

The subsidiary companies, all incorporated in Malaysia, are as follows:

Name of Company Effective Percentage of Ownership Principal Activities

2003 2002

% %

Direct Subsidiary Company

LOFSA Incorporated Sdn. Bhd. 100 100 Investment holding

Indirect Subsidiary Company

Pristine Era Sdn. Bhd. 100 – Providing educational services

In 2002, LOFSA Incorporated Sdn. Bhd. disposed of its entire equity interest in Pristine Era Sdn. Bhd. to a third party.

During the financial year, LOFSA through LOFSA Incorporated Sdn. Bhd. acquired the entire equity interest in Pristine

Era Sdn. Bhd., a company which manages the Labuan International School, for a cash consideration of RM1 and undertakes

to provide financial supports to the said newly-acquired subsidiary company. This is only a temporary measure until an

appropriate buyer or investor is identified to take over the company.





9. FEE RECEIVABLES, OTHER RECEIVABLES AND PREPAID EXPENSES

2003 2002

RM RM

Fee receivables 655,280 719,780

Allowance for doubtful debts (2,600) (2,600)

652,680 717,180

Other receivables:

Staff housing loans 8,129,631 8,558,048

Staff vehicle loans 1,390,900 1,731,129

Other loans and advances 115,451 133,814

Refundable deposits 120,130 114,045

Interest receivable 390,339 271,874

Prepaid expenses and advances – 56,897

10,146,451 10,865,807

10. CASH AND BANK BALANCES

2003 2002

RM RM

Fixed deposits with:

Licensed banks 12,027,040 9,565,300

Licensed finance companies 3,823,385 3,000,000

Money at call with licensed bank 700,000 –

Cash on hand and at banks 994,827 2,048,809

17,545,252 14,614,109

The average effective interest rate is as follows:

2003 2002

% %

Fixed deposits 3.2 3.2

Money at call 2.2 2.2

Deposits of the Authority have an average maturity of 30 days to one year (2002: 30 days to one year).





11. FEES RECEIVED IN ADVANCE

Fees received in advance comprise annual fees paid in advance by offshore banks and insurance companies.

12. REFUNDABLE DEPOSITS

Refundable deposits represent security deposits paid by trust companies in accordance with the provisions of the Labuan

Trust Companies Act, 1990.

13. OTHER PAYABLES AND ACCRUED EXPENSES

2003 2002

RM RM

Other payables 367,835 102,461

Accrued expenses 564,412 852,549

932,247 955,010

Other payables comprise amounts outstanding for ongoing costs. The amounts owing are interest-free and have no

fixed terms of repayment.

14. GOVERNMENT LOANS

Government loans represent the balance of RM3 million out of a RM6 million loan and a RM10 million loan obtained in

1996 and 2000 respectively from Bank Negara Malaysia. The loans are unsecured and interest-free. The balance of the

first loan and the second loan are repayable in the year 2010 or such other period as may be mutually agreed by the

parties.

15. FINANCIAL INSTRUMENTS

Financial Risk Management Objectives and Policies

The operations of the Authority is subject to a variety of financial risks, including credit risk, liquidity risk and cash flow

risk. The Authority has agreed to formulate a financial risk management framework whose principal objective is to

minimise the Authority’s exposure to risks and/or costs associated with the financing, investing and operating activities of

the Authority.

Various risk management policies are made and approved by the Members of Authority for observation in the day-to-day

operations for the controlling and management of the risks associated with financial instruments.






Credit risk

The financial instruments which potentially subject the Authority to credit risk are fee receivables. Concentration of

credit risk with respect to fee receivables is limited due to a large number of offshore companies in various industries. The

Members of the Authority are of the opinion that the risk of incurring material losses related to this credit risk is remote.

Liquidity risk

The Authority practises prudent liquidity risk management to minimise the mismatch of financial assets and liabilities and

to maintain sufficient credit facilities for contingent funding requirement of working capital.

Cash flow risk

The Authority reviews its cash flow position regularly to manage its exposure to fluctuations in future cash flows associated

with its monetary financial instruments.

Financial Assets

The Authority’s principal financial assets are fixed deposits, money at call, cash on hand and at banks and fee and other

receivables.

The accounting policies applicable to the major financial assets are as disclosed in Note 3.

Financial Liabilities and Equity Instruments

Debts and equity instruments are classified as liabilities or equity in accordance with the substance of the contractual

arrangement.

Significant financial liabilities include refundable deposits, other payables and interest-free government loans.

Government loans are recorded at the proceeds received.

There were no equity instruments as of the financial year-end.

Fair Values

Cash and cash equivalents, fee and other receivables and refundable deposits and other payables.

The carrying amounts approximate fair values because of the short maturity period for these instruments.

Government loans

The Members of the Authority consider that the carrying amounts of government loans approximate their fair values.




16. CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise the following:

2003 2002

RM RM

Fixed deposits 15,850,425 13,365,300

Money at call 700,000 –

Cash on hand and at banks 994,827 1,248,809

17,545,252 14,614,109

17. CAPITAL COMMITMENTS

As of 31 December 2003, the Authority has the following capital expenditure in respect of property, plant and equipment:

2003 2002

RM RM

Approved but not contracted for 1,154,850 1,040,512

Approved and contracted for 343,409 910,002

1,498,259 1,950,514


Guidelines 51

Listings of Offshore Institutions 53


Appendices



Guidelines And Directives

GUIDELINES FOR ESTABLISHMENT OF MARKETING

OFFICE IN KUALA LUMPUR AND JOHOR BAHRU

1. What is a Marketing Office?

The role of the Marketing Office is limited to

facilitate meetings with clients and establish

contacts with potential clients of the Labuan

offshore company (LOC). No maintenance of books and

records (including trading activities) shall be done

through, from or in the Marketing Office.

2. Eligibility

All LOC, including those licensed under the laws

relating to offshore financial services may apply to

set-up a marketing office in Kuala Lumpur and/or

in Johor Bahru. LOCs who have an existing Kuala

Lumpur Marketing Office (KLMO) may apply to

establish another Marketing Office in Johor Bahru.

With the exception of insurance brokers and

captives, all LOCs who have a Marketing Office are

required to maintain a management office in Labuan.

3. Operational Requirement

a. Location and address

i. The Marketing Office must have an address.

ii. The entry door only leads to the office and

is independent of any other entities.

iii. The premise should not be used for personal

use or accommodation.

b. Staff

The number of staff in each of the Marketing

Office should not exceed four.

c. Signboard

i. The name of the offshore company must be

printed and affixed in a conspicuous position, in

romanised letters easily legible, on the premise.

ii. The signboard must contain the following

information:

· Company name and registration number;

· License number, if any;

· Address, telephone and facsimile numbers.

d. The Marketing Office must be in compliance

with local authority laws and regulations.

4. Reporting Requirements

The LOC is required to submit a half-yearly report

comprising the organisational chart, business

activities for the past six months, before the 15th

of the following month.

5. Fees

The annual fee of RM5,000 will be imposed for each

Marketing Office in Kuala Lumpur and Johor Bahru.

6. Application

All LOCs must submit through the trust companies, the

following minimum information for application:

a. Purpose of the Marketing Office;

b. Business plan of setting up the Marketing

Office;

c. Organisation Chart; and

d. Biodata of the managerial level at the Marketing

Office.

The application can be submitted to:

Director-General

Labuan Offshore Financial Services Authority (LOFSA)

Level 17, Main Office Tower

Financial Park Complex

Jalan Merdeka

87000 Federal Territory Labuan

MALAYSIA

Telephone : 087-591200 / 591300

Fax : 087-453442 / 413328

7. Date in force

a. The Guideline would take effect on 15 November

2003 and would remain to be effective and applicable

unless otherwise amended or revoked; and

b. The Guidelines on Marketing Office issued on 3 July

1995 and 1 July 1998 are hereby superseded.

8. Revocation

LOFSA reserves the right to revoke the approval

due to non-compliance with LOFSA’s and other

regulatory requirements.

GUIDELINES


DIRECTIVE ON ISLAMIC FINANCIAL BUSINESS IN

LABUAN IOFC

I. Preamble

This directive is issued pursuant to section 4(5)

of the Labuan Offshore Financial Services Authority Act

1996 and sets out additional requirements to be

observed by any Offshore Financial Institution

(OFI) offering Islamic financial products and services

in Labuan IOFC.

II. Requirements to submit business plan and

appoint Shariah Supervisory Council

Notwithstanding to the requirements under any

guideline issued by LOFSA to the OFI relating to

the above, the OFI is also required:

a. To submit to LOFSA a business plan comprises

of a write up on the OFI’s which include:

i. Objectives;

ii. Products and services to be offered; and

iii. Investment strategies and operations;

with regard to the Islamic financial business that

they are carrying on or propose to carry on in Labuan

IOFC.

b. To establish its own Shariah Supervisory

Council (SSC) or engage the services of an

existing SSC available in the market, including

the SSC of the International Islamic Financial

Market (IIFM), to ensure that the products and

services offered are Shariah compliant.

Where the OFI establishes its own SSC, the OFI

is required:

i. to submit to LOFSA names, addresses,

qualifications and experience of the members of

the SSC;

ii. to submit to LOFSA a declaration (similar

to Appendix II of Form L for directors of

offshore banks) by each member of the SSC;

and

iii. to notify LOFSA prior to any change to be

made to the membership of the SSC.

Where the OFI engages the services of an existing

SSC available in the market, the OFI is required:

i. to notify LOFSA which SSC it intends to

engage; and

ii. to notify LOFSA prior to any change of the

SSC that has been engaged.

III. Additional Operational Requirements

a. The OFI which carries on both conventional and

Islamic financial business is required :

i. to keep the accounts and funds in respect

of their conventional financial business

separate from that of Islamic financial

business; and

ii. to submit to LOFSA two sets of any

statistical return, one for its conventional

financial business and one for its Islamic

financial business.

b All funds pooled into the Islamic banking and

investment portfolio must be channelled into

financing and investment activities that are

Shariah compliant.

IV. Implementation and Compliance

Any existing OFI has already offered Islamic

financial products and services but yet to comply

with the requirement stipulated in this directive

is required to comply with Part II and Part III by

31 December 2003.

GUIDELINES


OFFSHORE BANKS (COUNTRY OF ORIGIN)

1 ABN AMRO Bank N.V.

(Netherlands)

Tel : 087-423008

Fax : 087-421078

E-mail: [email protected]

Mr Anthony Rajan M Liguori

2 AmInternational (L) Ltd.

(Malaysia)

Tel : 087-413133

Fax : 087-425211


Mr Paul Ong Whee Sen

3 AmMerchant Bank Berhad

(Malaysia)

Tel : 087-413133

Fax : 087-425211



4 Barclays Bank Plc.

(United Kingdom)

Tel : 087-425571

Fax : 087-425575


Mr Miaw Siaw Loong

5 Bank Islam (L) Ltd.

(Malaysia)

Tel : 087-451801

Fax : 087-453077


Mr Mohamad Najib Shaharuddin

6 Bank Muamalat Malaysia Berhad

(Malaysia)

Tel : 087-412898

Fax : 087-451164


Mr Zainol Rashid Khairuddin

7 Bank of America National Association

(USA)

Tel : 087-411778

Fax : 087-424778


Ms Nur Farhah Ooi Abdullah

8 The Bank of East Asia, Limited

(Hong Kong)

Tel : 087-451145

Fax : 087-451148


Mr Thomas Wong Wai Yip

9 Bank of Nova Scotia

(Canada)

Tel : 087-451101

Fax : 087-451099


Mr Kwan Sing Hung

10 Bank of Tokyo-Mitsubishi, Ltd.

(Japan)

Tel : 087-410487

Fax : 087-410476


Mr Wataru Tanaka

Labuan Offshore Banks(as at end February 2004)

LISTINGS OF OFFSHORE INSTITUTIONS


11 Bayerische Landesbank

(Germany)

Tel : 087-591000

Fax : 087-422175


Mr Louise Paul

12 BNP Paribas

(France)

Tel : 087-422328

Fax : 087-419328


Ms Yap Siew Ying

13 Bumiputra-Commerce Bank (L) Limited

(Malaysia)

Tel : 087-410302

Fax : 087-410313


Mr Asaraf Aboo Bakar

14 Cathay United Bank

(Taiwan)

Tel : 087-452168

Fax : 087-453678


Mr Yeh Pin Hung

15 CIMB (L) Limited

(Malaysia)

Tel : 087-451608

Fax : 087-451610


Mr Adhha Amir Abdullah

16 Citibank Malaysia (L) Limited

(USA)

Tel : 087-421181

Fax : 087-419671


Ms Clara Lim Ai Cheng

17 Commerzbank A.G.

(Germany)

Tel : 087-416953

Fax : 087-413542


Mr Ho Kah Heng

18 Credit Agricole Indosuez

(France)

Tel : 087-425118

Fax : 087-424998


Mr Tan Boon Eong

19 Credit Industrial et Commercial

(France)

Tel : 087-452008

Fax : 087-452009


Mr Yeow Tiang Hui

20 Credit Lyonnais

(France)

Tel : 087-408331

Fax : 087-408335


Mr Clement Wong

21 Credit Suisse First Boston

(Switzerland)

Tel : 087-425381

Fax : 087-425384


Mr Rudolf Zaugg

22 Danaharta Managers (L) Limited

(Malaysia)

Tel : 03-20931122

Fax : 03-20934362


NA




23 Deutsche Bank AG

(Germany)

Tel : 087-439811

Fax : 087-439866


Mr Kuah Hun Liang

24 DBS Bank Ltd.

(Singapore)

Tel : 087-423375

Fax : 087-423376


Mr Kevin Wong Chee Fatt

25 Dresdner Bank AG

(Germany)

Tel : 087-419271

Fax : 087-419272


Mr Jamaludin Nasir

26 The Hong Kong and Shanghai Banking

Corporation Limited, Offshore Banking Unit Labuan

(United Kingdom)

Tel : 087-419690

Fax : 087-417169


Mr Prem Kumar

27 ING Bank N.V., Labuan Branch

(Netherlands)

Tel : 087-425733

Fax : 087-425734


Ms Milly Tan

28 International Commercial Bank of China

(Taiwan)

Tel : 087-581688

Fax : 087-581668


Mr Tai Chih-Hsien

29 J. P. Morgan Chase Bank

(USA)

Tel : 087-424384

Fax : 087-424390


Ms Leong Ket Ti

30 J. P. Morgan Malaysia Ltd.

(USA)

Tel : 087-459000

Fax : 087-451328


Ms Leong Ket Ti

31 KBC Bank N.V.

(Belgium)

Tel : 087-581778

Fax : 087-583787


Mr Kong Kok Chee

32 Lloyds TSB Bank Plc.

(United Kingdom)

Tel : 087-418918

Fax : 087-411928


Mr Barry Francis Lea

33 Macquarie Bank Limited

(Australia)

Tel : 087-583080

Fax : 087-583088


Mr Darren Woodward

34 Maybank International (L) Ltd.

(Malaysia)

Tel : 087-414406

Fax : 087-414806


Mr Lam Hee


35 Mizuho Corporate Bank Ltd., Labuan Branch

(Japan)

Tel : 087-417766

Fax : 087-419766


Mr Isaku Tanimura

36 Natexis Banques Populaires, Labuan Branch

(France)

Tel : 087-581009

Fax : 087-583009


Mr Rizal Abdullah

37 National Australia Bank Limited

(Australia)

Tel : 087-426386

Fax : 087-428387


Mr Lionel Lim

38 Oversea-Chinese Banking Corporation Limited

(Singapore)

Tel : 087-423381

Fax : 087-423390


Mr Bernard Fernando

39 Public Bank (L) Ltd.

(Malaysia)

Tel : 087-411898

Fax : 087-413220


Mr Alexander Wong

40 RHB Bank (L) Ltd.

(Malaysia)

Tel: 087-417480

Fax: 087-417484


Ms Toh Ay Leng

41 Schroders Malaysia (L) Berhad

(United Kingdom)

Tel : 65-6432 1000

Fax : 65-6432 1239

E-mail: NA

Mr Tan Chin Poh

42 Societe Generale

(France)

Tel : 087-421676

Fax : 087-421669


Mr Ramzan Abu Tahir

43 Standard Chartered Bank Offshore Labuan

(United Kingdom)

Tel : 087-417200

Fax : 087-417202


Mr Edward Ng Chin Swee

44 Sumitomo Mitsui Banking Corporation

(Japan)

Tel : 087-410955

Fax : 087-410959


Mr Junichi Ikeno

45 UBS AG

(Switzerland)

Tel : 087-421743

Fax : 087-421746


Ms Zelie Ho Swee Lum

46 UFJ Bank Limited, Labuan Branch

(Japan)

Tel : 087-419200

Fax : 087-419202


Mr Masayuki Kunishige



47 United Overseas Bank Limited

(Singapore)

Tel : 087-424388

Fax : 087-424389


Ms Ho Fong Kun

OFFSHORE INVESTMENT BANKS

(COUNTRY OF ORIGIN)

1 Al-Hidayah Investment Bank (Labuan) Ltd.

(Malaysia)

Tel : 087-451660

Fax : 087-451662


Mr Zakaria Abd Hamid

2 City Credit Investment Bank Limited

(Hong Kong)

Tel : 087-582268

Fax : 087-581268


Dato’ Abdul Rahman Abdullah

3 Commercial IBT Labuan Branch

(Australia)

Tel : 087-411868

Fax : 087-416818


Dr Adrian Ong Chee Beng

4 ECM Libra Investment Bank Limited

(Malaysia)

Tel : 087-408525

Fax : 087-408527


NA

5 OSK Investment Bank (Labuan) Limited

(Malaysia)

Tel : 087-581885

Fax : 087-582885


Mr Ong Leong Huat

6 RUSD Investment Bank Inc.

(Saudi Arabia)

Tel : 087-452100

Fax : 087-453100


Mr Naseeruddin A. Khan

7 Swift Investment Bank Ltd.

(Australia)

Tel : 087-452452

Fax : 087-452453


Mr Mark Bayoud



REINSURERS (COUNTRY OF ORIGIN)

1 Allianz AG General Reinsurance Branch Labuan

(Germany)

Tel : 087-417672

Fax : 087-417675


Mr Duncan Lancaster

2 Allianz AG Life Reinsurance Branch Labuan

(Germany)

Tel : 087-417672

Fax : 087-417675


Ms Sharon Tan May Kim

3 Allianz Australia Insurance Limited

(Australia)

Tel : 087-417672

Fax : 087-417675


Mr Ronnie Cheah

4 ASEAN Retakaful International (L) Ltd.

(Malaysia)

Tel : 087-451301

Fax : 087-451300


Mr Abdul Halim Nasri

5 AXA Re Asia Pacific Pte. Ltd. (Labuan Branch)

(France)

Tel : 087-427018

Fax : 087-429018


Mr Daniel Lim Teck Choon

6 B.E.S.T. Reinsurance - Far East Regional Office

(Tunisia)

Tel : 087-439977

Fax : 087-452600


Mr Riadh Karray

7 China International Reinsurance

Co. Ltd., Labuan Branch

(Hong Kong)

Tel : 087-417672

Fax : 087-417675


Mr Kenneth Ng Yu Lam

8 Cologne Reinsurance Company Plc.

(Germany)

Tel : 087-424450

Fax : 087-410279


Mr Phua Kia Ting

9 Virginia Surety Company, Labuan Branch

(USA)

Tel : 087-417672

Fax : 087-417675


Mr Lance Shay

10 Converium Ltd., Regional Reinsurance

Branch Office

(Switzerland)

Tel : 087-422004

Fax : 087-422005


Mr Din Merican

Labuan Offshore Insurance and Insurance-Related Companies(as at end February 2004)



11 Jerneh Asia Reinsurance Limited

(Malaysia)

Tel : 087-427818

Fax : 087-426818


Mr Walter Martinez

12 Labuan Reinsurance (L) Limited

(Malaysia)

Tel : 087-452886

Fax : 087-425070


Mr Majid Mohamad

13 Mitsui Sumitomo Insurance Co. Ltd.

(Japan)

Tel : 087-452748

Fax : 087-425750


Mr Danjiro Kajita

14 Mitsui Sumitomo Reinsurance Limited

(Ireland)

Tel : 087-452748

Fax : 087-452750


Mr Yasushi Aoki

15 Partner Reinsurance Company Ltd.

(Bermuda)

Tel : 087-417672

Fax : 087-417675


Mr Emil Bergundthal

16 Reliance National Asia Re, Labuan Branch

(Singapore)

Tel : 087-417672

Fax : 087-417675


Ms Lee Choon Ngoh

17 SCOR Reinsurance Asia Pacific Pte. Ltd.

Labuan Branch

(France)

Tel : 087-459008

Fax : 087-459007


Mr Teo Lai Kim

18 Singapore Reinsurance Corporation Limited

(Singapore)

Tel : 087-417672

Fax : 087-417675


Mr Mervyn Low Cheng Chwee

19 Sirius International Insurance

Corporation (publ), Labuan Branch

(Sweden)

Tel : 087-417672

Fax : 087-417675


Mr Yap Song Kng

20 The Copenhagen Reinsurance Company

Ltd., Labuan Branch

(Denmark)

Tel : 087-417672

Fax : 087-417675


Mr Cheok Chin Hock

21 Tokio Marine Global Re Limited

(Ireland)

Tel : 087-439062

Fax : 087-439063


Mr Keiichi Maruyama



22 Trust International Insurance Company

(E.C.), Labuan Branch

(Bahrain)

Tel : 087-428981

Fax : 087-428982


Mr Nabil Kotran

23 XL Re Ltd. Labuan

(Bermuda)

Tel : 087-417672

Fax : 087-417675


Mr Scott Ryrie

GENERAL INSURERS (COUNTRY OF ORIGIN)

1 Federal Insurance Company, Labuan Branch

(USA)

Tel : 087-417672

Fax : 087-417675


Mr Mark Thomas Lingafelter

2 HIH Casualty and General Insurance Limited

(Australia)

Tel : 03-20953388

Fax : 03-20947005

E-mail: NA

Mr Gan Ah Tee

3 MNI Offshore Insurance (L) Ltd.

(Malaysia)

Tel : 087-417672

Fax : 087-417675


Mr Ahmad Sabri Ismail

4 PT. Asuransi Jasa Indonesia, Labuan Branch

(Indonesia)

Tel : 087-417672

Fax : 087-417675


Mr Syarifudin Jajang

LIFE INSURERS (COUNTRY OF ORIGIN)

1 Mayban Life International (Labuan) Ltd.

(Malaysia)

Tel : 087-582588

Fax : 087-583588


Mr Mohd Willieuddin Lim Johan Lim

2 MNI Life International (L) Ltd.

(Malaysia)

Tel : 087-417672

Fax : 087-417675



COMPOSITE INSURERS (COUNTRY OF ORIGIN)


(Malaysia)

Tel : 087-451301

Fax : 087-451300



2 MAA International Assurance Ltd.

(Malaysia)

Tel : 087-422007

Fax : 087-422008


Mr James Beltran

CAPTIVES (COUNTRY OF ORIGIN)

1 ASEAN Forum G-G, Inc.

(Malaysia/Philippine/Indonesia)

Tel : 087-417672

Fax : 087-417675


Ms Annie Undikai

2 Asia Century Re Limited

(Malaysia)

Tel : 087-426686

Fax : 087-426010


Mr Paul S K Lam



3 Asia Pacific Insurance Ltd.

(Australia)

Tel : 087-417672

Fax : 087-417675


Mr Raymond Wong

4 AWCK International Insurance

Company Ltd. (Hong Kong)

Tel : 087-427018

Fax : 087-429018


Mr Au Cho Chu

5 BGC Insurance (L) Limited

(Australia)

Tel : 087-417672

Fax : 087-417675


Mr Stephen Robertson

6 BIB Asia (L) Berhad

(Malaysia)

Tel : 087-427018

Fax : 087-429018


Mr George Loh Voon Seong

7 Brighton Assurance Ltd.

(Australia)

Tel : 087-417672

Fax : 087-417675


Mr Raymond Wong

8 E-Cash Insurance Inc. Limited

(Australia)

Tel : 087-453858

Fax : 087-453616


Mr Peter Kent Searle

9 Finex Insurance Limited

(Thailand)

Tel : 087-426686

Fax : 087-426010


Mr Raymond Wong

10 Genting (Labuan) Limited

(Malaysia)

Tel : 087-427018

Fax : 087-429018


Mr Quah Chek Tin

11 GHR Risk Management (Labuan) Limited

(Malaysia)

Tel : 087-427018

Fax : 087-429018


Mr Quah Chek Tin

12 Jym Assurance (L) Ltd.

(Malaysia)

Tel : 087-423828

Fax : 087-417242


Mr Raymond Wong

13 Kinabalu Insurance Company Limited

(Malaysia)

Tel : 087-426686

Fax : 087-426010


Mr Paul S K Lam

14 KLK Assurance (Labuan) Limited

(Malaysia)

Tel : 087-417672

Fax : 087-417675


Mr Tham Chee Phing



15 New World Insurance Company (L) Ltd.

(Hong Kong)

Tel : 087-416122

Fax : 087-422122


Mr Wong Hei

16 Nichiryo (Malaysia) Sdn. Bhd.

(Japan)

Tel : 087-417672

Fax : 087-417675


Mr Shigeru Sase

17 Risk Retention Partners Limited

(Malaysia)

Tel : 087-423828

Fax : 087-417242


Mr Raymond Wong

18 Sime Darby Insurance Pte. Ltd.

(Malaysia)

Tel : 087-417672

Fax : 087-417675


Mr Mohamed Nor Abdul Hamid

19 SKS Assurance Company Ltd.

(Malaysia)

Tel : 087-417672

Fax : 087-417675


Mr Raymond Wong

20 Something Re.Co., Ltd.

(Japan)

Tel : 087-427018

Fax : 087-429018


Mr Toshimori Mae

21 The Mutual Assurance Co. Plc

(Malaysia)

Tel : 087-417672

Fax : 087-417675


Mr Raymond Wong

22 Warisan Captive Incorporated

(Malaysia)

Tel : 087-426686

Fax : 087-426010


Mr Tan Eng Guan

INSURANCE BROKERS (COUNTRY OF ORIGIN)

1 AON Natural Resources Asia Ltd.

(United Kingdom/Hong Kong)

Tel : 087-417672

Fax : 087-417675


Mr John Charles Lee

2 Armenwoodberg Incorporated

(Sweden)

Tel : 087-417672

Fax : 087-417675


Mr Armen Alex Babayan Fard & Ms Linda Susan Wood

3 Arthur J Gallagher Asia (L) Bhd.

(USA)

Tel : 087-417672

Fax : 087-417675


Mr Silvius Von Lindeiner

4 Asure Re Broker Pte Ltd

(North Korea/Singapore)

Tel : 087-417672

Fax : 087-417675


Mr Y T Zhu



5 BIB Asia (L) Berhad

(Malaysia)

Tel : 087-427018

Fax : 087-429018


Mr George Loh Voon Seong

6 BMS Asia Intermediaries Ltd.

(United Kingdom)

Tel : NA

Fax : NA

E-mail: NA

7 Citystate Risk Management (L) Bhd.

(Singapore)

Tel : 087-417672

Fax : 087-417675


Mr Anthony Tan

8 CRS Insurance Services (L) Limited

(United Kingdom)

Tel : 087-417672

Fax : 087-417675


Mr Jeremy C. Camps

9 Delphi International Insurance Broker Ltd.

(Sweden)

Tel : 087-417672

Fax : 087-417675


Mr Hans Lennart Bjornered

10 EFS (Labuan) Ltd.

(United Kingdom)

Tel : 087-419661

Fax : 087-419662


Mr Stuart Robert Williamson

11 Financial Partners International

(Labuan) Limited

(United Kingdom)

Tel : 087-427018

Fax : 087-429018


Mr Eric Jack Jordan

12 Global International Financial Services Ltd.

(Malaysia)

Tel : NA

Fax : NA

E-mail: NA

13 Global Strategies (L) Ltd.

(United Kingdom)

Tel : 087-417672

Fax : 087-417675


Dr Alan King

14 Guy Carpenter & Co Labuan Ltd.

(USA)

Tel : 087-417672

Fax : 087-417675


Mr Duncan Garland

15 Heath Lambert Asia Pacific Ltd.

(United Kingdom)

Tel : 087-417672

Fax : 087-417675


Mr Lee Jeffrey Warner

16 Independent Investment Advisors Ltd.

(Sweden)

Tel : 087-411236

Fax : 087-411235


Mr Roger Eric Spetz



17 Inter-Alliance International

(South East Asia) Ltd.

(BVI)

Tel : 087-451580

Fax : 087-451582


Mr George Donald Smith

18 Inter-Alliance International

Corporate Benefits Ltd.

(Malaysia)

Tel : 087-451580

Fax : 087-451582


Mr Benjamin Charles Bennet

19 International Insurance Brokers Limited

(Singapore)

Tel : 087-427018

Fax : 087-429018

E-mail: wunph@singnet .com.sg

Mr Wun Pak Hay

20 J.B. Boda Insurance Services (L) Bhd

(Singapore)

Tel : 087-427018

Fax : 087-429018


Mr Tiruverkadu Prakash Rao

21 J.G. Global Consulting Ltd.

(United Kingdom)

Tel : 087-427018

Fax : 087-429018


Mr Gordon Coates

22 JLT Risk Solutions Ltd.

(Hong Kong)

Tel : 087-417672

Fax : 087-417675


Mr Julian Hodge

23 Lloyds TSB Malaysia Limited

(United Kingdom)

Tel : 087-418918

Fax : 087-411928


Mr Barry Francis Lea

24 Mason Laroche International Ltd.

(United Kingdom)

Tel : 087-427018

Fax : 087-429018


Mr Clive Graham Mcdonald

25 Miller Insurance Services (Labuan) Limited

(United Kingdom)

Tel : 087-417672

Fax : 087-417675


Mr Jonathan Philip Garnett

26 National Marine Asia Ltd.

(Brunei/BVI)

Tel : 087-417672

Fax : 087-417675


Mr Aminnudin Nasuha

27 New World Risk Management (L) Ltd.

(BVI)

Tel : 087-416122

Fax : 087-422122


Mr Wong Hei

28 Orion International Ltd.

(United Kingdom)

Tel : 087-417672

Fax : 087-417675


Mr Steven Robert John Baker



29 Pacific World Reinsurance Brokers Limited

(Malaysia)

Tel : 087-426686

Fax : 087-426 010


Mr Paul Lam Sai Kwong

30 Pana Management (L) Ltd.

(Singapore)

Tel : 087-427018

Fax : 087-429018


Mr Paulson A H Lum

31 Phoenix International Investments

(Labuan) Ltd.

(United Kingdom)

Tel : 087-427018

Fax : 087-429018


Mr Roger Gumbrell

32 PWS East Asia (L) Ltd.

(Singapore/Malaysia)

Tel : 087-417672

Fax : 087-417675


Mr Ahmad Farouk Faizi

33 Select Asset Management (L) Limited

(United Kingdom)

Tel : 087-417672

Fax : 087-417675


Mr George Alfred Lindsay

34 Towry Law (SE Asia) Limited

(United Kingdom)

Tel : 087-417672

Fax : 087-417675


Mr Nigel Harris

35 Uni Financial Reinsurance Services (L) Ltd.

(Singapore)

Tel : 087-417672

Fax : 087-417675


Mr Leong Weng Kee

INSURANCE MANAGERS (COUNTRY OF ORIGIN)

1 Labuan Insurance Management Services Limited

(Malaysia)

Tel : 087-427018

Fax : 087-429018


Ms Jocelyn Yeo


(Ireland)

Tel : 087-452748

Fax : 087-452750


Mr Yasushi Aoki

3 MNI Offshore Insurance (L) Ltd.

(Malaysia)

Tel : 087-417672

Fax : 087-417675



4 New World Insurance Management (L) Ltd

(Malaysia)

Tel : 087-422122

Fax : 087-416128


Mr Wong Hei

5 Pacific World Insurance Managers Limited

(Malaysia)

Tel : 087-426686

Fax :087-426010





INSURANCE UNDERWRITERS (COUNTRY OF ORIGIN)


(Malaysia)

Tel : 087-451301

Fax : 087-451300



2 Catlin Labuan Limited

(Bermuda)

Tel : 087-417672

Fax : 087-417675


Mr Raymond Wong

3 Labuan Insurance Management Services Limited

(Malaysia)

Tel : 087-427018

Fax : 087-429018


Ms Jocelyn Yeo

4 Marsh Management Services (L) Limited

(Bermuda)

Tel : 087-417672

Fax : 087-417675


Mr Vittorio Pannuzzo


(Ireland)

Tel : 087-452748

Fax : 087-452750


Mr Yasushi Aoki

6 MNI Offshore Insurance (L) Limited

(Malaysia)

Tel : 087-417672

Fax : 087-417675



7 New World Insurance Management (L) Ltd.

(Malaysia)

Tel : 087-416122

Fax : 087-422122


Mr Wong Hei

8 Pacific World Insurance Managers Limited

(Malaysia)

Tel : 087-426686

Fax : 087-426010





1 Amanah Raya (Labuan) Limited

Tel : 087-581966

Fax : 087-582966


Mr Zainudin Suhaimi

2 Al-Aman Trust Services Limited

Tel : 087-423828

Fax : 087-417242


Mr Raymond Wong

3 BIMB Trust Limited

Tel : 087-451806

Fax : 087-451808


Ms Normala Mat Som

4 Bumiputra-Commerce Trust Limited

Tel : 087-414252

Fax : 087-411855


Mr Nor Azli Mohd Noor

5 EC Trust (Labuan) Bhd.

Tel : 087-453858

Fax : 087-453616


Mr Peter Kent Searle

6 Ernst & Young Trust Ltd.

Tel : 087-413524

Fax : 087-414526


Mr Foon Chee Meng

7 Equity Trust (Labuan) Limited

Tel : 087-423828

Fax : 087-417242


Mr Raymond Wong

8 ITMC Fiduciary Limited

Tel : 087-416518

Fax : 087-417655


Mr Colin Paul Seah

9 KPMG Labuan Trust Company Sdn Bhd

Tel : 087-415467

Fax : 087-414781


Mr John Ho Shui Fah

10 Law & Commerce Sdn Bhd

Tel : 087-421644

Fax : 087-421646


Mr Ahmad Kamil Mohd Yusop

11 LGT Trust Labuan Ltd.

Tel : 087-443118

Fax : 087-441288


Mr Moritz Gubler

12 Mayban International Trust (Labuan) Berhad

Tel : 087-410739

Fax : 087-410741


Ms Amy Liew Siew Mey

Labuan Trust Companies(as at end February 2004)



13 Noblehouse International Trust Limited

Tel : 087-410745

Fax : 087-419755


Mr Chin Chee Kee

14 PB Trust (L) Ltd.

Tel : 087-412336

Fax : 087-451193


Mr Raymond Liew

15 Portcullis Trust (Labuan) Limited

Tel : 087-439191

Fax : 087-439193


Mr Foo Chee Thong

16 RHB International Trust (L) Ltd.

Tel : 087-417480

Fax : 087-417484


Ms Noreen Wong Ming Li

17 Shearn Skinner Trust Company Ltd.

Tel : 087-414073

Fax : 087-413281


Mr Mathew Willie

18 Sititrust Administrator Limited

Tel : 087-421663

Fax : 087-421662


Ms Siti Hawa Saat

19 Trustco Labuan Ltd.

Tel : 087-453288

Fax : 087-451288


Mr Geoffrey Chang Tze Weng

20 ZI Labuan Trust Company Sdn Bhd

Tel : 087-451688

Fax : 087-453688


Mr Azizan Mohd Som



Labuan International Financial Exchange Inc

Unit Level 7(B), Main Office Tower

Financial Park Labuan, Jalan Merdeka

87000 Labuan Federal Territory, Malaysia

Tel: 087-451359

Fax: 087-451379


Website: www.lfx.com.my

Mr S Loganathan

LISTING SPONSORS

1 Alliance Merchant Bank Berhad

Tel : 03-26927788

Fax : 03-26919028


Ms Hwang Mei Lyn

2 AmInternational (L) Ltd.

Tel : 087-413133

Fax : 087-425211



3 Aseambankers Malaysia Berhad

Tel : 03-20591888

Fax : 03-20706521


Ms Rohaya Mohd Yusof


Tel : 087-451802

Fax : 087-451800


Mr Mohamad Najib Shaharuddin

5 CIMB (L) Limited

Tel : 03-20848888

Fax : 03-20950080



6 EQ Funds Services (Asia) Limited

(Formerly known as Insinger Funds Services (Asia)

Limited)

Tel : 087-423828

Fax : 087-417242


Ms Thang Mun Yee

7 K & N Kenanga Holdings Berhad

Tel : 03-21621490

Fax : 03-21647195


Mr Mohamad Hatta Yahaya

Labuan International Financial Exchange(as at end February 2004)

LABUAN INTERNATIONAL FINANCIAL EXCHANGE


1 Aseambankers Malaysia Berhad

Tel : 03-20591888

Fax : 03-20706521


Ms Rohaya Mohd Yusof


Tel : 087-451802

Fax : 087-451800


Mr Iam Nazir Ibrahim

3 CIMB (L) Limited

Tel : 03-20848888

Fax : 03-20950080



4. K & N Kenanga Holdings Berhad

Tel : 03-21621490

Fax : 03-21647195


Mr Mohamad Hatta Yahaya

Trading Agents(as at end February 2004)

LABUAN INTERNATIONAL FINANCIAL EXCHANGE

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Documents

LABUAN, MALAYSIA â€¢