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Making Labuan the centre of shipping business

April 23, 2012

What does Labuan have to attract and assure foreign ship owners that Malaysian flag is the right choice to avail with?

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By Siti Nafsiah Ahmad Shaffie

Most people know that Labuan is a major international business financial centre in the Asian region.

What does Labuan have to attract and assure the foreign ship owners that Malaysian flag is the right choice to avail with?

The island of Labuan is strategically located in the middle of Asia-Pacific region and an increasingly popular choice of International Business Financial Centre jurisdiction.

It is also located in the waters of the South China Sea where it is close to major shipping routes, free from natural disasters such as typhoons and hurricanes.

Labuan also has a good port, which has deep anchorage of about 11 to 21 meter draft. The port is well maintained by Labuan Liberty Port and offers top facilities to any vessels using their port.

Apart from the nature of Labuan itself, there are also other facilities which can attract ships or vessels owners to use Labuan for the Malaysian International Ship Registry (MISR) registration purposes, such as follows:

  • Labuan has excellent infrastructures such as hotels, communications services and transportation services;
  • World class shipping support services such as shipyard, ship care, floating repair, hull cleaning within Labuan water, direct supply of food, fuel supply to vessel and garbage disposal services; and
  • Competent and professional Marine Department officers to handle the registration and other matters related to the ships or vessels.

Other benefits

  • There are also other benefits that ship or vessel owners can enjoy when using Labuan for the MISR registration purposes:
  • Labuan is one of the safest place to visit in the region, as it is near to the Malaysian Navy base and air force base;
  • Labuan is Malaysia’s most established duty free island. A host of value-adding and manufacturing activities can commence in Labuan.

Labuan has been declared as one of the country’s oil and gas hub. This will further boost the oil and gas industries in Labuan;

The Malaysian government has introduced many incentives for businesses conducted through the island of Labuan. These include a reduction or exemption of income tax and stamp duty fees for individuals and companies doing business in Labuan;

Setting up a company is a quick and simple exercise, and approvals come from a one-stop regulator, the Labuan Financial Services Authority (Labuan FSA);

Ship owner may enjoy the tax regime of 3% tax from net profit or a flat rate of RM20,000. To enjoy the said tax treatment, the shipping activity comply with the Labuan Business Activity Tax Act 1990;

Labuan is the centre of International Business Financial Centre (IBFC) in Asian region. This has put Labuan as one of the premier IBFCs in Asia Pacific.

With an attractive tax regime and incentives, competitive cost for the formation of Labuan company without sacrificing quality, with access to expertise and world-class infrastructure and competitive ship registration fees, Malaysia International Ship Registry (MISR) has the potential to attract shipping companies to use Labuan IBFC as the centre for their shipping business.

For more information about Labuan shipping activities in Labuan, you can log on to www.labuanfsa.gov.my and www.labuanibfc.my.

The writer is a registered ship manager at Labuan Borneo Trustees Limited. She is responsible to assist ship owners to register their ships or vessels under the MISR.

Also read:

What is Malaysia International Ship Registry?


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