Authority Member of the Labuan Offshore Financial Services Authority (LOFSA) Dato' Mohd Azlan Hashim said, this could be done by capitalising on their inherent strengths.
"With technology as a driver, offshore financial centres have to continue to develop their capabilities, human and technology resources in outstanding, innovative ways to better serve market requirements," he said.
Noting that there are over 70 offshore financial centres world wide currently, he said each should develop its own niche area to remain competitive.
Mohd Azlan, who is also Chairman of the Board of Labuan International Financial Exchange (LFX) was speaking at the opening of the Offshore Institute Asia Pacific Conference 2002 in conjunction with Labuan Week organised by LOFSA.
The fundamental advantages of offshore financing, investment and related activities in offering facilitative tax regimes, better access to capital markets and asset protection can continue to be competitively enhanced.
"There should be greater focus in the innovative packaging of offshore products and services to fully derive the benefits of such facilitative tax regimes, world wide access to capital markets and asset protection - as offered by offshore financial centres," he said
On the current situation facing the industry, he said that it was one of continuing misperceptions on the practices and regulations of offshore centres.
"As stakeholders of the offshore financial centres, we should continue to review the reasons and causes for these misperceptions. More than this, we have to closely review recent legislative and regulatory reforms initiated by interest groups on offshore centres.
"This is key, as some of these recommendations may even affect the fundamental advantages offered by offshore centres for their continued overall competitiveness," he said.
Mohd Azlan said as part of the efforts in managing present challenges collectively, offshore financial centres should further consider:
- upgrading legislative infrastructure and adopting a more pro-active and pre-emptive approach in developing future legislation
- learning to cope with the increasing sophistication and requirements of the market by developing high quality businesses, and
- enhancing the levels of investment and quality in its human resources and technological capabilities.
"This will ensure that there is objective and consistent supervision which will mitigate against misperception of lack of regulations and control, whilst minimizing disruptions to stable business growth," he said.
On the overall progress of the Labuan International Offshore Financial Centre (Labuan IOFC), Mohd Azlan said there is constant effort to undertake strategic and competitive initiatives to ensure that the Labuan IOFC is amongst the world's leading offshore financial centres.
"It is a key objective of the Labuan IOFC to demonstrate that as an offshore financial centre - it is well regulated and compliant with international standards in offering innovative products and services in meeting, perhaps even exceeding, market requirements.
"With the objective of continued enhancement in its legislative and regulatory framework, technology and market infrastructure - the Labuan IOFC will continue to be proactive, to invest appropriate resources and to seek a level playing field," Mohd Azlan said.
Since its establishment in 1990, the Labuan IOFC has made encouraging progress with some 3,500 companies incorporated, including 105 insurance and insurance-related companies, 49 banks, 18 trust companies, 22 leasing companies and 35 fund managers.
He said in conduct and practice, the Labuan IOFC has received favourable recognition by the Organisation for Economic Co-operation and Development (OECD) as well as the Financial Action Task Force. The Labuan IOFC has also been ranked favourably by the Financial Stability Forum along with more established jurisdictions.
On the Labuan International Financial Exchange (LFX), Mohd Azlan said LFX provides unlimited opportunities for global companies and investors by offering an efficient, cost effective access to the capital market with the flexibility of listing multi-currency securities and instruments.
"With the support of LOFSA and participants of the Labuan IOFC, LFX has developed progressively since its establishment in the year 2000 with a current listing of nine (9) financial and equity related instruments.
"These instruments range from debt securities to open-ended investment funds, issued by both Malaysian and international issuers. These instruments are based on both conventional and Syariah principles, which is testimony to the comprehensive products and services, and choice offered by LFX to investors," he said
Mohd Azlan added as part of its on-going development, LFX is also positioning itself as a surrogate exchange for countries with either limited resources to set up an exchange or limited number of commercial enterprises to justify having an exchange.
"In this respect, LFX offers an efficient, cost effective mechanism for these countries to enable their corporates to access the capital markets," Mohd Azlan said.
The Offshore Institute Asia Pacific Conference is jointly sponsored by LOFSA, the Association of Offshore Banks, Association of Labuan Trust Companies, Labuan International Insurance Association, LFX and co-sponsored by Malaysian Airlines, The Edge and Bloomberg.
