SHENG commented on Hong Kong, Shanghai and Singapore having benefited from their huge proximity to the economic growth hinterlands of China, Indonesia.
While Labuan with just about 100,000 population with the lower dynamism of Borneo’s economies next to it, underperforms without attracting the influx of international funds.
“Hong Kong is a pass-through centre. They manage wealth for you, but the actual industry has to be in China. Now, as an international financial centre, you need to capture real business, not just the financial business. This is very critical.
“So for us to put it in Labuan. You know Labuan was of course part of the Straits Settlements. You know, look at Straits Settlements. You have Penang, Singapore, Malacca and Labuan.
And to some extent, Hong Kong was part of that British financial centre chain. But Labuan was not so important, because you know it only had coal, and when the ships didn’t need coal, Labuan fell apart as the Borneo economy didn’t grow that fast.”“In Shanghai, it has state-owned banks, state-owned enterprises, and the stock market was previously state-owned. In Singapore, you know, it is successful because of the money coming out of China, Indonesia and Malaysia.
They all go to Singapore. Initially, Singapore did not capture much from China because all the Chinese funds went to Hong Kong. But today, you know, Singapore is benefiting.
If the Middle East got problems, money will fly to Singapore. So they’ve understood how to do this. But Singapore is still a pass-through centre. The real business is in Asia,” Sheng explained.
Aware of the widely held perception that offshore financial centres are potential breeding grounds for financial crime, the Labuan Financial Services Authority (Labuan FSA) has stressed that Labuan is not a port of entry for money laundering and Labuan International Business and Financial Centre (Labuan IBFC) currently has a strong onboarding policy for companies, as well as robust laws and Anti-Money Laundering/Countering Financing of Terrorism (AML/CFT) guidelines that comply with international standards.
Now the Labuan financial services regime has been designated by the OECD’s Forum on Harmful Tax Practices as “not harmful,” indicating that the Labuan tax framework is now compliant with global standards.
Labuan can be an attractive wealth management destination for many reasons, including its physical location. Being strategically located in the centre of the Asia Pacific region, Labuan shares the same time zone with key Asian cities and financial hubs such as Singapore, Shanghai and Hong Kong.
Labuan could be an ideal jurisdiction for certain private clients and their advisers wishing to set up wealth management structures in the Asia Pacific region.
Sheng stressed on the vital image of clean and transparent reputation that countries like Singapore enjoys to be attractive as a reputable international financial centre.