Friday, 28th September, 2001

Labuan As Asia’s Islamic Banking, Finance Centre
By: Sohan Das

Labuan: Member of Parliament Datuk Suhaili Abdul Rahman while lauding the Labuan Offshore Financial Services Authority (LOFSA) in developing a smart partnership with Universiti Malaysia Sabah (UMS) and Universiti Utara Malaysia (UUM) is hosting the first International conference on Islamic Financial System which would see the best brains in the industry meeting here. He said “LOFSA’s next course of action is to have road shows to aggressively market the Islamic System.”

Suhaili who was a witness to the MOU signed for the conference said “conventional offshore banking had almost peaked here unless new economic developments take place and therefore for the island to enjoy another cycle of boom in offshore finance, we have to attract the millions of fund lying idle.”

He said what he has been told was that at least 1 trillion USD belonging to individuals and Islamic financial institutions were invested in conventional banking systems.

“And there was a case of a bank with USD 2 billion left idle in it’s accounts. We have to established why the funds were not invested in Islamic banking and financial instruments. Was it because of scepticism in their syariah compliance, or was it due to other reasons,” Suhaili said.

He said that Malaysia had made a head start in Islamic banking on the domestic scene “we should have the capability to break into the International stage with the experience we have.”

Expressing hope that the International conference held here would come up with measures to be taken to attract the Islamic funds in the conventional system, Suhaili said that Labuan should considered a perfect IOFC to invest such funds because it offered the lowest tax. He said in Luxembourg, the tax rate was 40pc and staff salaries were highest in the world next to Switzerland, while in the case of Dublin it was 20 per cent “while in IOFC Labuan it was merely 3 pc or RM20,000 per year, we therefore have our strengths, and I am confident that with the effort undertaken by LOFSA, Labuan could emerge as the Luxembourg of Asia in Islamic Banking,” Suhaili said.

The International Conference on Islamic banking and finance would be held here from October 31 to November 1 and some 15 of them, who are mostly University professors, would speak on the subject.