The COVID-19 pandemic posed an unprecedented challenge to the global market in 2020. The economic repercussions of the outbreak were profound as it had extended far beyond a public health crisis to having far-reaching impact on international economic activities, disrupting global business and supply chains. The pandemic had in fact exacerbated an already fragile international market, due to persistent geopolitical tension and the volatile oil market of recent years.
For Labuan IBFC, the year 2020 marked the Centre's 30th anniversary. It was also a tumultuous year navigating through the challenging pandemic and economic uncertainties. Despite the ongoing anxiety about the future, there are solid reasons for cautious optimism on the standing and growth of Labuan IBFC going forward. Faced with the spillover implications from prevailing global conditions, Labuan IBFC remained resilient in 2020 underpinned by its strong ecosystem and relatively stable financial market. This is a culmination of the various initiatives that the Centre has pursued in the past to achieve greater sustainability, innovation, and the trust of international investors, despite external adversities. In fact, it was encouraging to observe that Labuan IBFC continued to draw interest from international prospects ranging from conventional banking and insurance licensees to those from key growth verticals such as digital financial services and captives.
With this continued support and confidence in the jurisdiction, Labuan IBFC continued to be an attractive market for financial intermediation in the region with more than 800 licensed financial institutions operating currently. For 2020, the market saw inflow of new entrants amidst the current challenging times. Indeed this holds testament to the Centre's growing prominence in Asia.
Adaptability has never been more important than in 2020 and beyond, in particular in addressing new challenges. Both the industry and the Authority had acclimatised to the new norms which included adopting remote working arrangements via digital solutions. With this, the Centre continued to operate with minimal disruptions and served clients seamlessly across markets despite travel restrictions.
Agility was another factor that was also key for the Authority in 2020. With increasing adversity in business due to the pandemic, the Authority took pre-emptive measures by issuing temporary regulatory reliefs. To a certain extent, this alleviated some of the regulatory burdens and operational difficulties while the industry weathered through the business strains caused by the pandemic. In turn, the said reliefs provided avenues for the Labuan financial institutions to offer flexibilities to their own business in order to better facilitate clients. With such prompt and market sensitive measures, the market and prospective investors were assured of Labuan IBFC's standing as a stable and business-conducive Centre.
Alignment to global developments is important to ensure Labuan IBFC industry continues to thrive. For 2020 and beyond, we see a new competitive landscape lined with new business potential and accelerating innovation ride on these dynamics and welcomed digital propositions from prospects that were offered via the Centre. There has been a strong influx of new fintech-related business, and this positive momentum is expected to continue. It is encouraging to note that these digital prospects range from global corporations, small and medium sized enterprises and technology providers – all looking to expand their digital business reach in Asia via Labuan IBFC.
Since the Centre's inception, the Labuan financial industry has evolved and progressed into a stable and secure international financial centre with growing prominence. Labuan IBFC takes pride in its pragmatic market approach which emphasises on proportionality in regulating and supervising the market based on risk materiality. This has worked well for the Authority's balancing act for the past three decades between maintaining market stability and orderliness, versus facilitating business growth and innovations. All these were undertaken with due regard to conformity to international standards and best practices, thereby securing Labuan IBFC's solid reputation in international assessments as well as amongst peer international financial centres. These are the features that make the Centre an attractive, business facilitative hub, and a well-regulated financial centre amongst global investors.
As part of the next phase of market maturity, it has been encouraging to observe cross-pollination of businesses between Labuan entities. Indeed, it is only natural for the Centre to grow further with the increasing intra-Labuan business activities as more synergies between market players were realised. This augurs well for the Centre as it not only fosters closer collaboration between different sectors but also enhances the business vibrancy of the market.
For 2021, Labuan IBFC will continue to open its doors to international businesses and investors looking to operate in a sound and stable business environment. With the challenges and opportunities looming ahead, appropriate strategies with the theme "Enhancing the Sustainability and Relevancy of Labuan IBFC" have been formulated to propel the Centre to the next level. The growth prospects in the near term have remained cautiously optimistic. With the international market already on its path of recovery with the initiation of mass COVID-19 vaccinations, the global economy will shift towards a positive outlook – giving the market renewed confidences and growing positivity. Labuan IBFC will continue to be proactive and ever ready to seize opportunities as the international business climate improves in 2021. With the firm support of the Government and the industry, Labuan IBFC will continue to intermediate business and investment flows within Asia.
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