International-Business-Dr-R-Chandran-E-book
International-Business-Dr-R-Chandran-E-book International-Business-Dr-R-Chandran-E-book
72 International Business- Dr. R. Chandran • 1992 – Stock Exchange of Singapore (SES) granted membership to seven foreign brokerage houses, allowing them to trade directly on the local market. • 2002 – Offshore transactions became equivalent to domestic transactions. • 2006- offshore banks started investing huge money in other Asian countries like India, Sri Lanka, Indonesia, Thailand and Vietnam. With a view to creating a more level playing field for local and foreign banks, the maximum limit for offshore banks for Singapore dollar credit facilities at any one time to non-bank residents was raised from S$ 200 million to S$ 300 to S$ 1 billion, with a view to boosting Singapore as a financial centre. In 2004, many of the investors and joint venture partners avail of offshore facilities to invest in the mega projects of South Asia and South East Asia. Malaysia Malaysia established an International Offshore Financial Centre (IOFC) in Labuan in 01991. The Offshore Banking Act 1990 provides a regulatory framework for offshore banking operations in Labuan. As confidentiality is the hallmark of an offshore financial centre, an offshore bank has to maintain strict secrecy in the affairs of its customers. Offshore banks are expected to observe a strong self-regulatory code of conduct which places emphasis on ‘knowing your customer.’ The Labuan Offshore Financial Services Authority (LOFSA) established in 1996, is the single regulatory authority with the following roles and functions: • To be responsible for setting national objectives, policies and priorities for the orderly development and administration of the Labuan IOFC. • To be responsible for the promotion and development aspects and recommend new measures to the government to speed up growth and development of the Labauan IOFC. • To supervise the activities and operations of the offshore financial service industry in Labuan and to process applications to conduct business in the Labuan IOFC, specially in offshore banking, offshore insurance and insurance related business, offshore trust and fund management, incorporating and registering of offshore companies as well as for setting up of Labuan trust companies. Only for Private Circulation
73 International Business- Dr. R. Chandran • To administer and enforce offshore financial services legislation and work with the offshore players in Labuan to promote offshore financial services. The Labuan IOFC operates in a free exchange control environment. Offshore companies are given a non-resident status for exchange control status. Offshore companies can continue to transfer funds freely to and from their accounts outside Malaysia without approval from the central bank of Malaysia. The foreign currency accounts held with the offshore banks are not considered as external accounts and are not subject to exchange control measures. The offshore banks are also allowed to issue financial and nonfinancial guarantees to residents in Ringgit. They can receive fees and commissions related to guarantee in Ringgit. The holding requirement of one year is not applicable to assets in Ringgit held in collateral by the offshore banks for credit facilities granted to residents. The payments of existing loans and guarantees in foreign currency by Malaysian residents to the offshore banks do not require prior approval from the Central Bank. In Labuan no tax is imposed on the income of offshore companies that are non-trading companies, and offshore trading companies enjoy a low tax regime with a rate of only 3% of their net income of RM 20,000 (USD 8000). Other benefits and incentives include: • No tax on offshore companies carrying out offshore non-trading activities such as holding of securities, shares, immovable properties and taking of loans and placing of deposits. • No withholding tax for dividends paid by an offshore company, distribution from an offshore trust, royalties received from an offshore company by a non-resident, interest earned on deposits with offshore banks, and interest earned on loans to Malaysians. • No inheritance, death, or estate duty. • Exemption from paying stamp duty on all offshore business transactions. • Double tax treaty agreements signed with over 40 other countries and investment guarantee agreements with 50 countries. Mauritius Mauritius is fast becoming an international financial and business centre. Offshore transactions are normally conducted with non-residents and in currencies other than the Mauritius Rupee. Mauritius has focused its offshore business on specific areas such as investment funds, investment holdings and international trading. The island is becoming an attractive Only for Private Circulation
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72<br />
<strong>International</strong> <strong>Business</strong>- <strong>Dr</strong>. R. <strong>Chandran</strong><br />
• 1992 – Stock Exchange of Singapore (SES) granted membership to seven<br />
foreign brokerage houses, allowing them to trade directly on the local<br />
market.<br />
• 2002 – Offshore transactions became equivalent to domestic transactions.<br />
• 2006- offshore banks started investing huge money in other Asian<br />
countries like India, Sri Lanka, Indonesia, Thailand and Vietnam.<br />
With a view to creating a more level playing field for local and foreign<br />
banks, the maximum limit for offshore banks for Singapore dollar credit<br />
facilities at any one time to non-bank residents was raised from S$ 200<br />
million to S$ 300 to S$ 1 billion, with a view to boosting Singapore as a<br />
financial centre. In 2004, many of the investors and joint venture partners<br />
avail of offshore facilities to invest in the mega projects of South Asia and<br />
South East Asia.<br />
Malaysia<br />
Malaysia established an <strong>International</strong> Offshore Financial Centre (IOFC) in<br />
Labuan in 01991. The Offshore Banking Act 1990 provides a regulatory<br />
framework for offshore banking operations in Labuan. As confidentiality is<br />
the hallmark of an offshore financial centre, an offshore bank has to<br />
maintain strict secrecy in the affairs of its customers. Offshore banks are<br />
expected to observe a strong self-regulatory code of conduct which places<br />
emphasis on ‘knowing your customer.’<br />
The Labuan Offshore Financial Services Authority (LOFSA)<br />
established in 1996, is the single regulatory authority with the following<br />
roles and functions:<br />
• To be responsible for setting national objectives, policies and priorities<br />
for the orderly development and administration of the Labuan IOFC.<br />
• To be responsible for the promotion and development aspects and<br />
recommend new measures to the government to speed up growth and<br />
development of the Labauan IOFC.<br />
• To supervise the activities and operations of the offshore financial service<br />
industry in Labuan and to process applications to conduct business in the<br />
Labuan IOFC, specially in offshore banking, offshore insurance and<br />
insurance related business, offshore trust and fund management,<br />
incorporating and registering of offshore companies as well as for setting<br />
up of Labuan trust companies.<br />
Only for Private Circulation
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