The oil and gas industry is central to Malaysia’s economic growth, contributing a significant portion (one-fifth) to the country’s overall economic output (GDP) in the past decade. This growth is fueled by a rising demand for commodities, driven by initiatives like green transformation and improved infrastructure, which requires more commodity inputs. As the global population is expected to reach nearly 1.5 billion by 2030, the demand for resources is set to increase.
The Asia Pacific region, particularly Malaysia and Indonesia, is expected to become more active in the market over the next five years. With new investment opportunities in these sectors, many global traders are now taking advantage of the GIFT incentives and choosing Malaysia as their regional base. This strategic move allows them to access growing markets in the Asia Pacific and beyond, capitalising on the potential for expansion.
What is the Global Incentives for Trading (GIFT) Program?
The Global Incentives for Trading (GIFT) Program is an incentive scheme crafted for Labuan International Commodity Companies (LITC) to leverage Malaysia as the international trading hub for qualifying activities.
Commodities that can be traded under the GIFT Program
A qualifying activity means the trading of physical products and related derivative instruments such as: -
- Petroleum and petroleum-related products including liquefied natural gas (LNG)
- Minerals
- Agriculture products
- Refined raw materials
- Chemicals
- Base minerals
- Coals
Why participate in the GIFT program?
- Malaysia’s strategic location makes it an ideal base for international companies to expand into Asia Pacific.
- Offers a viable entry point into Malaysia’s expanding upstream and downstream segments of the oil and gas industry.
- Access to a wide pool of multilingual skilled professionals and technical workforce.
- Access to world-class banking and financial services.
Why Choose Labuan GIFT Program
Strategic location to tap into the Asia Pacific market
Shared time zone with major Asian cities for seamless interaction
Excellent infrastructure and regulations within the Labuan IBFC
OECD whitelist jurisdiction status
Recognised by prominent exchanges for entity listing (such as Hong Kong, Singapore, Malaysia, Australia, and Dubai Exchanges)
100% foreign ownership with a minimum requirement of 1 shareholder and 2 directors
Low corporate tax rate of 3%
Absence of withholding tax, stamp duty, GST, import duty, sales or service tax, capital gains tax, inheritance tax
Void of tax on dividends to shareholders
Void of tax on director fees for foreign directors
Void of tax on royalties and interests received from the LITC
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Licensing & Operational Requirements of a Labuan International Commodity Trading Company (LITC)
- Maintain a minimum annual turnover of USD 50 million and a minimum annual operating expenditure of MYR 3 million in Malaysia.
- Maintain a registered office in Labuan but is allowed to establish an operational office anywhere in Malaysia with a minimum number of 3 full-time employees (including professional traders).
- Employ at least 3 professional traders that fulfill the following requirements: -
- Must be a Principal Officer or any person in a senior management position.
- Involved in any one of the areas, which are trading, risk management, procurement or sales and marketing.
- Must be Malaysian tax residents under the Income Tax Act 1967 (ITA).
- Where the LITC has less than 5 related companies in a group of companies, the LITC shall: -
- have not less than 3 full-time employees including at least 2 of them are full-time employees in its Labuan operational office in a group of companies.
- incur a minimum annual operating expenditure of MYR 3 million in Malaysia including at least MYR 100,000 is incurred in Labuan for each company.
- Where the LITC has more than 5 related companies, the LITC shall have an additional full-time employee in its Labuan operational office for every addition of up to 5 related companies in a group of companies.
- Appoint a principal officer (PO), director(s) and officer(s) who are fit and proper persons. Appointment of PO has to receive prior approval from Labuan FSA.
- Indicate clearly the LITC name on its letterhead, stationery and other documents including signage containing its name that it is licensed as a “Labuan International Commodity Trading Company licensed by Labuan FSA” with its license number.
- Conduct business with corporate governance and risk management frameworks in place.
- Ensure compliance with all the requirements of the LITC Guidelines, relevant requirements under LCA, LFSSA, other Labuan legislations and the laws of the jurisdictions in which the LITC operates from, whichever applicable.
- Consultation on eligibility and procedural guidance tailored to your profile.
- Profiling, due diligence and guidance on documentation preparation.
- Preparation of Business Plan, Financial Forecast and Operation Manuals.
- Submission and supervision of the application process until approval.
- Acting as your liaison and contact point with LFSA, arranging for interviews (if any).
- Tracking the license approval and handling all queries from LFSA.
- Advisory services on the appropriate company structure post-approval.
- Assistance in setting up onshore and offshore bank accounts.
- Assistance in establishing operational and marketing or co-located offices.
- Staff provision and office space rental.
- Internal audit and compliance advisory.
About FAA Advisory Limited
Comprising a team of seasoned professionals well-versed in Labuan's business landscape, FAA Advisory Limited extends a comprehensive suite of services covering corporate services, private wealth management, and licensing compliance administration, all tailored to meet the unique needs of our clients.
At FAA Advisory Limited, our expertise lies in delivering Labuan insights that facilitate business expansion, simplifying intricate processes, and offering valuable information to guide you through various facets of your journey.
Choose FAA Advisory as your trusted partner in navigating the dynamic business landscape of Asia. With our commitment, we are your gateway to success in Labuan and beyond.
Email: advisory@finarkasia.com | Phone number: +6010-931 6678