Announcing the initiative at a recent press conference, Martin Crawford, the chief executive officer of the Labuan IBFC, revealed that offices would be set up in Hong Kong and either Abu Dhabi or Dubai within the next twelve months. But firstly, the IBFC would attempt to spread Labuan's message through roadshows in India, North Asia, Australia and Indonesia, he disclosed.

Crawford explained that the IBFC was keen to tap into newer emerging markets for offshore investment flows such as India, China and the Gulf Cooperation Council (GCC) region, which have traditionally routed their offshore investments through Mauritius or Singapore.

According to Crawford, the marketing campaign would focus on attracting business in five key areas, including international holding companies, private and public investment banks, captive insurance, Islamic finance and wealth management products.

Labuan is a relatively unknown offshore jurisdiction, having been created by the Malaysian government in 1990. However, it offers a highly attractive tax regime to offshore companies, and the IBFC will no doubt emphasise this point in its campaign

The Labuan Offshore Business Activity Tax Act 1990 (as amended 2004) provides for the reduction or complete exemption of income tax in respect of certain business activities carried on by offshore companies in Labuan. Chargeable profits derived by an offshore company from an offshore trading activity are subject to tax at a rate of 3%. An offshore company which carries on an offshore non-trading activity is exempt from income tax altogether.

Last year, Prime Minister, Datuk Seri Abdullah Ahmad Badawi stated in his budget speech that in future, companies registering in the Labuan offshore sector would have the option of having their offshore business income taxed under the Income Tax Act 1967, in addition to under the Labuan Offshore Business Activity Tax Act 1990. The Income Tax Act 1967 applies to any activity other than offshore business activity carried on by an offshore company, meaning that they pay normal taxes.

The Prime Minister explained at the time that:"In the light of greater global competition, we need to ensure that Labuan remains competitive as an international offshore financial centre. Given that investors in Labuan undertake a wide range of financial services, a flexible tax regime is necessary."

Despite is hitherto low profile however, growth in the Labuan offshore sector has been strong. As of March this year, there were more than 6,500 companies operating in Labuan, including 58 offshore banks with total assets of USD26.6 billion, 132 offshore insurers with more than USD600 million in capitalisation, 106 leasing companies with USD16 billion in leases and 22 fund management and 46 listed instruments worth USD16.1 billion.

By the year 2012, the Labuan Offshore Financial Services Authority (Lofsa) is aiming to have 50,000 companies registered in the financial centre.

“Labuan is an unpolished gem that can be sold to the world," Crawford observed.

"I am sure it has the potential to be a leading business and financial centre in the region once we have polished it," he added.