Mahathir was speaking at the inauguration of the Labuan Financial Park, a 360 million ringgit ($145 million) commercial complex that houses 50 banks, several insurance and other financial services companies.
He said further measures were being adopted to establish Labuan as a premier IOFC. "For instance, the Offshore Companies Act 1990 will be amended to allow Malaysians to own offshore companies as well as permitting offshore companies to invest in Malaysia," he said. Laws would also be introduced soon to recognise offshore businesses such as limited partnerships, securities industries and Islamic financial services.
Malaysia is promoting Labuan as an international offshore financial hub. The duty-free island in the South China Sea, off Borneo, has been modelled after tax havens such as Bermuda, the British Virgin Islands and the Channel Islands. At present, Malaysians are not allowed to own non-financial offshore companies in Labuan. There are already some 800 offshore trading companies operating on the island. The Labuan IOFC is a key part of Malaysia's goal of becoming a regional financial centre and bankers on the island said Mahathir's strong support would make the centre more attractive to investors.