A group of Australian and New Zealand investors, including retirees, claim they have lost millions in savings invested in debentures issued by a Labuan-based firm.
They say they have lost a total principal sum of US$25-35 million along with millions more in unpaid interest.
The matter was highlighted by Klang MP Charles Santiago in Parliament during a debate on 15 December 2009 on the Labuan Offshore Financial Services Authority (Amendment) Bill 2009.
The investors have written more than a hundred letters to various Malaysian government agencies and regulatory bodies to complain about the matter. Among other things, they want to know why the company is still in operation; they are also calling for a full-scale investigation.
Charles said it was important for the Malaysian authorities to look into the plight of these investors.
Deputy Finance Minister Awang Adek responded that the case was before the courts and the assets of the firm had been frozen. (The investors, however, are not a party to the case and seem to be in the dark about the proceedings.)
He added that the new Bill would expand the powers of regulatory bodies and agencies such as Lofsa and the Income Tax department.
Charles argued that the Ministry had to keep the investors abreast on the status of their investments if it wants to improve confidence in Labuan as an offshore financial centre.
Awang Adek said he was certain Lofsa was playing an appropriate role in keeping the investors informed. “I ask Lofsa to do this and I will oversee this to ensure that it is done.”
Much debate also ensued on why the Labuan off-shore financial centre, now being rebranded as the Labuan International Business and Financial Centre, hasn’t quite reached the levels of other off-shore centres after 13 years of existence.
Kamaruddin Jaafar (Tumpat) pointed out that water supply problems had not yet been resolved and noted that Labuan was still under-achieving despite its tax rate of 3 per cent being lower than the 18-20 per cent of Singapore and Hong Kong – a comparison Awang Adek described as “unfair”.
For the full and illuminating exhanges between Charles and Awang Adek and others on Labuan, look up page 158 onwards of the parliamentary Hansard.