Commodity Trading

The Global Incentives for Trading (GIFT) programme is aimed at positioning Malaysia as a regional trading and storage hub for oil and gas.

Under the programme, a set of incentives are offered through the establishment of the Labuan International Commodity Trading Company (LITC), including incentives for traders and trading houses to use Malaysia as their international trading base.

The LITC’s business is the trading of physical and related derivative instruments of petroleum and petroleum-related products including liquefied natural gas (LNG).

Post-Licensing Requirements

1. Achieve annual minimum turnover of USD50 million;

2. Incur minimum annual business spending of RM3 million payable to Malaysian residents in Malaysian Ringgit; and

3. Employ at least three professional traders that fulfill the following requirements:

a. The Principal officer or any person performing a senior management function who would be principally accountable for:

i. making decisions that affect the whole, or a substantial part of the LITC business;

ii. implementing and enforcing policies and strategies approved by the LITC’s Board of Directors including Head of Department or any equivalent designated person; or

iii. internal controls and processes of the LITC.

b. These professional traders shall be involved in any one of the following areas:

i. Trading;

ii. Risk Management;

iii. Procurement; or

iv. Sales & Marketing.

These professional traders shall be residents of Malaysia in a calendar year for the year of assessment under the Income Tax Act 1967 (ITA)

Operational Requirements

1. The LITC must have sufficient capital or working funds that commensurate with its operations and activities.

2. The LITC must indicate clearly 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”, together with its licence number.

3. The LITC is required to establish its operational office, which can be anywhere in Malaysia. The following details must be identified and provided to Labuan FSA prior to the commencement of business:

i. Principal Officer

- Name, designation and contact details such as telephone number and e-mail address of the officer that is in charge of the LITC.

ii. Address of Operational Office

iii. To provide address and staffing plan at its operational office.

4. The LITC must ensure that its business is conducted with both corporate governance and risk management frameworks in place.

5. Ensure that the Principal Officer, Director(s) and Officer(s) responsible for the management of the company are fit and proper persons pursuant to Section 4 of LFSSA and the Guidelines on Fit and Proper Person Requirements issued by Labuan FSA.

6. The LITC is required to submit to Labuan FSA the following:

i. The completed Annual Update Submission Form latest by 15 January of each year (as per Appendix I); and

ii. A copy of its audited financial statements within six (6) months after the close of each financial year.

7. Obtain prior approval from Labuan FSA on any new changes being effected on the following:

i. Business plan;

ii. Principal Officer;

iii. Directorship; and

iv. Shareholding.

8. The LITC is expected to comply with all the requirements of this Guidelines as well as the relevant requirements under LCA, LFSSA, other Labuan legislations and the laws of the jurisdictions in which the LITC operates from, whichever applicable.