There is a specific programme for commodity trading business in Labuan, which is Global Incentives for Trading (GIFT). This programme aims to position 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).
LITC must comply with the following conditions after the granting of its licence and commencement of its business:
- Achieve annual minimum turnover of USD50 million;
- Incur minimum annual business spending of RM3 million payable to Malaysian residents in Malaysian Ringgit; and
- Employ at least three professional traders that fulfill the following requirements:
- The Principal officer or any person performing a senior management function who would be principally accountable for:
- making decisions that affect the whole, or a substantial part of the LITC business;
- implementing and enforcing policies and strategies approved by the LITC’s Board of Directors including Head of Department or any equivalent designated person; or
- internal controls and processes of the LITC.
- These professional traders shall be involved in any one of the following areas:
- Risk Management;
- Procurement; or
- 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).