Global Incentives For Trading (GIFT)

Oil and gas is one of the 12 National Key Economic Areas (NKEAs) in Malaysia’s Economic Transformation Programme (ETP). In line with EPP 4 To create a regional oil storage and trading hub, Global Incentives For Trading (GIFT) programme was introduced by MPRC and Labuan Financial Services Authority (LFSA) with the objective to attract global companies trading in petroleum and petroleum related products to locate their regional operations to Malaysia. Malaysia’s central geographical location and connectivity, is an ideal link between buyers and sellers in the region.

On 31st October 2011, GIFT was launched by Yang Berhormat Dato’ Sri Mustapha bin Mohamed, Minister of International Trade and Industry, with 5 inaugural members. Whom are Vitol, Petronas Trading Corporation, Dialog Berhad, YTL Power Trading and BB Energy.

 

Key Incentives

- 3% flat corporate tax for other commodities
- 100% exemption on director fees for non-Malaysian
- 50% exemption on gross employment income tax for non-Malaysians
- Exemption on dividends received by or from the LITC
- Exemption on royalties received from the LITC
- Exemption on interest received by resident or non-resident from the LITC
- Stamp duty exemption on all instruments, M & A of LITC and transfer of shares within the LITC

Requirements

- Minimum annual revenue of USD 100 Million
- Minimum annual local expenditure of USD 1 Million
- Employ a minimum of three professional traders
- Encouraged to use and to engage local support services

Rationale

There is a demand to build storage capacity in the Asia Pacific region to meet growing customer demand especially in China, India and Southeast Asia. Singapore has rapidly increased its storage capacity but has reached the limits of adding more due to limited availability of land. With ports located on major shipping routes for crude oil and refined products, close proximity to Singapore, land availability and deep water marine accessibility, Malaysia is well placed to complement Singapore in this industry. Hence, Malaysia and Singapore together are in the perfect position to form a hub in the Asia region, similar to the Amsterdam-Rotterdam-Antwerp (ARA) in Europe, which complements each other in areas of refining capacity, independent storage and blending capacity as well as access to markets.

Malaysia complements Singapore to create an Amsterdam-Rotterdam-Antwerp (ARA) hub for Asia Pacific region

Key success factors Amsterdam-Rotterdam-Antwerp(ARA) Malaysia-Singapore
Export refining capacity
  • Rotterdam: 1,300 kbpd
  • Antwerp: 770 kbpd
  • Amsterdam: negligible refining capacity¹
  • Malaysia: 560 kbpd (although a net importer of gasoline)
  • Singapore: 1,300 kbpd
Independent storage and blending capacity
  • Rotterdam: 28million m³
  • Capacity for Antwerp and Amsterdam is not available
  • Malaysia: 10million m³ by 2017
  • Singapore: 10million m³ with limits on future expansion due to lack of coastal land
Access to markets
  • Amsterdam is the centre for the gasoline export trade, imports the product mainly from Europe and North Africa to blend and meet US specifications
  • Singapore is the third largest global oil trading hub and bunker port, with more than USD300 billion in physical oil trades and USD600 billion in derivative trade in 2007
The difference between a GIFT & Normal Labuan Co:
Item: GIFT Labuan Co.
Operating office anywhere in Malaysia YES NO
Marketing office anywhere in Malaysia - Limited to meeting clients & establishing contacts, no maintenance of books & records allowed YES NO - only in Kuala Lumpur & Johor Bahru
0% tax rate for LNG trading companies YES NO
Dealing with resident companies YES
(Petroleum, Petroleum Related Products, LNG and Coal)
Subject to filling notification to LFSA within 10 days of each transaction
50% exemption on gross employment income tax for non-Malaysian YES YES
3% flat tax for trading companies dealing in qualified commodities YES YES
100% exemption on director fees to Non-Malaysian directors YES YES
No stamp duties YES YES
All trades must be in non-ringgit YES YES
Tax exemption on dividends received and paid from the company YES YES
FAQ 
Contact Us

 

Labuan International Business and Financial Centre, Malaysia 

Malaysia Petroleum Resources Corporation (MPRC)