Labuan, Malaysia (International Commodity Trading License)

GENERAL INFORMATION

The Global Incentives for Trading Programme (GIFT) is a comprehensive incentive framework for international commodity trading. Under GIFT, traders use Malaysia as their global trading hub to trade physical products and their related derivatives via Labuan IBFC. To participate, individuals or entities must establish a Labuan entity and apply for a Labuan International Commodity Trading Company (LITC) license from Labuan FSA.

The GIFT programme supports the trading of the following physical products and derivatives:

• Petroleum and petroleum-related products (including liquefied natural gas)

• Minerals

• Agricultural products

• Refined raw materials

• Chemicals

• Base minerals

• Coal

PRIOR EXPERIENCE REQUIREMENTS

Experience

• Directors:

  • Must be "fit and proper" as per Section 4 of the Labuan Financial Services and Securities Act 2010 (LFSSA).

  • Should have relevant experience in commodity trading, risk management, procurement, or sales & marketing.

  • Must be involved in strategic decision-making, internal controls, and policy enforcement.

• Shareholders:

  • No specific requirement mentioned for shareholders, but they should demonstrate financial capability and strategic intent to support LITC operations.

Track Record

• Applicants must demonstrate prior experience in commodity trading, strategic management, risk management, or procurement.

• A history of financial stability and compliance with regulatory frameworks is expected.

Commitment

• The LITC must establish its operational base in Malaysia and conduct substantial business activities in the region.

• Key financial commitments include:

  • Achieving a minimum annual turnover of USD 50 million.

  • Incurring an annual business expenditure of at least RM 3 million payable to Malaysian residents.

  • Employing at least three professional traders residing in Malaysia.

REPORTING OBLIGATIONS

• Submission of the Annual Update Submission Form by 15 January each year.

• Submission of audited financial statements within six (6) months after the financial year-end.

• Maintain separate accounts if engaging in businesses outside the scope of approved trading activities.

• Prior approval from Labuan FSA is required for changes in:

  • Business plan

  • Principal officer

  • Directorship

  • Shareholding

REGULATORY MEETINGS

• Regular compliance reviews and potential audits by Labuan FSA.

• LITCs are expected to participate in meetings and engagements with regulators to ensure compliance with guidelines.

LOCAL STAFF REQUIREMENTS

• Employ at least three (3) professional traders residing in Malaysia.

• The Principal Officer must have expertise in Trading, Risk Management, Procurement, Sales & Marketing

APPLICATION FOR LITC LICENSE

Incorporation & Licensing Timeline

• Estimated processing time: 2-3 months from application submission to license approval.

• Requires submission of an Application Form with a processing fee of USD 350 to Labuan FSA.

Minimum Paid-Up Capital

• The LITC must maintain sufficient capital to support its trading activities.

COMPANY STRUCTURE

Shareholders

• No explicit restrictions, but shareholders should demonstrate financial capability and industry experience.

Directors

• Must meet the fit and proper criteria.

• Should have relevant industry expertise and be responsible for governance and compliance.

OFFICE

• The operational office can be located anywhere in Malaysia.

• The office must include:

  • Principal Officer details (name, designation, contact information).

  • Organizational structure with staff details.

• The LITC must clearly indicate its licensed status on letterheads, signage, and official documents.

CONFIDENTIALITY

• The company must comply with Labuan’s strict confidentiality and non-disclosure regulations, ensuring client and operational information is protected.

OTHER REGULATORY REQUIREMENTS

Secretary/Resident Agent

• A Labuan-licensed Trust Company must act as the company secretary or resident agent.

Registered Office

• Must be located in Labuan and maintained through a licensed Trust Company.

Key Staff

• Minimum of three (3) professional traders fulfilling specific roles in trading, risk management, procurement, or sales & marketing.

• The Principal Officer must oversee strategic decisions and operations.

BANK ACCOUNT OPENING

• The company must open a corporate bank account in Malaysia to facilitate financial transactions.

• Banks may require:

  • Proof of incorporation and licensing.

  • Business plan and compliance framework.

  • KYC documents for directors and shareholders.

TAXATION AND EXPENDITURE

• Corporate tax rate: 3% on chargeable profits or RM 20,000 fixed tax annually.

• Business expenditure requirement: Minimum RM 3 million payable to Malaysian residents.

• Annual license fee: USD 13,000, payable by 15 January each year.