KUALA LUMPUR (April 26): Asia’s international financial hub Labuan International Business and Financial Centre (Labuan IBFC) sees moderate growth in the aviation leasing sector in 2024, due to higher oil prices.

"We are closely monitoring the oil price situation amidst the ongoing tensions in the Middle East. However, we feel that air travel will persist,” said Labuan Financial Services Authority (Labuan FSA) director general Nik Mohamed Din Nik Musa.

“As long as air travel continues to take place, the aviation leasing sector will be growing at a moderate pace,” he said at a press conference on Friday, in conjunction with the release of the Labuan IBFC market report 2023.

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Rising oil prices may lead to higher fuel costs, impacting the aviation industry.

Brent, the global benchmark for crude oil, was trading at US$88.03 (RM420.56) per barrel at the time of writing on Friday, as Israel and Iran traded drones and missile attacks. The conflict came on the heels of the Israel-Hamas conflict in Palestine, as well as strikes by Houthi militants against Israel that sparked the so-called Red Sea crisis. Higher oil prices may lead to higher fuel costs that impact the aviation industry.

Nik Mohamed Din’s statement came after Labuan IBFC recorded a 39.4% year-on-year jump in lease revenue to US$961 million for 2023, due to higher demand, particularly from the aviation leasing sector, spurred by the resurgence of the tourism sector as air travel recovered from the Covid-19 pandemic.

The value of aviation sector leased assets in 2023 stood at US$20.8 billion, the highest figure in the past five years. In contrast, prior to the onset of the Covid-19 pandemic, aviation leased assets were only valued at US$17.4 billion in 2019.

There were 206 leasing companies in Labuan last year, of which 140 were engaged in the oil and gas sector, followed by 47 in aviation, and 19 in other sectors.

Labuan IBFC is governed by Labuan FSA, which comes under the purview of the Ministry of Finance. It provides an extensive array of business frameworks and investment options to support cross-border transactions and international business dealings conducted by global enterprises and investors.

Labuan IBFC’s key service areas include banking, insurance, wealth management, and activities associated with capital markets, leasing, money broking, and commodity trading.

https://www.theedgemarkets.com/node/709486