meaningful manner. without doubt, it is our collective duty, as an industry whether as regulators or industry players, to advance the welfare of society through a more inclusive economic development. the success or failure to achieve this will reflect on us all as a collective. in this respect, bank negara malaysia is proud to offer undergraduate scholarships to two deserving local students. this initiative to provide educational opportunities for deserving talents is very much needed and it exemplifies how one can contribute in a tangible manner to the local community. for the offshore industry in labuan, which has benefitted significantly from labuan since its inception, it is time to give back. 1 / 4 bis central bankers'speeches there are various ways in which the industry can assist the local population, such as innovative and creatively designed technical and industrial training that can assist in uplifting the job prospects of local talents. for example, fit - for - work programmes that leverage on online courses to complement industry supported training programmes and on - the - job training will improve the job fit of the workforce. needless to say, strong commitment by industry captains to grant similar opportunities, apprenticeship and fit - for - work schemes will surely hasten the upskilling of the locals. the industry ought to come together to devise a scheme that give opportunities to locals to get good jobs. as we move forward, we need to be more focused on the outcomes we want for labuan. we want a more balanced growth. a clear step forward is to formulate clear and measurable targets, and to review them consistently. the primary performance indicators that should be applied must cover aspects such as ; contribution towards malaysia ’ s and labuan ’ s gdp, quality of job creation, training and development for the local population, investment in infrastructure, access to financing by local smes. we must ensure that the benefits we obtain outweigh the incentives given by the government such as the revenues foregone from the notional tax incentives offered. the old adage – “ you can ’ t manage what you don ’ t measure ” – captures the essence of this idea. transforming the economic structure to become one that is more diversified, resilient and sustainable over the past few decades, the finance and oil and gas sectors have been the main economic contributors to the island ’ s economy, representing more than half ( 51 % ) of the economy. however, the decline of oil prices since 2015 have revealed the vulnerabilities of labuan

areas of economic potential and fulfilling infrastructure needs is a difficult but not insurmountable task. we may refer to the story of our country ’ s development for inspiration. within six decades, our economy moved from being a commodity - dependent nation to one that is successfully transformed. we subsequently elevated ourselves to where we are today, an economy that is open, diversified and competitive. this is only possible because of continuous investments in infrastructure over many decades. rationalising tax incentives to be in line with international practices on the global regulatory front, as we had witnessed, the unfolding of the global financial crisis revealed the significant vulnerability of international financial markets to market dislocations. calls for greater regulatory harmonisation and the adoption of international best practices have gathered speed, blurring the distinction between onshore and offshore regulatory requirements. offshore financial centres which remain mired in the old model and thinking are set to become part of a sunset industry. there have also been significant advancements with respect to international taxation practices. authorities are now more proactive in seeking to mitigate the distortionary effects of harmful tax competition on the allocation of resources and its negative implications on national tax bases. malaysia, until early this year, has been an observer of the oecd ’ s inclusive framework on base erosion profit shifting ( beps ). since january 2017, we have agreed to become a participating member in the inclusive framework. this will allow malaysia to participate in the beps related work on equal footing with other oecd and g20 countries. we will also be able to provide direct inputs to shape the content of the beps related standards. in addition to that, work has commenced on reviewing respective jurisdictions ’ preferential tax regimes against the standards outlined, to combat harmful tax practices. the standar4, which forms one of the four beps minimum standards, will require authorities to step up on transparency and substance rules for geographically - mobile activities, such as financial services. it seeks, for one, to prohibit the shifting away of income into preferential tax regimes where businesses have little or no economic activity. such international developments will directly influence ibfc ’ s business model going forward. the world that we live in, since the creation of offshore labuan in the 1990s, has drastically changed. what was relevant then is no more relevant now. we have no choice but to change with it. it is an opportune time for us to review of the current tax framework for labuan. the purpose of this review