THE island of Labuan, a mere dot on the map about 21/2 hours by air from Kuala Lumpur, was declared an International Off-shore Financial Centre in October 1990 by the Malaysian Government. Labuan, a federal territory administered by the Prime Minister's Department, is gradually transforming into a premier off-shore financial centre. It is strategically located in Southeast Asia and well placed to serve the rapidly growing commercial and financial markets of the Asia-Pacific region. According to an official of the Malaysian Commission in Hong Kong, the island ''will be complementary to other financial centres in the region and not competitive''. It is located off the coast of Borneo and shares the same time zone as Singapore and Hong Kong and has the advantage of being able to do 24-hour business with financial centres in Europe and the US. The official said Labuan had always been a free port and was a barter trading base in the region, encompassing Brunei, Sabah and Sarawak. Various off-shore finance business activities are allowed in Labuan under different regulations and requirements. Foreign off-shore companies can either be incorporated or registered in Labuan. For off-shore companies, there is no minimum capital requirement. There are limitations on public inspection of company documents, and prohibition from disclosure of shareholding or financial affairs of the companies. Off-shore banks must first be registered or incorporated as an off-shore or foreign off-shore company and get a licence from Bank Negara, the central bank. Off-shore banking business covers credit facilities, deposits, current accounts, savings or any other accounts allowed by Bank Negara. Identity of accounts and activities of the customers of off-shore banks are protected by secrecy laws. Disclosing information related to customers and accounts is forbidden. Trust companies who intend to operate from Labuan are required to register under the Trust Companies Act 1990. These firms must establish an office in Labuan and will be allowed to act as a trustee, nominee or agent to non-residents. Share transfer and registration, management and accounting services, providing directors, secretaries and registered offices, registering companies, acting as agents managing property and providing investment and fund management services are business activities that trust companies can engage in. Insurance companies must comply with minimum capital requirements and solvency margins depending on the type of insurance offered. Labuan offers a range of tax and other fiscal incentives to companies. An off-shore company engaged in trading will be taxed at a rate of three per cent of net profits, or at a fixed rate. Incomes are not taxed. Expatriates working in a managerial capacity in Labuan are exempt from 50 per cent of their gross income for six years. There are no sales taxes, import and excise duties or export duties, except for petroleum products. The Labuan Development Authority was set up in 1992 and helps the overall development of Labuan as an international off-shore financial centre.