Labuan: Labuan's duty-free status should be given equal consideration for full restoration, in line with the proposal being studied for Langkawi, to support the island's tourism, retail, and business sectors, the Labuan Corporation (LC) Advisory Council said. Its chairman, Datuk Bashir Alias, emphasized that Labuan must not be left behind in any review of duty-free policies.
According to BERNAMA News Agency, Bashir stated that the council unanimously agreed on the matter at its second meeting, highlighting Labuan's importance as a federal territory under direct administration of the Federal Government. He argued that Labuan deserved similar attention given its long-standing role as a duty-free island and regional business and tourism hub.
Bashir pointed out the economic disparities between Labuan and mainland states, noting higher logistics costs, limited market size, and dependence on imported goods. The duty-free status has historically helped mitigate these challenges by enhancing the island's competitiveness as a shopping, tourism, and business destination.
He articulated that the duty-free status forms an essential part of Labuan's economic identity and acts as a tool to attract visitors, investors, and business activities. Bashir warned that weakening this status could diminish Labuan's advantages, particularly as the island strives to bolster its tourism, port, logistics, and commercial sectors.
Bashir urged for fair treatment of Labuan in national economic planning, recognizing its contributions through the Labuan International Business and Financial Centre, the oil and gas sector, port activities, and regional trade. He suggested that a comprehensive duty-free framework could revive the local economy, increase tourist arrivals, and support businesses, benefiting hotels, restaurants, transport operators, and small enterprises.
He advocated for a balanced approach, suggesting that enforcement could be strengthened to address concerns over abuse of duty-free privileges without reducing Labuan's competitiveness. He emphasized the need for clearer policy support, better infrastructure, stronger connectivity, and a duty-free framework to genuinely stimulate economic activity.
Bashir proposed that the duty-free status should be part of Labuan's broader development agenda, aiming to attract cruise tourism and regional visitors, as well as investors in financial services and oil and gas. He noted that strengthening the framework would complement Visit Malaysia 2026 and diversify tourism offerings beyond major mainland destinations.
The proposal comes in the wake of Prime Minister Datuk Seri Anwar Ibrahim's recent statement about the government's intention to study the proposal to restore Langkawi's duty-free status to boost its economy and tourism appeal. Under Budget 2026, duty-free privileges in Langkawi and Labuan were affected by measures including duties on tobacco products and limits on vehicle tax exemptions for vehicles valued at RM300,000 and below.