Labuan Seeks Equal Duty-Free Treatment As Langkawi

LABUAN, April 29 (Bernama) -- 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, said the council had unanimously agreed on the matter at its second meeting today, stressing that Labuan must not be left behind in any review of duty-free policies.

He said Labuan, as a federal territory under the direct administration of the Federal Government, deserved similar attention given its long-standing role as a duty-free island and regional business and tourism hub.

“If Langkawi is being considered for the restoration of its full duty-free status, Labuan should also be given the same consideration.

“Labuan has been a duty-free island for decades, and this status remains one of its key economic attractions. Any restriction or reduction in the scope of duty-free privileges will affect local businesses, tourism spending and investor confidence,” he told Bernama after the council’s second meeting at UTC Sentral here today.

Bashir said Labuan’s economic structure differed from that of mainland states, with higher logistics costs, a limited market size and dependence on imported goods.

He said the duty-free status had helped offset these challenges by enhancing the island’s competitiveness as a shopping, tourism and business destination.

“The duty-free status is not merely about cheaper goods… it is part of Labuan’s economic identity and a tool to attract visitors, investors and business activities.

“If the status is weakened, Labuan will lose one of its strongest advantages, especially when the island is still working to strengthen its tourism, port, logistics and commercial sectors,” he said.

Bashir said Labuan must be treated fairly in national economic planning, noting its contributions through the Labuan International Business and Financial Centre, the oil and gas sector, port activities and regional trade.

He said a full-fledged duty-free framework would help revitalise the local economy, boost tourist arrivals and support businesses, with spillover benefits for hotels, restaurants, transport operators and small enterprises.

“There must be a balanced approach. If there are concerns over abuse of duty-free privileges, enforcement can be strengthened, but the solution should not be to reduce Labuan’s competitiveness.

“What Labuan needs is clearer policy support, better infrastructure, stronger connectivity and a duty-free framework that can truly stimulate economic activity,” he said.

Bashir said the duty-free status should form part of Labuan’s broader development agenda, including efforts to attract cruise tourism, regional visitors from Sabah, Sarawak, Brunei and the wider BIMP-EAGA region, as well as investors in financial services and oil and gas.

He said strengthening the framework would complement Visit Malaysia 2026 and help diversify tourism offerings beyond major mainland destinations.

Prime Minister Datuk Seri Anwar Ibrahim was recently reported as saying the government would study the proposal to restore Langkawi’s duty-free status to revive the island’s economy and tourism appeal.

Under Budget 2026, duty-free privileges in Langkawi and Labuan were reported to have been affected by measures, including duties on tobacco products and limits on vehicle tax exemptions for vehicles valued at RM300,000 and below.

-- BERNAMA