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Breach of promise by KL regarding Labuan
Published on: Tuesday, July 26, 2016
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Labuan: A consumer activist here said the Customs plan to reduce the free part status via restrictions and control on import-sales of liquor and cigarettes is a breach of promise following the island's declaration of Federal Territory.Fauziah Datuk Din, whose late father Datuk Din Jaffar was among those who voices disagreement over the Federalisation of the island in 1984, said:

"When Labuan was given to Federal rule it was without any compensation unlike Kuala Lumpur.

The understanding was that in return, Federal create the stimulus to accelerate economic growth on the island and this conjured up dreams of Labuan becoming a little Singapore or Hong Kong.

"It became none of these even after 32 years as a Federal Territory. It has failed and now Federal want to abolish the island's duty free status by 50 per cent, just because the enforcement agencies cannot deal with smuggling syndicates.

Fauziah noted that unlike Langkawi or Tioman, Labuan's duty free status came about under British rule about a century ago and continued under Sabah administration. It was not a Federal-given status and this constituted a big difference.

"It gives little right for enforcement agencies to meddle with Labuan's special position."

Fauziah also said the duty-free status is the most important asset of Labuan and until today helpful for economic survival.

Hundreds are involved in the sale of duty-free products because unlike KK and KL most local businessmen due to the small local population have no other business opportunities. "The status helps in Labuan having a daily transient population of about 2,000."

Fauziah said Customs should also take note of the Prime Minister's speech here last February when launching the Urban Transformation Centre (UTC) when he said Labuan would keep its duty-free status despite the government losing revenue in uncollected taxes due to rampant smuggling by syndicates. Enforcement agencies need to be directed to step-up to stop the leakages which was estimated in billions of ringgit.

Fauziah said the PM know the history of Labuan and the enforcement agencies should need his advice instead of outsmarting him with their own plans.

Fauziah debuted that if Labuan had remained under Sabah rule Customs would have proposed such action.

"It is just that we are now a small state without much support. Rules are being bulldozed without regard to its consequences to the island."

The Customs move, along with the plan to impose bank guarantee on Labuan-registered vehicles leaving the island "may make many here regret over the island being mode a Federal territory," said Fauziah.

She further said that such drastic rules should only be considered when Labuan's economic had become vibrant and dynamic, the bridge link to Menumbok established to give Labuan a new lease of life, not when the island is under a cloud with the decline in oil and gas activities.

Apart from bridge, Fauziah said the government should also serious consider a way to diversity Labuan economy as suggested by new Bank Negara Malaysia (BNM) Governor Datuk Muhamad Ibrahim while in Labuan recently.

For a start, Petronas should be encouraged to add value to its more than 100 derivatives in methanol which is produced in abundance, here., as this would lead to spin-offs.

Customs is planning to impose the restrictions affective Aug 1. The move sparked an outcry here and Member of Parliament led a strong delegation of local leaders to meet Deputy Finance Minister Datuk Johari Abdul Ghani to express concern.

The meeting ended in a deadlock and another has been fixed this Wednesday.

Under the control, only 11 select importers can store the goods in a branded warehouse.

While out of about 200 duty free outlets only about 10 had been selected for the retail business.

Sale is limited to 3 cartons of beer, 5 litres of spirits and 3 reams of cigarettes per non-Muslim adult individual per month.

Some are complaining why only few select shops are involved when there are dozens in the trade.

Some are also asking why should Customs official occupy a corner of the premises to monitor sales and enjoy the free facilities.



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