Labuan to Mahathir: Thank you!
Published on: Saturday, April 06, 2019
By: Sohan Das and Iffah Dilaney

LABUAN: The various Chambers of Commerce and the business sector here are full of praise for the new Pakatan Harapan government led by Tun Dr Mahathir for dismantling the previous Barisan Nasional Government’s attempt to restrict Labuan’s colonial era duty-free status. 

Chairman of the Labuan Chinese Chamber of Commerce Datuk Wong Kii Yii said the removal of the curbs on cigarettes and liquor was akin to allowing Labuan to breathe again. 

“We hope that with the hurdle cleared, both the Labuan Corporation and industry players will double efforts to woo more tourists to the island”.

He said what should be next on Dr Mahathir’s agenda to revive Labuan’s glory days is to review the island airport’s “military status” so that tourism can take off by allowing charted and civilian flights to land. At the moment China tourists must travel by road to Labuan after landing in Kota Kinabalu due to the military status..

Commenting on the restrictions, Wong said the island had been screaming with protests when the new regulations were implemented but these were ignored by the arrogant Umno-led government.

“That the Prime Minister considered a simple plea by Member of Parliament Datuk Rozman Isli to lift the restrictions shows how humble, wise and great the Prime Minister is,” he said.

He said the island’s most reliable and strongest product was duty free shopping. 

“Almost everyone who comes here returns home with liquour, beer or branded cigarettes,” he said.

When Labuan people protested, a special Task Force was set up by then Deputy Prime Minister Datuk Seri Zahid Hamidi to resolve the issue but it was merely for show as the new measures came into place on Nov 1, 2016, anyway.

Under the measures, purchases of alcoholic beverages and cigarettes were limited to three reams of cigarettes, five litres of liquor and three crates of beer.

In addition the number of shops allowed to sell liquor was restricted and buyers had to produce their Mykad as if they were school kids.

Labuan Indian Chamber of Commerce and Industry Chairman Datuk Dahlif Singh said the lifting of the curbs would give a meaningful impact to the local tourism industry.

He noted that Dr Mahathir himself, being the Member of Parliament for duty-free Langkawi understood well the need for a full status for the island to prosper.

“In recent months, the Prime Minister also doubled the duty free shopping limit to RM1,000.

“Rampant smuggling was the reason given for introducing the controls on Labuan but this is supposed to be handled by enforcement agencies. Why penalise industry players?” he asked.

A prominent liquor dealer here, Arthur Kong, said the restrictions should not have been imposed in the first place as it did not serve its purpose.

“Ever since it was imposed, the prices have increased and smuggling issues have not died down which defeated the purpose of its implementation,” he said.

“The move only created higher cost of living and it does not help the government since the duty-free business dropped and it loses out in terms of income tax, corporate tax, etc,” he explained.

Arthur said it will take some time before prices will reduce but is optimistic that sales will increase by a great margin compared to before. 

“Hopefully with this move, prices will be lower as there will be open competition in the market as operators are now not classified as KBC 1 or KBC 2,” he said.

Arthur who owns One Stop and First Stop duty-free stores, said under the restrictions, importers were burdened due to the many new regulations set by the Customs Department which increased their cost.

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“At the end of the day, prices will go up as we’re passing the higher cost back to the consumers.

“The move to revoke this ruling will be a win-win situation for all including the consumers, the government in terms of corporate tax and the business community,” he said.

Arthur appealed for the Customs Department to take a further step and abolish the requirement for a duty-free stamp for goods, which was implemented about eight years ago.

He said there was no purpose for these stamps on duty-free goods, as they were first introduced to label duty-paid goods only.

“These stamps are necessary to label tax-paid goods but not duty-free products. The sale of the stamps does not benefit the government in any way.

“On top of that, we suppliers have to take on an additional cost of RM6,000 to RM7,000 for each container of booze for a stamp which does not serve a purpose to duty-free goods,” he said.

Another supplier who wished anonymity said sales were affected after the measures came into play. 

She said the most obvious decrease was during the festive season. “Usually many local customers will purchase in large quantities for celebrations, particularly Chinese New Year, Kaamatan and Christmas.

“However, the implementation restricted their purchase and hopefully with this move, things will return to the way it was,” she added.

Another liquor supplier, LMJ Distributor supervisor Tan Lip Xin said he is looking forward to see how this will change the landscape of the duty-free business here.

“We are hoping business will pick up from here on and it definitely saves all of us from the hassle.

“We suppliers will no longer be compelled to provide a bank guarantee for the imported liquor and customers can purchase our goods more flexibly from now on,” he said.

Eatery owner, Arman Raymond Tan, said the move will make it more convenient for all parties to do business in the duty-free island.

“I think Labuan will return to being business-friendly as it was before. 

“As an outlet operator (KBC 2) we could only purchase from KBC 1 outlets and that has indirectly increased our cost. Now we can directly purchase our goods from the supplier,” he said.

Lounge operator, Teo, also lauded the move, saying this will indeed alter the bleak economy of the island.

“Maintaining a business since the oil and gas slump has been hard, on top of that we were slapped with these restrictions and now we are optimistic that conditions will improve for us,” he said.


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