LABUAN: The Labuan Chinese Chamber of Commerce hopes the federal Ministry of Finance (MoF) will restore the island’s legendary privilege of duty-free cigarettes which was revoked under the national 2021 Budget.
Its Chairman Datuk Wong Kii Yii said the effects of the removal of the special privilege are being severely felt by the local economy, particularly the tourism industry, because there has been no suitable replacement for the attraction loss.
He said the withdrawal had put a severe dent on the economy and drawn public outcries from various quarters.
“The reason given by the authority for the withdrawal of the status, which is due to the rampant leakage of revenue, is not acceptable.
“If smuggling is the cause, what needs to be done is to strengthen the enforcement agencies and identify the weaknesses, instead of penalising the island,” he stressed.
Wong said meddling with the duty-free status of the island was not the answer.
“It has to be taken into consideration that the privilege is a colonial legacy. Labuan was endowed this because of its limited resources and until today the situation is the same.”
Wong reminded that cigarettes were included in the tax-free list in 1950.
“When Labuan became a Federal Territory in 1984, it was expected that the local economy would be dynamic and vibrant and not the reverse.
“The removal of the duty-free status has affected visitor arrivals to Labuan, a drop in the cargo volume to Labuan and a number of retailers are keeping their shelves, empty, no longer keen to sell cigarettes due to low demand,” he said.
Wong said last December, Federal Territories Minister Datuk Seri Shahidan Kassim, in a dialogue with the local media, said the Ministry planned to review the policies that have to some extent dented the attraction of the island.
Wong said the Chamber hoped the Minister’s concern would be taken into account in the 2023 pre-budget planning.
