Reinstate Labuan’s full duty-free status, stakeholders plead
Published on: Friday, March 01, 2024
By:
FMT, Natasha Busst
According to Labuan’s tourism, culture and arts department, the island has experienced a 33% decrease in tourist numbers since the removal of its duty-free status. (Bernama pic)
PETALING JAYA: A business group and a former MP have urged the government to reinstate Labuan’s full duty-free status, the removal of which has negatively affected the island.
Labuan Chinese Chamber of Commerce president Wong Kii Yii said doing so was crucial to boost its foreign investments, business prospects and tourism.
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“The Labuan Chinese Chamber of Commerce has 200 members, and around 45% of these businesses have been affected by the removal of the duty-free status,” Wong told FMT.
He added that many businesses experienced declines of around 10% in sales and customers from 2019 until last year.
“Products such as cigarettes and alcohol have been a major source of income for Labuan. These products contribute to around 30% of the island’s economy.
“(Because of the tax on cigarettes) the number of tourists coming into Labuan has inevitably decreased,” he said.
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Citing reports by Labuan’s tourism, culture and arts department, Wong said the island had experienced a 33% decrease in tourist numbers.
“The people of Labuan hope the government will restore its full duty-free status,” he said.
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On Jan 1, 2021, cigarette and tobacco products were listed taxable goods on all duty-free islands including Labuan, Langkawi, Tioman and Pangkor.
Later that year, Sabah Umno chief Bung Moktar Radin urged the government to make Labuan a “truly” tax-free haven once again, citing the decline in its attractiveness as a tourist destination.
In 2023, it was reported that a long-standing law restricting alcoholic drinks for travellers leaving the island had been enforced, allowing visitors to bring out only one litre of alcoholic drinks, or four cans of beer.
Prior to that, the untaxed maximum allowed out of the island was six litres, or a crate of 24 cans of beer.
Former Labuan MP Rozman Isli also said that visiting Labuan had become less attractive to tourists due to the tax on these products.
“Removing the duty-free status may be a small matter in the eyes of the government, but it is important to Labuan,” he told FMT.
Rozman added that many retailers and restaurants there had closed down in the past few years not only due to the removal of the full duty-free status, but also because of Malaysian’s reduced purchasing power.
“From 2011 to 2015, hotel occupancy rates were high and restaurants were mushrooming everywhere. Now, we just hope that these outlets stay open while our economy recovers,” he said.
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