Duty Free Labuan Island

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Malaysia has many islands that serve as ideal places for visitors to put their feet up under the shade of a swaying coconut tree to bask in the abundant tropical sunshine.

Travelling to Labuan Island for tourism, as opposed to conducting offshore banking for which the island is best known, requires a little more convincing but there are several attractions on the island located just off the coast of Sabah in East Malaysia.

Labuan is a trade-free zone and tax-free haven and an International Offshore Financial Centre (IOFC). Labuan Financial Park is the focus for the IOFC, located in the town centre which was previously known as Victoria but now Bandar Labuan. Merchant bankers, lawyers and accountants regularly pass through town to get on with the business of conducting business while enjoying duty-free beverages offered in several lively bars in the town centre.

Labuan was once part of the Sultanate of Brunei but was ceded to the British in 1846. In 1848, it became a Crown Colony and James Brooke, the first Rajah of Sarawak, was also the Governor of Labuan.

“Labuan” means anchorage in Bahasa Malaysia and the island’s safe mooring was one of the island’s most valuable assets. However, the British were especially attracted by deposits of coal to fire coal-fired steamships that were then plying the world’s oceans. Seven British companies mined the coal for 64 years and there was even a railway line running from the coal mines at Tanjung Kubong to Victoria Port. The coal was depleted by 1911 but fishing and ship building ensured the local economy continued to flourish. To this day, the Sabah Shipyard is a dominant feature located just across the bay from the township and which continues to mostly service the offshore oil industry.

The main island is surrounded by six smaller islands and there are several offshore shipwrecks that have helped put the island on the tourist map with divers. Visitors also come to Labuan to enjoy several attractive beaches, World War II memorials, a bird park and duty-free stores selling a range of goods but most importantly an extensive range of cigarettes and alcohol.

Labuan Island of a little over 90 km2 is just ten kilometres off the Sabah/Brunei coast or 30-minutes flight, terminal to terminal from the Sabah capital of Kota Kinabalu. The island is one of Malaysia’s three Federal Territories and therefore administered centrally. Its duty-free status also makes it very appealing to holidaying East Malaysians (many visit as day trippers on ferries that regularly depart to or from Kota Kinabalu or Limbang in Sarawak) and those from neighbouring Brunei. Many of the expats who travel here are visiting from neighbouring Brunei in search of a little fun and excitement.

For some international visitors, Labuan is close to their hearts as Labuan played a strategic regional role in World War II. Japanese forces occupied the island from 1941 to 1945 and renamed the island “Pulau Maida” after their commanding officer. The liberation of Borneo by Australian troops from the 9th Division started in Labuan in June 1945 under the command of General Douglas MacArthur. A plaque in front of the small Labuan Museum close to the Dorsett Labuan Hotel marks the place where the Australian forces landed.

At the end of World War II, the Japanese forces surrendered to the Allied forces on Labuan. Other places of interest on the island include the Surrender Point, Peace Park and Labuan War Cemetery where the remains of 3,908 Allied soldiers are buried. These places are visited by an increasing number of tourists who come to remember those who died for their country during the war. Tourism arrivals, especially from Australia, are steadily increasing.

Several other interesting tourist sights on Labuan include the futuristic-design of the An’Nur Jamek Mosque, a Taoist Chinese Temple and a Sikh Temple inspired by Amritsar’s Golden Temple in India.


Perhaps the biggest tourist attraction around Labuan are the wrecks submerged in shallow water that offer reasonable underwater visibility. Three islands (Pulau Kuraman, P. Rusakan Kecil and P. Rusakan Besar) make up Labuan Marine Park and there are several interesting dive sites nearby. Pulau Papan is another island that is a popular destination for day-tripping tourists.

The diving is focused on four sunken ships – two from WWII and two commercial vessels that sank in the 1980’s. The sunken wrecks have created an artificial reef teeming with marine life. Divers get short of breath at the marine life that survives on and around the rusting hulks – fish, invertebrates, corals, sponges and other encrusting marine life forms. Back on the water’s surface, fishing, boating, sailing, kayaking and jet skiing attract watersports enthusiasts. There are several deep sea fishing operators

on Labuan who conduct day trips or live aboard trips of several days duration into the South China Sea.

Labuan Golf Club (T: +6087 412-810+6087 412-810) is the island’s only golf course and while it’s just nine holes, the course offers sufficient opportunities to keep a loyal group of locals challenged on most weekends. The par 72 course is 6,111m in length and the mature landscaping creates a very picturesque setting.

The ninth (and 18th) fairway is the most scenic and a good finishing hole especially for those who drive their tee shot accurately straight down the fairway. The pond in front of the green plus its surrounding bunkers could prove challenging on what is the course’s signature hole.

The Labuan course is a walking course made more pleasant by the fact that the sun rises early in East Malaysia. First tee off time is at 6am, which enables some golfers to get a nine-hole round before heading off to the office. Clubhouse amenities are excellent with a well-patronised restaurant and an abundance of chilled, duty-free priced beer. Additional club facilities include a practice green, swimming pool, tennis court, reflexology facilities, gym and a karaoke room.

While Labuan isn’t destined to become another Langkawi, visiting the island on the way to or from Sabah makes good sense even if only to stock up on duty-free goods and have a peaceful rest.

Getting There:
There are direct flights to and from Kuala Lumpur to Labuan on both AirAsia (www.airasia. com) and Malaysia Airlines (www. malaysiaairlines.com). The island is also connected by air to several destinations in Sabah and Sarawak. Perhaps one of Labuan’s most appealing qualities is that mainland visitors can break their journey on the island in their travels to or from the mainland to Sarawak, Sabah or Brunei.

Where to Stay:
Grand Dorsett Labuan Hotel (T: +6087 422-000+6087 422-000, W: www.dorsettinternational.com) is the best hotel on the island. Located in the town centre opposite the Labuan Financial Park, the hotel is popular with bankers and offshore oil workers. There’s a good restaurant, an energetic fun pub that features live music, a compact swimming pool and a well-equipped gym.

Source: The Expat March 2011 
This article has been edited for Expatgomalaysia.com
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