Business Leader Moots Turning Labuan Into Special Economic Zone

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Labuan is currently a federal territory governed by the Federal Territories Department, which falls under the Prime Minister’s Department. (Bernama pic)PETALING JAYA: A business leader in Labuan has suggested that the government consider making the island a special economic zone (SEZ) to ensure its economic development and growth.
Daniel Doughty, chairman of the Labuan Chamber of Commerce, said Putrajaya and Sabah needed to explore alternative governance models for the duty-free island rather than continue the debate on returning Labuan to the Bornean state.
He said the topic constantly resurfaced during elections without any actual progress, and that concrete and genuine efforts were needed for this to materialise.
“Labuan could greatly benefit from being part of a SEZ with a certain amount of autonomy and oversight from both the federal and Sabah governments,” he told FMT.
Doughty also said it would be “tantamount to insanity” to maintain Labuan’s current governance model as the island’s economic position looked more uncertain than before.
He said Labuan’s economic future depended on how well it aligned with Sabah’s development plans, and that they should support each other’s growth rather than compete with one another.
“Perhaps it’s time we review the governance model of Labuan, as the changing geopolitical landscape and increasing autonomy and recognition for Sabah and Sarawak further supports the need for this.
“It’s crucial for Labuan to synergise with Sabah, leveraging our collective strengths to drive forward our economic ambitions. This way, we can become economically stronger,” he said.
Labuan is currently a federal territory governed by the Federal Territories Department, which falls under the Prime Minister’s Department.
There have been recurrent calls for Labuan to be returned to Sabah, including by former chief minister Yong Teck Lee.
Last month, Upko’s Tuaran MP Wilfred Madius Tangau repeated the call, claiming Putrajaya had failed to develop the tax-free island as promised.
This was shot down by Labuan MP Suhaili Abdul Rahman, who called for Prime Minister Anwar Ibrahim to be given the opportunity to develop the island.
The Labuan Chinese Chamber of Commerce also rejected the calls, saying Anwar’s leadership could bring fresh perspective and new initiatives to stimulate economic growth, infrastructure development and improved social welfare in Labuan.
“His experience in politics and governance could facilitate collaborations with various stakeholders to address local challenges and capitalise on opportunities for advancement.
“However, the actual impact would depend on the specific policies, strategies, and resources allocated under Anwar’s leadership,” its chairman Wong Kii Yii said.
He said the federal government must specifically invest in improving Labuan’s infrastructure, particularly education and healthcare, while encouraging different types of businesses to grow.
This calls for close partnerships between the public and private sectors, he added.
Labuan’s tax-free status makes it a haven for offshore banking and investment holding services, while logistics, oil and gas, and tourism are also big on the island. - FMT

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