MP to raise issue of Labuan duty-free status erosion

LABUAN: Labuan Member of Parliament Datuk Dr Suhaili Abdul Rahman is to bring up with the Federal Government what he described as the gradual erosion of the duty-free status of the island.

“The privilege of Labuan being a duty-free island, the high cost of living, and the continuous shortage of essential items will be brought to the attention of the Federal Government.

“I will raise these issues during the upcoming session of Parliament beginning Feb 26. I (also) plan to meet Prime Minister Datuk Seri Anwar Ibrahim to highlight the challenges faced by Labuan,” he told Bernama after representing Sabah Chief Minister Datuk Seri Hajiji Mohd Nor in handing over lion dance heads to the representatives of seven temples, at a hotel here.

Suhaili attributed the gradual erosion of Labuan's duty-free island status to the imposition of duty on cigarettes and limitations on the purchase of alcoholic drinks.

“There is nothing special about this duty-free island anymore since the imposition of duty on cigarettes and restrictions on the purchase of alcoholic drinks,” he said.

He said the erosion of benefits had led to a decline in tourist numbers and the cost of goods on the island had become higher than in towns without duty-free status.

He also said that he plans to discuss cabotage issues with the Minister of Transport, advocating for direct cargo shipments to the Labuan port.

“If we can establish direct shipment of cargo to Labuan without transiting through Kota Kinabalu port, numerous consumer-related issues can be resolved,” he said.

Suhaili said this move would lead to more attractive duty-free prices, a reasonable cost of living, and an influx of visitors boosting Labuan's economy.

He also highlighted the critical role of the duty-free retail sector as both a significant source of revenue and a tourist attraction for Labuan. He stressed the importance of restoring the island's comprehensive duty-free status to bolster its economy.

The reclassification of cigarettes and tobacco products as taxable items on all duty-free islands – Labuan, Langkawi, Tioman, and Pangkor – which took effect on Jan 1, 2021, has had a substantial impact on Labuan's duty-free allure and its overall economy.