Pulau Labuan derives its name from Labuhan, the Malay word for “an anchorage” and is fittingly Malaysia’s only deepwater port.

Located on the major shipping and air routes of Southeast Asia, this Malaysian Federal Territory actually comprises a cluster of seven small islands, of which Pulau Labuan is the largest.

Labuan Island is one of three tax-free islands in Malaysia, thus all goods sold over here are free of Malaysian tax. In 1990, to further bolster the island’s status, Pulau Labuan was designated an international offshore financial centre.

Aside from financial services, Labuan Island is also a hub for the oil and gas industry, providing refining and support services to rigs scattered on the western seaboard of Borneo.

History & background

Once a part of the Sultanate of Brunei, Pulau Labuan was ceded to Britain in 1846. During World War II the Imperial Japanese Army occupied Labuan, changing its name to Maida Island. In 1963, Labuan Island became a part of Malaysia.

More on the history of Labuan Island

The ethnic composition is predominantly Malay (Kedayan and Bruneian Malays), with a sizeable Chinese minority and growing Indian community and it feels quite cosmopolitan, especially in Bandar Labuan (formerly Victoria), the main town and port.

Location & geography

Labuan sits ~8 km (5 mi) off the northwest coast of Borneo, north of Brunei Bay. It consists of the main island and six smaller islands: Pulau Burung, Pulau Daat, Pulau Papan, Pulau Kuraman, Pulau Rusukan Besar and Pulau Rusukan Kecil, with the latter 3 belonging to Labuan Marine Park.

The main island covers 75 sq km (30 sq m) and is essentially flat – the highest point is just 85 m (280 ft) above sea level – and mostly covered in vegetation. There is little agriculture – the best land is used for residential or tourist development or, in the southwest, shipbuilding, manufacturing and oil and gas production.

Commerce & tourism

Pulau Labuan serves as an important hub for commerce and tourism in the region. Its position in the middle of the Asia-Pacific region near shipping routes and offshore gas and oil fields prompted the Government to encourage foreign investment, and today Labuan is a free port and International Offshore Financial Centre (IOFC).

Labuan Island’s duty-free status is a great attraction for the many tourists who come from Brunei – there is even a month-long, end-of-year ‘shopping carnival’.

In addition to shopping, Pulau Labuan has some good beaches, notably Pohon Batu and Pancur Hitam. Hotels and resorts in Labuan are aplenty, and the clear blue waters around the islands are perfect for diving, and also offer marvelous fishing, both deep-sea and around the coasts.

The island boasts excellent physical infrastructure with state of the art telecommunications system including an Internet Gateway which provides an e-commerce platform.

Associated with safety and security, Labuan Island in its early days was a port of refuge for ships plying the waters of Borneo, providing shelter from storms and pirate attacks.