Labuan As Profit Centre

Labuan Advantages

Labuan has many advantages that are waiting to be tapped. In this section, we spell out the key attractions of Labuan as a profit centre.



Labuan is Malaysia’s most established and the only duty free island in the Brunei-Indonesia-Malaysia-Philippines East Asia Growth Area (BIMP-EAGA) triangle. This in itself put Labuan at a forefront as a potential investment centre. All goods (except for petroleum and petroleum products) imported to, stored and processed at and exported from Labuan are exempted from duty. A host of value-adding and manufacturing activities can be undertaken in Labuan.


Since being declared an International Offshore Financial Centre (IOFC) in 1990, Labuan has become as one of the region’s premier offshore financial centres. Labuan can now be proud to host more than 5,000 offshore companies including some of the largest financial institutions in the world.
As an IBFC, it offers a wide range of offshore financial products and services to clients worldwide, including banking, insurance, captives, trust business, fund management, investment holding, company management and Islamic financing. There is no restriction in foreign currency dealings with offshore banks. Funds are freely remitted in any currency other than Malaysian Ringgit. Its low income tax regime (3% or RM20,000 annually) for offshore companies registered in Labuan is also a key incentive.


Malaysia has 13 States and a Federal Territory which is further segmented to three cities which are Kuala Lumpur (Malaysia’s capital and commercial centre), Putrajaya (Malaysia’s administrative centre) and Labuan. The Federal Government has been generous in developing Labuan with modern amenities and facilties including an airport, schools, university, sufficient electricity and water supply and telecommunication connectivity in the last 25 years.


Labuan is strategically located in the middle of the Asia-Pacific region and equidistant to major cities including Kuala Lumpur, Singapore, Hong Kong, Taiwan, Seoul, Manila and Jakarta.
It shares the same time zone, language and culture with most of them. It is also located in the waters of the South China Sea, close to major shipping routes and offshore oil and gas fields.


The Malaysian Government has declared Labuan as one of the country’s petro-chemical hubs. Various activities within the O&G sector are being actively pursued. Petrochemicals represent more than 70% of Labuan total export of about USD3.3 Billion annually. Several oil and gas fields are now either in production or being explored offshore Labuan.
Giants such as Shell, Petronas, Murphy, Schlumberger and Harliburton are the leading majors. Apart from upstream activities, Labuan is now one of the world’s largest producers of methanol and the country’s major producer of crude oil and hot briquetted iron. In addition, a shipbuilding company which once was one of the biggest employers on the island is being revived which will further boost the local logistics and maritime industry.


Labuan is a strategic naval and air force base for East Malaysia, which makes it one of the safest places to visit in the region. It is politically stable with fairly urban and affluent population. It also has good infrastructure, telecommunication and internet connectivity as well as dependable air and sea linkages.


The BIMP-EAGA stands for the Brunei Darussalam-Indonesia-Malaysia-the Philippines - East ASEAN Growth Area. It is Asia's largest regional grouping, spanning territories of four ASEAN countries and covering a geographical area of more than 690,000 sq km and home to more than 50 million potential consumers. The region is rich in natural resources such as coal, oil and gas, timber, agricultural products and sea products which can be used as raw materials by manufacturers. Demand for consumer goods such as electrical products, canned food and household products are huge. LLPM are working with the Malaysia BIMB-EAGA Business Council (BEMBC) on how to make Labuan the preferred gateway for BIMP-EAGA traders. We plan to provide facilities for these traders to access the wider regional market under one roof. Likewise, traders from other regions e.g. East Asia will be able to meet their counterparts from BIMP-EAGA in one place – Labuan.


Labuan has a deep anchorage of about 11-21 meter draft and most port facilities have draft of 8-18 m. It is also free from typhoon and other bad weather conditions. There are seven major cargo port facilities in Labuan, mostly dedicated for specific cargo. Labuan Liberty Port is the main general and containerised cargo port facility in Labuan.