By Jailani Hasan
LABUAN, Oct 13 (Bernama) -- The Labuan Chamber of Commerce has called for targeted tax relief and clearer policies to address the island’s business challenges following the announcement of Budget 2027, particularly those affecting local producers and small and medium enterprises (SMEs).
Its president, Daniel Doughty, said the chamber welcomed the proposed RM10,000 duty-free shopping allowance for Labuan and Langkawi, but stressed that the initiative should be complemented by measures tailored to the economic conditions of each island.
“Labuan and Langkawi have different visitor markets, transport connections and business conditions… a common shopping allowance should be supported by measures that reflect each island’s economic needs,” he told Bernama today.
Doughty said the expanded duty relief for qualifying Langkawi products under Appendix 31 was a positive development and urged the government to consider similar incentives for Labuan-produced goods.
He said Labuan entrepreneurs depended heavily on access to markets in Sabah, Sarawak and Peninsular Malaysia due to the island’s limited domestic market.
“Our domestic market is small… access to Sabah, Sarawak and Peninsular Malaysia is important for businesses to expand, sustain employment and invest in local production,” he said.
Under Appendix 32, the proposed RM10,000 duty-free allowance, effective Jan 1, 2027, applies to eligible new goods brought out of Labuan and Langkawi, subject to a minimum stay of 48 hours.
However, the allowance excludes alcoholic beverages, tyres, cigarettes, tobacco products and electronic cigarettes, including vape liquids.
Doughty encouraged the government to reconsider the exclusions, especially those concerning beer, wine, and spirits, along with the minimum stay requirement, to better align with Labuan’s visitor market and promote spending.
He also expressed disappointment that Budget 2027 did not specifically address outstanding service-tax and local-product duty issues previously raised by Labuan SMEs.
“The absence of an announcement does not necessarily mean the proposals have been rejected. However, businesses need clarity on which proposals have been accepted, which remain under consideration and when decisions can be expected,” he said.
Doughty urged the Finance Ministry and the Customs Department to clarify the service-tax treatment of work carried out entirely in Labuan, including subcontracting services provided to customers registered elsewhere.
He said the chamber also sought duty relief for qualifying locally produced goods, supported by safeguards to prevent imported products from being repackaged merely to qualify for exemptions.
“Labuan needs a tax framework that rewards genuine local production, gives businesses certainty and allows island enterprises to compete in Malaysia’s domestic market,” he said.
Doughty urged the relevant authorities to provide written responses and a clear implementation timetable for outstanding SME tax proposals, adding that the chamber was ready to cooperate in developing practical measures to strengthen Labuan’s economy.
-- BERNAMA