KUALA LUMPUR: The Securities Commission Malaysia (SC) is calling on key stakeholders to explore solutions aimed at strengthening Labuan's status as a global financial hub.
Its chairman Datuk Seri Dr. Awang Adek Hussin emphasised the importance of revitalising Labuan's infrastructure to establish it as an appealing destination in the global market.
"Over the years, Labuan has faced its fair share of challenges, particularly with basic infrastructure, such as recurring water supply disruptions due to ageing infrastructure and poor maintenance, and an unreliable electricity grid. Addressing these issues is paramount," he said at the Labuan Rejuvenation High Level Roundtable today.
He pointed out the critical importance of enhancing internet connectivity on the island, as its deficiency has significantly hampered productivity, impacting both the supply and demand sides of the economy.
"Resolving these basic infrastructure issues will help Labuan attract new businesses, potentially, through innovative strategies such as a tailored digital nomad strategy, which could be highly beneficial.
"Attracting high-income expats and professionals to live and spend in Labuan could generate a multiplier effect on the local economy," he emphasised.
Awang Adek noted that the elimination of Labuan's duty-free status in 2022 has greatly impacted the island's appeal as a tourist destination.
He said that the duties previously collected from items such as cigarettes and alcohol accounted for about 30 per cent of Labuan's revenue.
"Reinstating Labuan's tax-free status is not just a matter of economics. It is about breathing new life into Labuan's tourism sector, creating opportunities for local businesses and the people," he noted.
Awang Adek suggested that Labuan must be able to retain more of its income for its development needs.
"In 2023, Labuan contributed RM1.2 billion to the Federal government, which is six times the RM189 million allocated for Labuan in the 12th Malaysia Plan mid-term review.
"At the very least, Labuan should at least retain half of its income (RM600 million) to be reinvested into itself," he said, emphasising on the necessity for collaborative efforts across diverse sectors to realise the island's complete potential.