Labuan's broken promises
LABUAN, Jan 7, 2010: The year 2010 as usual start of with high
expectations but as months went by it became evident that the gloom
that gripped the local economy the preceding year had not loosened.
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Retail business was said to have plunged by between 30 and 40 per cent,
and the island's duty-free status seemed to be losing its lustre.
Though more residential houses became available for rent at cheaper
rates, it was not the case for commercial properties.
Shophouses continued to command a price tag of more than RM1 million
each. Shop rentals shot up due to limited shops available for business,
adding to the inflation on the island.
The much talked-about proposed Labuan-Menumbok bridge, which was first
mentioned in the Labuan Development Plan (1997-2015) and in 2006 a
visiting Yang diPertuan Agong gave royal endorsement for efforts to be
pursued with the Federal Government, looked like moving towards
reality. Especially with the allocation of RM5 million for Universiti
Malaysia Sabah (UMS) to do a hydrographic study for the project. The
survey reported that it was essential due to the limited air and sea
links of Labuan and that the bridge if built now would cost RM3 billion
but doubled if built later.
More hope of the bridge finally came about when former Prime Minister
Datuk Seri Abdullah Ahmad Badawi, when launching the RM80 million Halal
Distribution Hub, said the Government would consider building the
The circumstances provided just reasons for many to think that the
project would be included in the 10th Malaysia Plan.
But in July high hopes of the bridge fell like a punctured balloon when
Deputy Prime Minister Tan Sri Muhyiddin Yassin said the proposed bridge
would not be implemented due to its high cost of about RM3 billion.
He said steps would be taken to improve the sea transportation system
via ferry and speedboats, and that the government would consider a new
site for ferry service. It is however several months now and no one
here feels any improvement of the transportation system.
The "dream bridge" ended in an anti-climax when former Prime 'Minister
Tun Dr Mahathir Mohamad added another "nail" to it by saying that the
bridge would not help spur the economic activities and object-ed to the
proposal. He felt that with the bridge Labuan would lose its
After more than 10 years of expectations, the year 2010 finally saw
bidding the bridge proposal "farewell."
Since it was unlikely that the bridge would become a reality, there
were hopes that as a consolation there would be other goodies for the
island under the 10th Malaysia Plan.
Such hopes were especially generated when the Federal Territories
Minister announced that an application of RM3 billion had been
submitted for various Labuan projects.
The Government spending under the 10th Malaysia Plan, when unveiled,
did not reflect this. Much less than what was applied had been
allocated for continuing projects such as Halal Distribution Hub,
market, bus terminal, esplanade and parking complex, with no new
projects coming the way except for a Sekolah Menengah Agama and Maktab
Rendah Sains Mara.
What continued to make news was the prolonged acute water shortage
problem, which affected about three quarters of the island. It affected
households, industries, hotels, schools and institutes of higher
The frustration climaxed with about 1,000 students at the UMS Labuan
International Campus staging a peaceful demonstration. The second RM1.5
mega methanol plant could not operate in full capacity because of the
The Government took a number of positive steps to overcome the problem,
including using 21 tube wells for water production and increase of
water delivery trucks. The problem remained and Energy, Green and
Technology Minister Datuk Peter Chin Fah Kui made a rare visit to the
island in April to get a first hand look on the water crisis.The
Minister said that with the completion of the 25.7km water pipeline
costing RM365 million from Padas River in mainland Sabah to Labuan, the
crisis would be over end of the year.
The year has ended and Chinese New Year is around the corner, but the
subsea pipeline is still not ready. However, the various measures taken
had helped to solve the problem to some extent.
Performance by the tourism industry was not impressive. Many said they
had seen better years before. Economic downturn that resulted in many
trimming their social spending was perhaps a reason but in the case of
Labuan, there were other reasons as well.
The entertainment industry, which presented a strong lure, could not
perform well because of difficulties in getting employees from
neighbouring countries due to new restrictions.
Labuan's "clean image" was also battered by continued suggestion that
the island was a vice centre.
Exaggerated reports of rampant human trafficking here were also
damaging to the tourism industry. An online portal report on rampant
prostitution on the island was also damaging and did no favour to the
island's tagline of "where business and 'leisure meet.'
The reports led to increased frequency in checks by enforcement
agencies and outsiders found this unnec-essary for them and, thus, many
stayed form Labuan. At least one police report was lodged against, 'the
portal by someone mentioned in the reports.
Due to the decline in business, several operators here seemed keen to
sell off their businesses. All these meant that though Labuan is a
duty-free island with cheap ooze available, it was not able to draw
more visitors, causing a general decline in tourist arrivals.
The oil and gas industry continued to be the "shining star" of Labuan.
The Asian Supply Base (ASB ) which has about 70 support companies using
its base continued to expand.
The State-owned company was allocated RM50 million for expansion and
acquired 10.5 acres of industrial land which belonged to Guocera Tiles
Industries (Labuan) Sdn Bhd. ASB now has about 350 over acres for its
Its new asset included a new quay suitable for deep and shallow water
vessels and it is expanding in offshore services with supply boats, the
first of which costing RM18 million is in operation. Three others would
be joining the service.
ASB is also the only known company to declare a generous six months
bonus for its staff.
Many are confident that the few dark clouds over Labuan now would
disappear when ASB-serving com-panies engaged in ultra deep drilling.
The Halal Distribution Hub under production is also expected to give
some push to the local economy.
The Labuan Financial Serviced Authority (FSA), which is re-branding and
having new Acts and another four Acts radically amended, is expected to
keep improving the performance of the sector. The sector activities
were expected to have a positive impact on the local economy though FSA
had allowed relocation of various offices at Kuala Lumpur. By: Sohan