Labuan’s economic growth mostly centred on the mining sector, which is largely represented by oil and gas production and the related industries. The sector is followed closely by the manufacturing and tourism sectors. The finance sector is becoming a major economic contributor probably due to the increasing number of offshore companies, like Seychelles company, that had set up office in Labuan, which is also an International Offshore Financial Centre (IOFC).
Labuan should be labelled a successful and thriving International Offshore Financial Centre, a commercial hub and tourist destination. Major economic contributors are tourism, finance and transport. It is expected that the manufacturing and mining sectors will play a less significant role in the future. Though, Together with the islands other economic edge, being an international financial offshore centre, the oil and gas sector are expected to continue to assist the economy of Labuan and place it in the global arena. The mining sector, largely represented by oil and gas production and its related industries, is the biggest contributor to Labuan’s economy, followed by the manufacturing sector, wholesale, retail, hotel and restaurants sector.
Both the sectors have contributed to the national coffer and created thousands of job opportunities for the local people and this is expected to grow especially once the downstream activities are in place.
The development of oil and gas and the offshore financial sector has also turned the island into a second home for many expatriates and this has augured well for the development of the island, he said.
Recognizing Labuan’s strategic location and proximity to major shipping routes and offshore oil and gas fields, the Federal Government launched a long-term development program to jump-start Labuan’s stagnating economy and to encourage the influx of both domestic and foreign investments.
As Malaysia’s only deepwater anchorage, Labuan is a free port, a Federal Territory, and an International Offshore Financial Centre (IOFC). The currency is the Malaysian Ringgit (RM); however the business of Labuan offshore companies requires a foreign currency (the standard currency is US dollars).
Malaysia’s ambitions for Labuan to become a financial centre to challenge Singapore and Hong Kong remain unfulfilled, but the island has become a major conduit for FDI into the surrounding economies, especially Korea. It is thought that somewhere between one-third and one-half of the companies registered on the island are somehow linked to Korea. Many Korean companies themselves have invested back into Korea through Labuan.