MPM manages the Labuan Liberty Terminal.

Tiong said the duty-free status of the island should remain intact as it was one of the nine points agreed upon during the federalisation of the island in 1984.

“Hence, abolishing the duty-free status was a departure from what was agreed upon,” Daily Express reported him as saying.

Tiong added that with tax free cigarettes unavailable, non-duty paid cigarettes were now being sold on the island.

“Restoring the island’s transshipment port status by lifting obstructive policies to revive barter trade with the southern Philippines should include cigarettes and liquor,” he said.

His statement came in a memorandum that was handed to the transport minister through the chairman of Labuan Corporation, Amir Hussien.

Tiong said the drop in transshipment activity had negatively impacted the local economy, citing the decline in the number of twenty-foot equivalent units (TEUs) handled — from 1,112 TEUs in January to 409 TEUs in February, a decrease of 60%.

Tiong also proposed that the transport ministry subsidise feeder vessel services from Port Klang to Labuan, Bintulu and Kota Kinabalu as rigid standard operating procedures since last November had caused vessels to seek more profitable routes.

The subsequent reduced frequency of ships from Port Klang calling at Labuan, from four to two trips per month, had disrupted supply chains and resulted in an increase in the prices of goods.

He added another factor affecting the economy was the “sign on” and “sign off” for ship crews that entered Sabah waters, which had been shifted to Kota Kinabalu.

As such, ship crews could not “sign on” or “sign off” in Labuan, causing a lot of inconvenience.

Late last year, Sabah Umno chief Bung Moktar Radin had said Labuan was no longer an attraction as the only tax-free items there were chocolates.

He urged Putrajaya to make Labuan a “truly” tax-free haven again to kick-start its economy and uplift the lives of the people who were struggling without jobs and businesses.