Azhar Othman, chairman of the BIMP-EAGA Business Council (BEBC) based in Labuan, said the RM500 million pumped back for the island could be utilised towards maintaining its infrastructure.
Resolving these infrastructure issues would help boost trade, investment and tourism.
“Part of the funds can be put into a sovereign fund for investment in future industries,” he told FMT.
Azhar also echoed calls for a bridge to be built connecting Sabah and Labuan, saying it has the potential to be a “game changer”.
“Labuan has many things for those in the hinterland of south Sabah and north Sarawak. The bridge could be a catalyst for our future growth.”
Azhar also proposed the setting up of an economic action council for Labuan as the administration of the federal territory needs an “overhaul”.
He said the council should be modelled on Iskandar Malaysia in Johor, and should include the formation of a high-level committee chaired by the prime minister and comprising several ministers and leading members of the private sector.
“I don’t see Labuan progressing much without these (in place),” he said when asked about initiatives that could be implemented to further spur Labuan’s economy.
Earlier this month, Labuan Chamber of Commerce chairman Daniel Doughty said the island’s economy had benefitted from revisions made to the tax regime and a greater emphasis on financial services.
More can be done
However, Doughty said there was still room for improvement.
He called for 40% of Labuan’s revenue to be put to the island’s use, saying that since Labuan was previously part of Sabah, it ought to be entitled to funds on the same basis as its former parent state.
He also proposed that the Labun tax regime, which focuses heavily on financial services, be broadened to cover additional business activities.
Doughty said the Labuan International Business and Financial Centre would be able to foster a more comprehensive ecosystem if the island’s tax regime allowed for international trading, consultancy and other service-related activities.
He also suggested the establishment of a Free Trade Zone (FTZ) or the creation of a Special Economic Zone (SEZ) encompassing Labuan and nearby towns in mainland Sabah, where the state government has a stake in development.
“This would prevent Labuan from competing in isolation with larger neighbouring states with greater resources, population, and political influence.”
Doughty also proposed that Labuan be allowed to open a casino to “fast track investor, tourism content and visitors” to the island, saying it was not in a position to compete with its neighbours in traditional tourism products.
“We need man-made tourism products to woo more visitors,” he said.