Labuan Port is located on East Malaysia’s Labuan Island about 10 kilometers off Borneo’s northwest coast on the South China Sea about 118 kilometers southwest of Kota Kinabalu Port. The town of Labuan is part of the urban area of Victoria, the island’s biggest city. The sheltered deep-water harbor at Labuan Port is an important transshipment point for Brunei state, northern Sarawak, and much of western Sabah state.
In 1990, the Malaysian government declared Labuan Port a tax haven in their effort to develop the island as an offshore financial center. The major products produced on Labuan and exported through Labuan Port include copra, rubber, and sago. In 2001, over 54 thousand people lived on Labuan Island.
The Brunei Sultanate ceded Labuan Port to the British in 1846 to get help in combating piracy in the region. In 1848, it became an official Crown Colony. Years later, the British used the island as a submarine cable station between Hong Kong and Singapore. In 1946, the island became a part of Britain’s colony of North Borneo.
Labuan Port was occupied by the Japanese from 1941 to 1945 during World War II. They governed Labuan Port as part of their Northern Borneo military district and renamed it Maida Island. Australian troops took the island back in 1945, and it continued as Labuan under British military administration.
Labuan Port became a part of the Federation of Malaysia as part of the Sabah state in 1963. In 1984, Sabah transferred the island to the federal government, making it a Malaysian federal territory. In 1990, the government created the Labuan International Business and Financial Centre (Labuan IBFC) to strengthen the role of financial services in Malaysia’s economy and to develop the island. Today, Labuan Island hosts more than 6500 offshore companies and over 300 financial institutions including many leading world banks.