Labuan’s Duty-Free Status Capped; Stricter Rules For Vehicle Owners

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Restrictions to be imposed on duty-free outlets in Labuan, and those who purchase liquor will have their particulars jotted down.
Restrictions to be imposed on duty-free outlets in Labuan, and those who purchase liquor will have their particulars jotted down.

LABUAN – Despite the objections of local politicians, including lawmaker, Datuk Rozman Isli, the Malaysian Customs is going ahead with imposing strict rulings on the outflow of Labuan-registered vehicles to the mainland, as well as new rules for duty-free shops.

This policy was deferred to Nov 1 from August after taking into account, inputs and comments from various parties, but will now be enforced next month, said its deputy director-general (Customs and Goods and Services Tax), Datuk Zulkifli Yahya.

Second right - Zulkifli Yahya with MCA Labuan chief Datuk Chon Hon Vui after the briefing on the soon-to-be-implemented customs rule and policy on the outflow of Labuan-registered vehicles and new ruling on duty-free shops.
Second right – Zulkifli Yahya with Chin Hon Vui after the briefing on the soon-to-be-implemented customs rule and policy on the outflow of Labuan-registered vehicles and new ruling on duty-free shops.

“As our director-general stated earlier on, the ruling will be implemented on Nov 1. We have not received complaints on the implementation from any party,” he said after meeting the leaders of chambers of commerce, Barisan Nasional (BN) component parties and representatives of duty-free shops here Friday.

He said the Labuan-registered vehicles with engine capacity (c.c) from 2.501 cc and above would require to place bank guarantee of 50 per cent of the CIF valuation (Cost, Insurance and Freight).

“Labuan-registered vehicles with an engine capacity below 2500cc will only be required to pay general bond as currently being practised,” he said.

Rozman Isli
Rozman Isli

It was learnt that owners of unpaid duty vehicles leaving Labuan must make declaration using Customs Form 1 under Article 21A Customs Duty Order (Exemption) 1988 and to pay stamp duty of RM10 to make the documents legal.

The number of registered duty free shops in Labuan is 21, and the owners will now have to strictly abide by the procedures and requirement for approval.

Rozman however is cautioning against any move to limit the number of businesses importing alcoholic drinks and tobacco products in line with the island’s duty-free status.

He said there were hundreds of businesses on the island dealing with such products and any move to limit the number traders will spell doom for the island’s economy.

Labuan MCA chief, Datuk Chin Hon Vui said the full enforcement of the new rule and policy on the Labuan-registered vehicles would affect the business community especially those involved in transportation of daily essential goods such as vegetables into the island.

Hardest hit will be Labuan transporters and owners of vans, trucks carrying daily essentials for the islanders.
Hardest hit will be Labuan transporters whose vans and trucks carry daily essentials for the islanders.

“We proposed sterner action against those ignoring the ruling, such as caning, but not to impose the bank guarantee on vans and trucks with engine capacity above 3000cc, as they carry essential daily goods to the island,” Chin said.

“Labuan must keep its duty free status as said by our Prime Minister and Deputy Prime Minister. But the new rule and policy on the restriction the sales of duty-free items is seemingly affect the island’s duty-free status.”

Among the proposed changes is a mechanism being worked out whereby liquor and tobacco products can only be bought at designated centres.

Details of customers and their purchases would then be recorded and there was also talk of a monthly quota – a crate of 24 cans of beer or any alcoholic beverage, five litres of liquor and three cartons of cigarettes.