Labuan, << LAH boo ahn >>, is an island in Brunei Bay off the coast of Sabah. It is a federal territory of Malaysia.
Labuan has an area of 37 square miles (96 square kilometers). It is generally low-lying, and its highest point is 318 feet (97 meters) above sea level. Several small kampongs (villages) and a small town, Victoria, stand on the island. Coconut trees, paddies (rice fields), and rubber trees cover 30 percent of Labuan. More than half of the island is covered by forest, scrub, or swamps.
About three-fourths of Labuan’s people belong to the pribami, who were the original inhabitants of the island. About a fourth of the people are Chinese.
Labuan is a free port—that is, a harbor in a free-trade area where companies do not have to pay customs duties. It is a tax-free area for overseas companies. It is also an important center for barter trade with the Philippines. A large fleet of supertankers uses Labuan’s deepwater harbor to collect petroleum products.
Natural gas, produced in the coastal waters of Sabah, is processed into methanol on Labuan. It is also used to generate electricity for the island. A large industrial complex produces iron.
Brunei handed over Labuan to the United Kingdom in 1846. The British intended to make Labuan into a naval base to protect its ships from pirates, but failed. Labuan became a colony for convicts, who worked in its coal mine in the late 1800’s. The island became a territory of Malaysia in 1984. In 1990, the Malaysian government made the island a tax haven, hoping to develop a financial center and attract multinational companies.
