Business down 40 per cent in Labuan
Credit: Free Malaysia Today
Oil is the lifeblood of Labuan and the drastic drop in the commodity’s price has affected the international offshore financial centre and tax haven.
KOTA KINABALU: Business is down by 40 per cent in Labuan in the wake of the crude oil price heading south to USD32 per barrel, 50 per cent of the workers have been laid off and many companies have closed down, been sold or moved out. “Oil is the most important commodity to Labuan as an international offshore financial centre and tax-free haven,” said Labuan Chinese Chamber of Commerce (LCCC) President Wong Kii Yii. “The drastic drop in the crude oil price has affected the hotel, tourism, entertainment, restaurant and other sectors on the island.”
One bright spot, said Wong, was the property sector which has not been affected much by crude oil prices crashing. However, market demand has dropped slightly and sellers are more willing now to negotiate on their prices. Still, he added, a two-storey shophouse near the LCCC office can sell at RM3 million or more. “The buyers are mostly investors who buy properties and lease them to business people.”
“A 1,800 sq feet shop near LCCC can easily bring in RM10,000 per month in rental. Half a shoplot near the Ferry Terminal can fetch RM6,000 per month rental from a food stall operator.
Wong conceded that overall he’s not optimistic for Labuan in the near future and expects things to get a whole lot worse before turning the corner, if at all. “We have to wait for oil prices to recover to see any pick up in activities in Labuan.”
“That would take at least two years. By that time, many new players in the oil and gas industry would be from China.”
If the Labuan Bridge materializes, said Wong, it could attract visitors from Kota Kinabalu who would enjoy the nightlife on the island, the food and drinks. “On the other hand, it would encourage Labuanites to shop in Kota Kinabalu and holiday there and in Sabah. Local businesses would be affected. Labuan would become a quiet town.”
“Government officials and contractors would support the construction of the bridge.”
Wong hastened to add that he personally would not welcome the construction of the bridge. However, if the bridge project went ahead, he would stay in Menumbok on the Sabah mainland — because it’s cheaper – and do business in Labuan. “There are pros and con on the bridge project.”
The Opposition claims that the long-proposed bridge between Sabah and Labuan would only become a reality once it seizes the reins of power from the ruling Barisan Nasional (BN) in Putrajaya. “Such a project would only remain a dream under the BN.”
“Putrajaya did not do it when the economy was doing better, and now that the outlook has turned gloomy, they certainly will not do it.”
PKR Labuan chief Simsudin Sidek added that had its candidate for the island’s only parliamentary seat, Ibrahim Menudin, won in the last General Election and Pakatan installed in Putrajaya, “the tenders for the bridge would have been awarded by now”.
He estimates the cost of the bridge to be at least RM5 billion. “The amount is huge but we can carry out the project by raising the oil royalty for Sabah, from the present measly 5 per cent, to at least 20 per cent.”