LABUAN: The Federal Government has approved the implementation of the Waterfront Development Project Phase One, which is expected to give a major boost to Labuan’s duty-free economy, particularly in strengthening its tourism and services sectors.
Minister in the Prime Minister’s Department (Federal Territories) Datuk Seri Dr Zaliha Mustafa said with the island already enjoying duty-free status, stakeholders believe the waterfront redevelopment will enhance Labuan’s attractiveness to investors, visitors and local businesses, provided it is implemented effectively.
The approval for the implementation of the project was announced by Prime Minister Datuk Seri Anwar Ibrahim during the tabling of the 2026 Budget on Friday.
She said the Federal Government has earmarked the allocation for the initial phase of a waterfront revitalisation project along Victoria Harbour Beach, at the site of the former wet market in downtown Labuan.
The project will include promenade walkways, public event spaces, food and bazaar precincts, sea-sport and water taxi facilities, lighting, parking and supporting infrastructure. Labuan Corporation, as the implementing agency, has initially estimated the total cost of the project to be RM38 million.
Dr Zaliha said the project, aimed at stimulating economic activity, can attract private investment, create job opportunities and elevate Labuan’s tourism profile.
“It also aligns with the Labuan Local Plan 2040 and the Labuan Development Blueprint 2030, both of which emphasises smart tourism, green growth and improved public amenities,” she said.
Dr Zaliha described the Government’s move as a positive and much-needed development for the island.
“Such a dedicated infusion of capital into Labuan’s waterfront is precisely what the local economy needs to transition from a passive tax haven into a vibrant economic hub,” she said.
She said the redevelopment would complement Labuan’s existing fiscal advantages by enhancing its liveability, visitor experience and investor confidence.
Dr Zaliha said the project also has the potential to generate significant spillover benefits for small and medium enterprises (SMEs) involved in hospitality, food and beverages, water tourism, cultural activities and support services. “If properly implemented, the Waterfront Development Project could redefine Labuan’s identity from a quiet duty-free island into a dynamic coastal destination featuring public attractions, night-time activities and waterfront commerce.
“The 2026 Budget allocation is an encouraging start. What matters now is effective execution and ensuring that the local economy gains maximum benefit,” Dr Zaliha added.
She said the Government remains committed to supporting the long-term development of Labuan and will work closely with local stakeholders to ensure the success of the Waterfront Development Project.
