Travel Guide to Malaysian Borneo's Labuan Island

Labuan Island, Malaysia
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The small island of Labuan has been an important maritime port for more than three centuries. Once a place to rest for Chinese traders coming to do business with the Sultan of Brunei, the island was affectionately given the name "Pearl of the South China Sea."

As Malaysia's only deep-water anchorage just six miles from the northwestern coast of Borneo, Labuan Island was a highly-strategic point during World War II. The Japanese used Labuan as the operating base for their campaign against Borneo and officially surrendered on the island in 1945.

Today, Labuan Island enjoys the duty-free status and is an epicenter for shipping, trade, and international banking. The small island of around 90,000 residents is still highly-prized for its hurricane-free, deep-water port at the mouth of Brunei Bay. The island also serves as an excellent stopover for travelers crossing between Brunei and Sabah.

Although Labuan Island is located just a few hours by boat from the tourist city of Kota Kinabalu in Sabah, very few Western tourists end up on the island. Instead, the cheap alcohol and shopping on Labuan Island draw residents from nearby Bandar Seri Begawan in Brunei as well as Miri in Sarawak.

Despite being highly-developed, Labuan Island still feels as though tourism has missed it somehow. The local people are warm and courteous; there are none of the usual hassles. The miles of pristine beaches remain untouched - even deserted - on weekdays!

Things to Do on Labuan Island

Aside from the beaches and tax-free shopping, Labuan Island is pleasantly sprinkled with free sites and activities. One excellent way to explore the island's small wonders is to rent a bicycle and move from site to site, taking the time to cool off with dips in the sea along the way.

Labuan Island is also known for its world-class sports fishing and wreck diving.

Shopping on Labuan Island

Labuan Island is tax-free; prices for alcohol, tobacco, cosmetics, and some electronics are significantly discounted compared to the rest of Malaysia. Duty-free shops are scattered around the city center; serious shoppers should proceed to Jalan OKK Awang Besar for retail outlets stocked with fabrics, souvenirs, and other cheap goods.

An open-air market is held every Saturday and Sunday with stalls offering handicrafts, sweets, and local goods. Aside from a small shopping mall integrated into the Financial Park Complex, most shopping takes place on the eastern edge of the city center. The Labuan Bazaar, market and several Indian shops comprise a mini-shopping district.

Ammunition on wreck of USS Salute.
Michael Aw / Getty Images

Scuba Diving on Labuan

Although the war and bad circumstances produced four excellent wrecks just south of Labuan in Brunei Bay, diving is inexplicably even more expensive than nearby Sabah. The inflated diving prices are unfortunate; the protected marine park and reefs surrounding Labuan's six small islets are full of life.

Nearby Pulau Layang-Layang is considered a top diving destination in Southeast Asia. A three-star dive resort offers diving along the wall which drops to a depth of 2000 meters. Hammerhead sharks, tuna, and bigeye trevallies frequent the wall.

Islands Near Labuan Island

Labuan is actually comprised of the main island and six tiny tropical islets. It is possible to make day trips to the islands for swimming, enjoying the beaches, and exploring the jungle.

The islands are privately owned; you must get a permit before taking a boat from the Old Ferry Terminal. Inquire at the Tourist Information Centre just north of Labuan Square in the city center.

The islands which make up Labuan are:

  • Pulau Daat
  • Pulau Papan (the closest and most-developed)
  • Pulau Burung
  • Pulau Kuraman
  • Pulau Rusukan Besar
  • Pulau Rusukan Kecil

Getting Around

Numbered minibusses run unscheduled circuits around the island; a one-way fare costs 33 cents a ride. You must hail the minibusses from any bus stand. The primary bus stand is a simple lot located opposite of the Victoria Hotel on Jalan Mustapha.

A few Taxis are available on Labuan Island; most do not use meters so agree on a price before getting inside.

Renting a car or bicycle is a great way to move around the small island. Car rentals and fuel are both cheap; an international driving license is required.

Getting to Labuan Island

Labuan Airport (LBU) is located only a few miles north of the city; regular flights by Malaysia Airlines, AirAsia, and MASWings connect Brunei, Kuala Lumpur, and Kota Kinabalu.

Most travelers arrive by boat at the Labuan International Ferry Terminal on the southern coast of the island. To reach the bus stand, exit the terminal and begin walking right on the main street. At the roundabout, take a left onto Jalan Mustapha; the bus stand will be on the left.

Several companies run ferries to Kota Kinabalu (90 minutes), Muara in Brunei (one hour), and Lawas in Sarawak. Arrive at the ferry terminal at least one hour early to purchase your ticket; boats do fill up regularly. If you are traveling to Brunei, plan enough time to get stamped out at immigration before taking the ferry.