Labuan

Labuan, island and Federal Territory of Malaysia, located 9.7 km (6 mi) off the north-western coast of the island of Borneo. The town of Bandar Labuan is the capital of Labuan. The area of the island is 91 sq km (35 sq mi).

In 1846 Labuan was ceded to Great Britain by the Sultan of Brunei, as a base for the Royal Navy's campaign to suppress piracy in the region. It was made a Crown Colony in 1848, but from 1890 to 1906 it was administered by North Borneo. Labuan was then incorporated into the Straits Settlements. After being occupied and badly damaged by Japanese troops during World War II, the island in 1946 again became part of the colony of North Borneo, which joined Malaysia in 1963 as part of the state of Sabah. From that year until 1966 Labuan was the headquarters of British Commonwealth forces during the “Confrontation” with Indonesia along the border in Borneo.

The island's original economic development was as a trans-shipment point for trade from Brunei, North Sarawak, and West Sabah. Labuan was ceded to the federal government in 1984 by the State of Sabah and was declared an offshore banking centre in 1990, the first of its kind in the Asia-Pacific region. Special legislation was introduced during the 1990s to encourage banking and related financial activities. Population 70,400 (1997 estimate).