KUALA LUMPUR: The government should provide tax initiatives for all types of businesses in Labuan to its economy.
This is the only way to make Labuan welcome to investors, Senator Tan Sri Anifah Aman said at the Dewan Negara today.
"Currently, only 23 types of businesses governed by Labuan Financial Services Authority (LFSA) enjoy a 3.0 per cent tax rate.
"Why not extend this priviledge to all businesses in Labuan. That way, people will come in and invest in Labuan, spurring the economy," said Anifah.
He also said the island's duty free status must be revised to ensure that it is fully duty free again.
"Back then, Labuan was a fully duty free island. Now there have been many changes in policies made by the previous government.
"It's current status as a restricted duty free island is one of the reasons of the poor economic conditions there."
He added that allowing a 3.0 per cent tax rate on all businesses can be a stepping stone towards making the island a fully tax exempt island.
The poor economic conditions and the difficulties in finding jobs on the island have caused people to call for Labuan to be returned to the Sabah state government because people feel like they have been sidelined by the federal government.
"People in Labuan feel like they are step sons and daughters. Labuan was supposed to be developed like the other federal territories but it wasn't", he added.
Anifah also spoke on the importance of upholding the federal constitution to ensure its full implementation for the benefit of Sabah, Sarawak and Labuan.
He added that this was in accordance with the recent royal address by His Majesty the
Yang di-Pertuan Agong Sultan Ibrahim ibni Almarhum Sultan Iskandar who convened the opening of the third session of the 15th Parliament.
"It is important to adhere to the federal constitution as the supreme law of the nation," said Anifah, whose sentiments was echoed by fellow Senator Datuk Dr Mujahid Yusof Rawa.
Drawing attention to specific provisions within the Federal Constitution, Anifah pointed out Article 112C and Schedule 10, which stipulate that the federal government must allocate 40 prr cent of federal revenue collections to the state governments of Sabah and Sarawak.
"The interim payment of RM300 million to the Sabah government is very welcome.
"However, what else are we waiting for? The constitution is clear. The 40 per cent is clear," he added, raising concerns regarding the ongoing discussions on the implementation mechanism.
Anifah also asked the federal government to allow the Sabah government to issue its own manufacturing license for investments of up to RM100 million.
"Currently, the Sabah state government can only issue state government approvals for investments below RM2.5 million.
"Do you know that the cost to set up a McDonalds is already RM2.8 million?
"So can't Sabah approve manufacturing licences above RM2.5 million?" he asked.