What Budget 2027 means for Langkawi and Labuan, island by island

Prime Minister Anwar Ibrahim said the aim is to boost tourism on the two duty-free islands. The Finance Ministry’s tax measures say the new rules start on 1 January 2027.

The Budget does more than raise a limit. It also touches local products, cash payments, flights and sewerage. This article looks at what each measure could mean for the islands.

What changes for shoppers and traders

The RM10,000 applies to all new goods except a short list. The list covers tyres and tubes, alcoholic beverages, cigarettes, tobacco products, smoking pipes, and e-cigarettes or vapes. Visitors and tourists must stay at least 48 hours.

Labuan’s minimum stay rises from 24 hours to 48 hours, according to the tax measures. Langkawi’s stays at 48 hours. Tioman, Pangkor and Forest City keep their existing treatment, so only these two islands move to the higher limit.

Langkawi traders get a second change. More products made in Langkawi will be exempt from import duty, and Anwar said this supports local entrepreneurs.

At present, 23 listed goods are exempt under the Customs Duty (Exemption) Order 2017, according to the tax measures. The list will be updated and expanded. The reports do not name the new products.

Getting visitors to the islands

The Budget also sets a matching grant for international and charter flights. It targets new direct routes from China, India, Central Asia and Europe. The grant now also covers cruise ships, ferries and tour buses that bring in international visitors.

The reports do not name any Langkawi or Labuan routes. Sabah Tourism, Culture and Environment Minister Datuk Jafry Ariffin called the flight grants a strategic measure. He said they could strengthen air links with those markets.

The Star quotes Regina Chua, 38, from Sabah, on the higher limit and Labuan. She said, “It will encourage more tourists, especially Sabahans, to visit the island.” She applauds the flight grant and hopes for more direct services from Kota Kinabalu to international destinations.

Dr Sri Ganesh Michiel is president of the Malaysian Tourism Federation and national president of MyBHA. He called the duty-free change a “positive initiative”. He said Langkawi should become a “premium island tourism and shopping destination”.

Daily life on the islands

Anwar said residents and tourists on some resort islands struggle to find ATMs. Small businesses lose sales when customers carry no cash. QR payments will reach 15 locations next year, including resort islands.

The speech does not name the 15 locations. It also does not say how much of the RM935 million for tourism and culture will reach Langkawi or Labuan.

The Budget also deals with basic services. Ageing public sewerage systems in Pulau Tuba, Langkawi, Redang and Tioman will be urgently upgraded. The speech lists this under its environment measures, not under tourism.

The Visit Malaysia campaign also continues next year. For Langkawi and Labuan, the next step is Customs guidance on how the new allowance works. Visitors and traders should check it before the rules start on 1 January 2027.