Small Illusions
Sydney Morning Herald
Wednesday October 19, 1994
ON Labuan Island in Malaysia, the talk on the waterfront is smuggling. They don't actually call it that, of course: they call it bartering or exchange or even that old standby, "import-export". Nevertheless, smuggling it is.
Like everything else on Labuan, however, this is difficult to confirm. Labuan, just off the coast of Sabah (formerly British North Borneo), is one of the strangest, most secretive islands in the world. Nothing is quite what it seems.
It was the island's entry in a guidebook that caught my eye. It explained how Labuan, a British colony since 1846, had fallen into decline: "The island was little more than a malarial swamp and its inept colonial administration was perpetually plagued by fever and liver disorders. Its nine drunken civil servants provided a mine of eccentricity for the novelists Joseph Conrad and Somerset Maugham."
Now, the Malaysian Government is intent on turning Labuan into a South China Sea version of Bermuda. With a population of only 30,000, the island has been declared a duty-free zone. Twenty or so offshore banks have opened, and new apartment blocks and hotels are going up everywhere.
But the island's atmosphere remains that of a frontier town: a rough-and-ready place of "string-vest millionaires" grown rich through the barter trade. To other Malaysians, this part of the country is known as the Wild East.
To reach Labuan you take a half-hour flight from Kota Kinabalu, Sabah's capital, and descend into a landscape of low scrubby hills. To the west of the island there are coral-fringed beaches, and a new Sheraton resort that also serves as a social centre for the island's many expatriates.
Around the coast are a scattering of pretty Malay kampungs, with wooden huts on stilts and fishing boats drawn up on the sand. There are one or two underwhelming tourist attractions such as the war memorial and the old chimney of the former coal mine, but it's in Labuan town that all the action takes place.
I arrived at the weekend and the place was unusually quiet; a dusty shambles of low-rise buildings baking in the tropical heat. A group of Chinese merchants was playing mah-jong outside a shuttered duty-free shop. Near the empty market was an arcade of bars, where a plate of noodles and an ice-cold Anchor beer cost a very reasonable 75 cents. The Indonesian hookers at the Hotel Pertama next door charge more, but were off duty for the afternoon, slumped quietly in the shade. The waterfront was deserted, the "barter boats"having been ordered back to their anchorages for the night.
The barter trade works like this. Boats arrive from the Philippines carrying supplies of copra and hardwood. These are traded on the Labuan docks for duty-free electrical goods, cigarettes, jeeps and motor bikes, which quickly find their way back to Manila. By - allegedly - over-declaring exports and under-declaring imports, the traders can make huge profits. A lucrative sideline is in duty-free booze, much of which winds up in the neighbouring"dry" State of Brunei. Figures are hard to come by, but one source estimates the official turnover on the docks to be about $A200 million a year.
With so much money involved the stakes are high. Mindful of pirates, the barter boats cross the South China Sea armed with M-16s, bazookas and other weaponry, which is turned into the Labuan Coastguard for safekeeping on arrival, and collected again on the way out.
I learned these things from an Englishman I'll call Jonathan, whom I'd met on the nearby island of Kuraman, where the ex-pat community congregates on Sundays for swimming and barbecues. Of all the people I met on Labuan, Jonathan seemed the least afraid of answering a direct question.
He spoke with the louche drawl of the public schoolboy gone wrong. He'd left his job on the London Stock Exchange under a cloud, and drifted south through Asia dabbling in construction here, and marketing there. Now, like the rest of the ex-pat population of Labuan, he was involved in "import-export". It was Jonathan himself who introduced the subject of murder. "If you've got the money you can get anything you want done out here," he said in a satisfied tone. "Anything."
"Could you have someone killed?"
"Funny you should say that," Jonathan said. "You want to get someone knocked off, I know the people to talk to ..."
Then there was the question of Filipino refugees. Labuan has 10,000 of them, living in ramshackle villages around the coast. Yet another rumour - on an island teeming with them - says the Government tolerates, even encourages, the refugees because it needs their votes: Labuan is a Federal enclave in Sabah's Christian Government - the only non-Muslim government in Malaysia.
But even the refugees can fall victim to market forces. Residents of a squatters' camp just up the coast were about to be forcibly evicted by the police, according to Jonathan. "The owner wants the land back to build a hotel, so he's made some arrangements with the police - on a private hire basis, if you see what I mean."
We looked out over the azure sea. The smell of barbecued meat wafted across the beach; kids splashed about in the shallows. Murder, smuggling, forcible eviction - it all seemed a long way away.
Down at the waterfront the next day the barter boats arrived early, a collection of converted fishing boats, ferries and freighters. The sailors were sinewy, pirate-types with ear-rings and bandanas and they carried stacks of air-conditioners and videos on and off boats and hauled hardwood logs towards waiting trucks.
I chatted to a Customs officer who confirmed the handing-in-of-weapons story. "Some of these men very bad men," he said, glancing around nervously. But he wouldn't be drawn on another rumour, whether pirates were actually operating out of the refugee camps.
Just then a police officer arrived and took exception to my presence. Passport? Papers? Wearing mirrored sunglasses, he looked almost as fearsome as some of the sailors. I backed slowly out of the dockyard gates, smiling.
In Labuan's duty-free stores there are piles of CDs, videos, computers, even designer clothing for sale. Business is brisk, but it will be a million years before Labuan develops the sophistication of Hong Kong or Singapore. Meanwhile, there's something appealing about this slightly dodgy frontier island, an island of rumours, with its motley collection of string-vest millionaires, import-export people, construction men, tourists, sailors, prostitutes and refugees.
After a few days on Labuan I had the feeling that no-one - possibly not even Jonathan - had given me a straight answer in all the time I was there.
On the plane back to Kuala Lumpur my neighbour was a Chinese man in his 30s, whose gold Rolex and black briefcase suggested involvement in business of some kind. What had he been doing in Labuan?
"Oh, I just made a vacation for a few days. And you?"
"Oh, I was just travelling around."
Neither of us believed the other for a moment.
CASE NOTES
MALAYSIA Airlines has flights from Sydney to Kuala Lumpur costing $924 until November 15, rising to $1,044 until mid-December. A return flight from Kuala Lumpur to Labuan costs about $470. Bookings, 13 2627.
There are also express boats and regular ferry connections from Kota Kinabalu, and plane and ferry connections to nearby Brunei.
The Sheraton Manikar Resort is a pleasant, well-managed resort, 20 minutes from town. Details, (087) 41 8700. Alternatively, there are several cheap hotels in Labuan town.
For more information about Labuan Island, contact the Malaysia Tourism Promotion Board, (02) 299 4441 or fax (02) 262 2026.
© 1994 Sydney Morning Herald