In 1984 Labuan, was made a federal territory, and ceased from the administration of Sabah. Labuan continues to enjoy closed relation with Sabah because of its geographical position and its people, many of them have closed family tie with the mainland Sabahan.

Labuan is an island located near the South West corner of Sabah with a GPS position of 5° 19′ N, 115° 12′ E, and has a land mass of 95 square kilometre. The Premier International Offshore Financial Centre (IOFC) of Malaysia is what made Labuan known to the outside world. A full range of offshore financial services include offshore banking, offshore insurance, trust business, investment banking, and management services.

Two memorials related to the Second World War were built in Labuan sometime after the war. The World War Two Memorial is the largest war grave in Malaysia, with about four thousand soldiers, consisted of mostly Australian, British, and Indian. Every year a memorial service is held on a Sunday closest to 11th of November. The other war memorial is at Layang-Layangan, the Peace Park, and also the place where the Japanese Soldiers surrendered.

A visit to Labuan will not be complete without visiting the mystery 106 feet Chimney, Labuan’s most well known landmark. Some people believe the Chimney was a connected with Labuan coal mining past, but recently archaeological study found no trace of smoke, therefore the Chimney mystery linger on.

Three huge geodesic domes like structure made up the Bird Park. A wide varieties of birds are house under these domes, birds like hornbills, kingfishers, herons, and even ostriches. The Bird Park is located near Tanjung Kubong Tunnel.

For the scuba diving enthusiasts the sea around Labuan offers four wreck dives, these wrecks lies between the depth of 30 m and 35 m . The biggest ship wreck is the American wreck, which is formerly the USS Salute, a US minesweepers went down in 1945. Near by is the Australian wreck, just 1.4 km apart. Blue Water wreck has the best visibility among the four wrecks, and the Cement wreck with its upright position in the sea bed is the most colourful and great for photos.

Labuan is also a duty-free island, making its imports relatively cheaper than other part of the country. Alcohol, chocolates, perfumes, and tobaccos are a bargain at the downtown shopping areas. In Labaun a can of beer is cheaper than a can of coke.

There are daily flights to Labuan from Kota Kinabalu, Kuching, and Kuala Lumpur. The main airlines serving this route is AirAsia and Malaysia Airlines. By sea: there is a 3 hour ferry to Kota Kinabalu twice a day, and one hour ferry to Brunei twice daily. Smaller boats also ferry passengers to Menumbok about 30 minutes, and from Menumbok to Kota Kinabalu is a 2 hours journey by roads.