Originally a pestilential swamp, Labuan lies 115km southwest of KK and only 50km northeast of BSB (Brunei) and if it were a school student, the report card would read, 'failed to live up to expectations'. The Sultan of Brunei ceded Labuan to the British in 1846 and it remained part of the empire for 115 years, during which time it was distinguished by a failed coal industry and the Pollyanna-like optimism of some British officials, who believed that Labuan might become the next Singapore.
The Japanese held the island for three years during WWII and it was here that the Japanese forces surrendered at the end of the war, and the officers responsible for the death marches from Sandakan were tried.
Bandar Labuan is the main town and the transit point for ferries linking Kota Kinabalu and Brunei. Duty-free shopping and ample booze make it a favourite destination for Bruneians.