Although it's a duty-free island, the things here are not that cheap. However, the followed items should be cheaper than other places:
Pearl & crystals - Made into jewelleries like brooch, bracelets, pendants, earrings, and baju Melayu buttons. Bazaar Labuan is a good place to shop for them.
Cars - Especially imported ones. But, they are subjected to taxes when transported out of the island.
Chocolate - Lots of choices too, that hard to be found in Peninsular.
Cigarette - The price is half of the Peninsular's, but the flavor is not that desirable to some smokers.
Alcohol
Batik sarongs RM10 is reasonable and normal price in Malaysia, if more than that, than You shouldn't buy it!
Seafood - Wet Market near Bazaar Labuan is a recommended place. You can even ask the sellers to pack the items frozen-ready for flights. Recommended place to buy frozen ready seafood is SBS Seafood Sdn. Bhd in the center of Labuan's town. Just ask the local or taxi's driver, they can show you where is the shop. Recommended to buy - frozen fish coated with flour which is RM14 per bag, deep-fried it; very crunchy + boneless fish!
Things that are really exorbitant here:
Computer stuff - sometimes almost double the Peninsular's.
Electronics
