Initially, the proposal for accommodation Labuan Island under Federal Government was announced by Sabah Chief Minister Datuk Harris Mohd. Salleh after Barisan Nasional Meeting at Kuala Lumpur on 1 st August 1983. Sabah State Assembly Hall has conferred on 8 th March 1984 (Federal Territory Of Labuan Enactment 1984). On 16th April 1984, Labuan Federal Territory was officially formed according to Constitutional Act (Amendment) 1984. Sabah border was amended due to the formation of Labuan Federal Territory. As was confined under Constitutional allocation Item 3 and Item 4 (Amendment) (No 2) 1984. Labuan as Federal Territory will consist from Labuan Island and all territories with 4.8km coverage (3 nautical miles) from the particular island, including Rusukan Besar, Rusukan kecil, Kuraman, Burong, Papan dan Daat islands.

It will be governed under Federal Government and was placed under Ministry Control. Meanwhile, 16 th April 1984 in Labuan, it will be a historical event and meaningful to the citizens. Thousand of Labuan citizens witnessed Prime Minister, YAB Datuk Seri Dr. Mahathir B. Mohamad and Sabah Chief Minister, Datuk Harris Mohd. Salleh signing “Labuan Agreement” documents that has changed Labuan status to the Federal Territory. Various even and ceremonies and events such as Barisan Nasional Higher Meeting , Taman Damai Officiating in Layang-layangan, Spin competition as well as lantern and car parade to enlighten the Labuan memorable Day.