Labuan was expected by the British to be a second Singapore, but it did not fulfill its promise especially after the failure of its coal production that did not become fruitful, causing investors to withdraw their money, leaving all machinery equipment and Chinese workers that had entered the colony previously.

[5] Brooke urged the British to establish a naval station, colony or protectorate along the northern coast to prevent other European powers from doing so which being responded by the Admiralty with the arrival of Admiral Drinkwater Bethune to look for a site for a naval station and specifically to investigate Labuan in November 1844,[6] along with Admiral Edward Belcher with his HMS Samarang to survey the island.

[6] On 24 February 1845, Admiral Bethune with his HMS Driver and several other political commissions left Hong Kong to survey the island more.

[10] Brooke acquired the island for Britain through the Treaty of Labuan with the Sultan of Brunei, Omar Ali Saifuddin II on 18 December 1846.

[12][13] Brooke supervised the transferring process and by 1848, the island was made a crown colony and free port with him appointed as the first Governor.

[26][28] The liberation of the whole of Borneo began on 10 June 1945 when the Allied forces under the command of General Douglas MacArthur and Lieutenant-General Leslie Morshead landed at Labuan with a convoy of 100 ships.

[29] The 9th Australian Division launched an attack, with its 24th Brigade landing two battalions at the island southeast protrudance and the north side of Victoria Harbour on Brown Beach while being supported by massive air and sea bombardments.

[30][31] The landings were witnessed by MacArthur on board the USS Boise (CL-47) when he decided to proceed further south from the southern Philippines to Labuan.

Governor John Fitzpatrick imported a group of Dublin policemen to clean up the island and enforce health regulations during his term.

The Europeans were mainly government officials and staff of companies, the Chinese were the chief traders with most of the industries in the island in their hands, while the Malays were mostly fishermen.