The Journey to Obtaining Your Manufacturing Licence in Malaysia
Key Updates on Financial Services
Definition of Manufacturing
As defined under Section 2 of The Industrial Co-ordination Act 1975, “manufacturing activity” means the “making, altering, blending, ornamenting, finishing or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery, or disposal and includes the assembly of parts and ship repairing but shall not include any activity normally associated with retail or wholesale trade”.
Further, Section 3 of ICA 1975 says that no person shall engage in any manufacturing activity unless he is issued a licence in respect of such manufacturing activity.
Therefore, all manufacturers must first secure an approval from the Malaysian government and obtain a manufacturing licence before commencing any manufacturing operations. The application for manufacturing licence must be submitted to the Malaysian Investment Development Authority (“MIDA”).
Eligibility Criteria in Applying for Manufacturing Licence
A company that meets the criteria stated below must apply for a manufacturing licence and those which do not meet the criteria have to apply for an exemption from manufacturing licence:
Eligibility Criteria Details Self-check on Eligibility
- Company employs 75 or more full-time paid employees; OR
- Company has at least RM2.5 million of shareholders’ funds
- Project’s Capital Investment Per Employee (CIPE) is at least RM140,000; and
- Total full-time workforce of the company comprises at least 80% Malaysian; and
- At least 25% of the Company’s fulltime workforce is managerial, technical and supervisory staff with degree and/or diploma/certificate; or
- The product must achieve a value added of at least 40%.
For more information, please click on the MIDA’s Guideline on Application for Manufacturing Licence.
Benefits of a company to obtain a Manufacturing Licence
1. Access to a wide range of tax incentives
The company may apply for the “Promoted Activities / Promoted Products” tax incentives, including Pioneer Status, Investment Tax Allowance or other incentives such as Reinvestment Allowance, etc.
2. Indirect Tax / Duties / Sales Tax Exemption
The company can enjoy import duty and/or sales tax exemption for machinery, equipment, components and raw materials used in or by an approved manufacturing or a registered manufacturer.
3. Compliance and Legitimacy
Having the proper licence shows compliance with national industrial policy and regulations which can help with credibility, regulatory ease and potentially access to global opportunities or supply chain.
Key Updates on Education Services
Required Documents for Application
The documents required for the manufacturing licence application are as follows:
- Statutory forms from Suruhanjaya Syarikat Malaysia (also known as the Companies Commission of Malaysia), including a company’s constitution
- Manufacturing Process flow chart
- Valid business licence
- Machinery list and equipment in approved manufacturer’s premises
- Corporate and Products brochure
Step by Step Application Process
Step 1: Initial assessment (Preliminary eligibility review)
Step 2: Completion of comprehensive ML checklist provided by Crowe
Step 3: Compilation of documents and information required for application
Step 4: Submission of application via Invest Malaysia Portal
Step 5: Review of application by MIDA’s officers
Step 6: Issuance of Approval Letter by MIDA
Step 7: Fulfilment by Company of all criteria stated in the Approval Letter
Step 8: Submit supporting documents per MIDA’s Approval Letter within timeline
Step 9: Upon verification, MIDA will issue the final manufacturing licence
Let Crowe support you through your Manufacturing Licence application
Our team provides an end-to-end guidance on eligibility assessment, documentation and submission to MIDA to help you obtain your manufacturing licence.
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