Foreign Investment: Setting up of Manufacturing Business in Malaysia- Approval Criteria


     By L Y Lu & Co

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Foreign investor manufacturing license application – Malaysian government’s guidelines requirement.

The Malaysian Government’s guidelines for approval of industrial/manufacturing projects in Malaysia are based on the Capital Investment Per Employee (C/E) Ratio. Projects with a C/E Ratio of less than RM55,000 are categorized as labor-intensive and thus will not qualify for a manufacturing license or for tax incentives. Nevertheless, a project will be exempted from the above guidelines if it fulfills one of the following criteria:

(a) The value-added is 30% or more; or

(b) The Managerial, Technical and Supervisory (MTS) Index is 15% or more; or

(c) The project undertakes promoted activities or manufacture products as listed in the List of Promoted Activities and Products – High Technology Companies (Please refer to Part 3 of this Article); or

(d) It is located in the promoted areas i.e the States of Sabah, Sarawak, Perlis and the designated Eastern Corridor of Peninsular Malaysia (the states of Kelantan, Terengganu, Pahang and the district of Mersing in the State of Johor); or

(e) Existing companies (formerly exempted) applying for a manufacturing license.

ABOUT THE AUTHOR: Ong Mun Siong
Mun Siong was admitted into Malaysian Bar in 2006 after 11 years of military service with the Malaysian Armed Forces which earned him the rank of Captain. During the career as a military officer, Mun Siong was appointed as a member of court martial and also worked as defense council in the court martial proceedings. Mun Siong received his Bachelor of Laws from University of London in 2004 and Certificate of Legal Practice in 2005.

Mun Siong joined Messrs L Y Lu & Co in 2010 after heading the property section in a major Kuala Lumpur law firm. Mun Siong’s practice focuses on all areas of commercial and consumer banking and real estate transactions of which including the purchase, sale, leasing and financing of residential, industrial, retail and office properties.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.