Establishing Factory Operations in Malaysia : Manufacturing Licence and Certificate of Origin
Establishing Factory Operations in Malaysia including obtaining the Manufacturing Licence and Certificate of Origin can be made easy, once the investor understands the Procedures and Regulations in Malaysia.
Registration of Malaysian Incorporated Company
In order to Purchase or Rent Industrial Properties in Malaysia, the first step is the setting up to a Malaysian Incorporated Private Limited Company (Sendirian Berhad – Sdn. Bhd.). The Registration with Suruhanjaya Syarikat Malaysia (SSM) is in compliance with Companies Act 2016. This can be done within 2 weeks with the help of Registered Company Secretary.
The support team of industrialspace2u.com is able to assist the investor to complete this process expeditiously.
Opening of Bank Accounts
Upon Opening of Bank Account in Malaysia, Share Capital Injection from Overseas for the Purchase of Industrial Property or Tenancy of Factory/ Warehouse can be done hassle free once the intention of cash injection is made clear. This is because the Central Bank of Malaysia (Bank Negara Malaysia) monitors the inflow movement of funds cross border via Anti-Money Laundering Act (2001) and Exchange Control Rules.
Manufacturing Licence
The Manufacturing Licence is an important document required for the application of Certificate of Origin
What is a Manufacturing Licence ?
The Industrial Coordination Act (ICA), 1975 defines manufacturing activity as “…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”.*
The Industrial Coordination Act, 1975 requires person(s) engaging in any manufacturing activity with;
• shareholders’ funds of RM2.5 million and above; or
• employing 75 or more full-time paid employees;
to apply for a Manufacturing Licence.
Eligibility Criteria for Manufacturing Licence
• Companies with shareholders’ funds of RM2.5 million and above or engaging 75 or more full-time paid employees*;
• Project’s Capital Investment Per Employee (CIPE) is at least RM140,000.00;
• Total full-time workforce of the company comprises of at least 80% Malaysians. Employment of foreign workers including outsourced workers is subject to current policies;
• At least 25% of the company’s full time workforce are managerial, technical, and supervisory (MTS) staff with degree and/or diploma/certificate or product’s value added is at least 40%;
• The project must be consistent with the national economic and social objectives and promotes an orderly development of manufacturing activities in Malaysia.
The support team of Industrialspace2u.com is able to assist you with the application of Manufacturing Licence.
Local Authority/ Local Municipal Business Licence
Once Site Selection of Factory or Warehouse has made, the signed Sale and Purchase Agreement or Tenancy Agreement would need to be Stamped via Payment of Stamp Duty to Inland Revenue Board of Malaysia.
The Stamped Tenancy Agreement is a Critical Document to enable the application of Local Authority Business Licence. The issuance of the licence would be subject to obtaining approvals obtained from:-
• Department of Environment (DOE)
• Department of Occupational Safety and Health (DOSH)
• Fire Department (also known as “Bomba”)
In order to ensure Compliance to proper Immigration Procedures, employment of Foreign Nationals working for the newly established factory will have to be applied via the Malaysian Industrial Development Authority (MIDA) Manufacturing Licence – Expatriate post. MIDA is a government body established under Ministry of International Trade and Industry (MITI) that oversees the setting up new factory operation in Malaysia.
The support team of industrialspace2u.com is able to assist you with the application of Manufacturing Licence, Expatriate Posts as well as Tax Incentive application, where applicable.
It is advisable that the Manufacturing Licence, Expatriate Post and Exemption of Import Duty for Machinery and Equipment is to be submitted concurrently to avoid delay in the processing. Application for Exemption of Import Duty for Machinery and Equipment shall be made before the items are purchased or imported and requires evidence of registration made earlier with Department of Occupational Safety and Health (DOSH).
Certificate of Origin
What is Certicate of Origin ?
Certificate of Origin is a document that certifies the country of origin of a particular product
The Certificate of Origin is intended solely to prove the origin of goods in order to satisfy customs or trade requirements such as supporting letter of credit. It can also be used as supporting documents for the issuance of corresponding COs by another authorised Chamber of Commerce and Industry.
Criteria to be met for Rules of Origin:-
• Manufactured in Malaysia & used 100% local materials; or
• Manufactured in Malaysia through transformation process which alters tariff code classification at six (6) digit level; or
• Contains at least 25% local materials
There are two types of Certificate of Origin. Preferential Certificate of Origin and Non Preferential Certificate of Origin. The term Preferential Certificate of Origin (PCO) refers to the preferential tariff reduction for products offered under the Free Trade Agreements between Malaysia and partner countries, provided the rules of origin are fulfilled. Free Trade Agreement is an agreement made between two or more countries under which countries involved are given preferential market access.
Non-Preferential Certificate of Origin (NPCO) or Ordinary COs are issued by Chambers and Associations authorized by Ministry of International Trade & Industry, Malaysia. List of Chambers and Associations include Federation of Malaysian Manufacturers (FMM), Malaysia China Chambers Of Commerce, Arab Malaysian Chamber of Commerce and Malaysian German Chamber of Commerce (MGCC) to name a few
The Compliance to the above Procedures and Processes can be made easy with assistance the support team at industrialspace2u.com. We have a range of industrial property available for sale and rent for your warehouse and factory requirements. Contact Joyce at +6017 333 8007 or joyce@industrialspace2u.com today !
