MIDA Manufacturing Licence in Malaysia
- Roger Pay
- 1 day ago
- 5 min read
Malaysia Manufacturing License by MIDA
The Malaysian Investment Development Authority (MIDA) is the primary governmental agency in Malaysia responsible for overseeing and promoting investments in the manufacturing and services sectors within the country. Established in 1967, MIDA operates under the Ministry of Investment, Trade and Industry (MITI).
A manufacturing license in Malaysia is an official permit issued by the government, through MIDA, that allows companies to engage in manufacturing activities as defined under the Industrial Coordination Act (ICA) 1975. Manufacturing activity includes 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 also covers the assembly of parts and ship repairing.
When is a Manufacturing License Required?
A company needs to apply for a Manufacturing License if it meets either of the following criteria:
Shareholders' funds of RM2.5 million and above.
Employs 75 or more full-time paid employees.
Even if a company does not meet these thresholds, it still needs to register with MIDA and may apply for an exemption letter from the manufacturing license.
Key Requirements for a Manufacturing License Application:
Besides meeting the financial or employment threshold, the project must also meet the following conditions:
Capital Investment Per Employee (CIPE) of at least RM140,000. This is calculated by dividing the total fixed assets (including land, equipment, buildings, and up to 10 years of rent) by the total number of full-time employees.
A minimum of 80% of the total full-time workforce must be Malaysian citizens.
The company must meet one of the following criteria regarding the skill level or value-added contribution:
At least 25% of the workforce should consist of managerial, technical, and supervisory (MTS) staff with degrees and/or diplomas.
The value-added (VA) of the product must be at least 40%.
Benefits of Obtaining a Manufacturing License:
Holding a manufacturing license can open doors to various incentives and benefits offered by the Malaysian government to promote the manufacturing sector. Some of these benefits include:
Pioneer Status: This grants partial or full exemption from income tax for a specified period (typically 5 to 10 years).
Investment Tax Allowance (ITA): This provides an allowance (e.g., 60% to 100%) on qualifying capital expenditure incurred within a specific timeframe, which can be used to reduce taxable income.
Steps to Apply for a Manufacturing License:
Register Your Business in Malaysia: Ensure your company has a legal presence in Malaysia. For manufacturing companies, a Private Limited Company (Sdn Bhd) is often the preferred structure. This involves registering with the Companies Commission of Malaysia (SSM).
Obtain Mandatory Permits to Operate Your Business: Secure any other necessary permits required for your specific manufacturing activities from relevant local authorities or other government agencies.
Apply for a Manufacturing License with MIDA: Submit your application online through MIDA's InvestMalaysia portal. This requires creating an account on the platform.
Submit Required Documents: Prepare and submit all the necessary documents along with the application form. These typically include:
Certificate of Incorporation issued by SSM.
Business License.
Company profile.
Latest audited financial statements.
Detailed business plan.
List of machinery and equipment.
List of products to be manufactured.
Factory layout plan.
Submit the Interim Approval Letter with Additional Documents: After the initial review, MIDA may issue an Interim Approval Letter and request additional supporting documents. These need to be submitted within the specified timeframe.
Final Review and Issuance: MIDA will conduct a final review of your application and submitted documents. If everything is in order, they will issue the official Manufacturing License.
Fees and Validity:
The application fee for a Manufacturing License is RM1,500.
Once approved, the license typically has a five-year validity period and needs to be renewed. Renewal applications are also submitted online through the InvestMalaysia portal.
Other Relevant Licenses for Manufacturing:
Besides the primary Manufacturing License from MIDA, depending on the specific industry and activities, other licenses and approvals might be required, such as:
Customs Licensed Manufacturing Warehouse (LMW) License: For companies manufacturing goods mainly for export, this license provides exemptions on import duties for raw materials and components. It requires holding a MIDA Manufacturing License.
Environmental approvals from the Department of Environment (DOE), especially for industries with potential environmental impact.
Approvals related to occupational safety and health from the Department of Occupational Safety and Health (DOSH).
Local Authority Composite License: This includes premise and signboard licenses issued by the local council where the manufacturing facility is located.
It is crucial for manufacturers in Malaysia to understand the licensing requirements and comply with all relevant regulations to ensure smooth operations and avoid potential penalties. MIDA serves as a key point of contact and provides guidance throughout the application process.
How Bestar can Help
MIDA Manufacturing Licence in Malaysia
Engaging Bestar can significantly streamline and enhance your application process for a MIDA Manufacturing License in Malaysia. Here's how we can help:
1. Understanding the Requirements and Eligibility:
Expert Knowledge: Bestar possesses up-to-date knowledge of the Industrial Coordination Act (ICA) 1975 and the specific criteria for obtaining a Manufacturing License. We can accurately assess if your company meets the requirements related to shareholders' funds, number of employees, Capital Investment Per Employee (CIPE), Malaysian workforce ratio, and skill level/value-added contribution.
Exemption Guidance: If your company doesn't meet the mandatory license criteria, Bestar can guide you through the process of applying for a Letter of Exemption from Manufacturing License, which still requires registration with MIDA.
2. Preparing the Application and Documentation:
Document Checklist and Gathering: We can provide a comprehensive checklist of all the necessary documents, ensuring nothing is missed. This typically includes the Certificate of Incorporation, Business License, company profile, financial statements, business plan, machinery list, product details, and factory layout.
Ensuring Accuracy and Completeness: Bestar can review and help prepare these documents to ensure they are accurate, complete, and meet MIDA's specific requirements, minimizing the chances of delays or rejection.
Business Plan Development: We can assist in developing a robust business plan that clearly outlines your manufacturing activities, financial projections, and economic benefits to Malaysia, strengthening your application.
3. Navigating the Application Process:
Online Submission Expertise: Bestar is familiar with MIDA's InvestMalaysia portal, where all applications are submitted online. They can guide you through the registration and submission process, ensuring all sections are correctly filled.
Liaison with MIDA: We can act as a point of contact with MIDA, handling inquiries, providing clarifications, and following up on the application status. This can save you significant time and effort.
Expediting the Process: Our experience can help anticipate potential issues and address them proactively, potentially speeding up the approval timeline. MIDA aims to approve complete applications within 7 days (fast track) or 60 days (normal track).
4. Maximizing Incentives and Benefits:
Incentive Identification: Bestar can advise you on the various incentives offered by the Malaysian government through MIDA, such as Pioneer Status and Investment Tax Allowance, that are often linked to holding a Manufacturing License or even an exemption.
Application for Incentives: We can assist in preparing and submitting applications for these incentives, ensuring you meet the specific eligibility criteria and maximize potential tax benefits.
5. Ensuring Compliance and Renewals:
Understanding License Conditions: Bestar can help you understand the conditions attached to your Manufacturing License and ensure ongoing compliance.
Renewal Assistance: We can manage the renewal process, which typically occurs every five years, ensuring timely submission of the required documents through the InvestMalaysia portal.
Bestar Can Help:
Bestar has expertise in MIDA applications.
Bestar assists with company registration and can extend their services to include license applications.
Bestar can provide guidance on the legal aspects of obtaining a Manufacturing License.
Bestar can ensure your financial documents meet MIDA's requirements and advise on potential tax implications and incentives.
In summary, engaging Bestar for your MIDA Manufacturing License application can provide valuable expertise, save time, reduce errors, increase the likelihood of a successful outcome, and help you leverage available incentives. We act as a guide through a potentially complex process, allowing you to focus on your core manufacturing activities.
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