Entering Malaysia’s manufacturing sector requires more than just capital, it demands operational precision, regulatory alignment, and location-specific readiness.
Whether you’re building a production facility, assembling components, or refining petrochemical streams, the licensing process is structured to ensure safety, compliance, and strategic contribution to national priorities.
This guide offers a high-level overview of what foreign investors must prepare before applying for a manufacturing license, from incorporation and factory setup to incentive-linked approvals.
For foreign investors looking to enter Malaysia’s industrial landscape, securing a manufacturing license is a critical step. Manufacturing in Malaysia is governed by clear definitions and eligibility thresholds. Below is a simplified overview of what qualifies as manufacturing, the key features of the license, and the basic criteria companies must meet to apply.
What Counts as Manufacturing in Malaysia?
Manufacturing refers to the process of transforming raw materials—organic or inorganic—into new products by changing their size, shape, composition, or quality. This includes:
These activities qualify as manufacturing under Malaysia’s licensing framework.
Key Features of the Manufacturing License
Basic Eligibility Criteria
To qualify for a manufacturing license, a company must:
Additional conditions may apply depending on the sector, location, and nature of operations.
Securing a manufacturing license in Malaysia is not just a regulatory requirement—it’s a strategic milestone. Here’s how to get ready:
Step 1: Incorporate Your Company and Meet Capital Requirements
Before anything else, ensure your company is:
Incorporated as a local private limited company (Sdn Bhd)
Has a paid-up capital of at least RM2.5 million (or meets the employment threshold of 75 full-time staff)
You’ll also need a Malaysian corporate bank account to demonstrate financial readiness and facilitate capital injection.
Step 2: Secure and Prepare Your Factory Premises
Manufacturing licenses are tied to physical operations. You must:
Lease or purchase a factory with a valid tenancy agreement or sales & purchase contract
Know the exact location of the facility to engage the relevant State Investment Authority
Obtain the following clearances:
Building and structural approval from the local authority
Fire safety clearance from the Fire and Rescue Department
Environmental approval from DOSH (Department of Occupational Safety and Health)
Utility clearance from providers like TNB (electricity) and SYABAS (water)
These documents form the backbone of your manufacturing license application.
Step 3: Apply for Interim Manufacturing Approval
Before full licensing, you may need to apply for interim approval—especially if you’re starting operations while awaiting final clearance. This involves:
Submitting a self-declaration via MIDA’s online portal
Providing detailed documentation on your business model, investment scale, and operational readiness
Engaging with MIDA for site visits or technical assessments
XpatMobi offers free consultations to help you navigate this multi-step process efficiently.
Step 4: Apply for Investment Tax Allowance (ITA)
If your project is capital-intensive, you may qualify for Investment Tax Allowance (ITA):
Offers 60%–100% allowance on qualifying capital expenditure
Can offset up to 100% of statutory income
Unused allowances can be carried forward indefinitely
This incentive is ideal for companies investing in machinery, industrial buildings, and automation systems.
Step 5: Tap Into Import Duty & Sales Tax Exemptions
Manufacturers may also apply for:
Import duty exemptions on machinery and equipment
Sales tax exemptions on ICT and production-related assets
These incentives reduce upfront costs and accelerate operational readiness.
Final Step: Submit Your Manufacturing License Application
Once all conditions are met, you’re ready to apply for the full Manufacturing License via MIDA’s online portal:
Ensure all documentation is complete and aligned with ICA 1975 requirements
Processing typically takes 4–6 weeks, depending on project complexity
Approval is based on strategic alignment, capital investment, and compliance readiness
Securing a manufacturing license in Malaysia is not just about meeting minimum thresholds—it’s about demonstrating operational readiness, strategic alignment, and long-term value creation. From incorporation and capital injection to factory setup and regulatory clearances, every step signals your intent to build with scale and compliance.
For foreign investors, this process unlocks more than just permission to operate. It opens access to Investment Tax Allowance (ITA), import duty exemptions, and the potential to align with Malaysia’s promoted sectors under the Promotion of Investments Act 1986. These incentives are designed to reward companies that contribute to national priorities—advanced manufacturing, sustainability, and regional integration.
XpatMobi supports foreign manufacturers through:
