The Manufacturing License: A Guide for Malaysian Manufacturers
The Industrial Coordination Act 1975 (ICA) requires certain manufacturing companies to secure a license from the Malaysian Investment Development Authority (MIDA). The ICA was established to regulate and support structured growth in Malaysia’s manufacturing industry. Under this act, businesses involved in manufacturing activities must obtain a manufacturing license if they meet certain criteria. This ensures fair business practices, promotes the interests of both local and foreign investors, and fosters sustainable development within the sector.
Who Needs a Manufacturing License?
According to the ICA, companies engaged in manufacturing must apply for a license if they meet one or both of these thresholds:
- Shareholders’ Funds of RM2.5 Million or More: This includes paid-up capital, reserves, and retained earnings, excluding specific capital reserves.
- A Workforce of 75 or More Full-Time Paid Employees: Defined as employees working at least six hours daily, 20 days monthly, for 12 months.
Companies that do not meet these requirements can apply for an exemption letter instead of a license. This exemption allows them to access various government facilities, such as import duty exemptions on machinery, equipment, and raw materials, as well as investment incentives under the Promotion of Investments Act 1986 and the Income Tax Act 1967
Additional Requirements in Selangor: No Objection Letter (NOL)
For manufacturing companies operating in Selangor, an additional requirement applies: obtaining a No Objection Letter (NOL) from the Selangor State Government. The NOL is a prerequisite mandated by the Ministry of International Trade and Industry (MITI) and MIDA before the official manufacturing license can be granted.
Who Needs to Apply for the NOL?
Any company in Selangor that has received a Letter of Manufacturing License Approval from MITI/MIDA is required to apply for the NOL. This step ensures that the state government has no objections to the company's manufacturing activities within its jurisdiction.
Application Process for the NOL
To apply for the NOL, manufacturers must follow these steps:
- Registration: Sign in or sign up on the Invest Selangor website to initiate the application.
- Form Completion: Fill out the NOL electronic form (e-form) with accurate company details.
- Submission of Supporting Documents: Attach certified copies of the required documents, which include:
- Form 9, 24, and 49
- A list of products or product catalog
- A copy of the Letter of Manufacturing License Approval from MITI/MIDA
- A copy of the Land Title or Land Conversion Approval
- A copy of the Certificate of Fitness
- A copy of the Sale & Purchase or Tenancy Agreement
- A copy of the business license from the local authority
Ensuring the completeness and accuracy of these documents is crucial for a smooth application process.
Required Documentation for Manufacturing License Application
To apply for a manufacturing license from MIDA, companies must prepare and submit the following documents:
- Certificate of Incorporation from the Companies Commission of Malaysia (SSM)
- Valid Business License from the Local Authority (Majlis Perbandaran)
- Company Profile from SSM
- Latest Audited Financial Statements or Management Account
- Detailed Business Plan
- List of Machinery and Function
- List of Raw Materials, Quantity, and Supplier Information
- List of Products, Quantity, and Customer Information
- Factory Layout Plan
- List of Manpower, divided into Management, Technical, Clerical, Administrative, and Factory Worker categories
These documents help MIDA assess the company's operations, ensure compliance with local regulations, and provide an accurate profile of its manufacturing activities.
Penalties for Operating Without a Manufacturing License
Under the ICA, engaging in manufacturing activities without a valid manufacturing license is an offense. Violators may face penalties including a fine of up to RM2,000, a jail sentence of up to six months, and an additional daily penalty of RM1,000 for each day the offense continues. This emphasizes the importance of regulatory compliance for manufacturers operating in Malaysia.
MIDA maintains stringent oversight of the manufacturing sector to ensure compliance with all relevant regulations. By adhering to MIDA’s requirements, manufacturers can benefit from various government incentives and contribute to a sustainable and growth-oriented industrial landscape in Malaysia.
Land Search Considerations in Manufacturing License Applications
During the process of applying for a manufacturing license, businesses may need to access the latest information regarding encumbrances and transactions related to the land where their factory will be located. For example, manufacturers may need to verify ownership details or check for encumbrances through a land search to ensure the land is free from legal claims or disputes that could impact business operations. Additionally, manufacturers may need to obtain the Pelan Tanah (land plan) for the specific plot of land or secure a Certified True Copy (CTC) of documents related to any encumbrances or legal matters under the land title. These documents serve as proof of land ownership and confirm the suitability of the land for industrial use.
If you require assistance with these land-related documents, EasyLaw can help. We offer services to obtain land searches, whether it’s a private land search, an official land search, or a certified true copy of the title. Additionally, if you need to extract specific documents from the Land Office, we can handle this on your behalf.
We understand that visiting the Land Office in person can be time-consuming and inconvenient. Instead, we provide a hassle-free solution, allowing you to obtain all necessary documents without leaving your office or business premises, saving valuable time and energy.
Let EasyLaw take care of these tasks for you , so you can focus on what matters most—growing your business.
Contact Us Today!
For a seamless and efficient solution to your land-related document needs, reach out to EasyLaw:
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