Introduction
Malaysia has long been recognized as one of Southeast Asia’s top investment destinations, particularly in the manufacturing sector. Its strategic location, skilled workforce, and strong government support make it an attractive hub for both local and foreign investors.
However, before a business can begin large-scale production, it may need to obtain a manufacturing license. This requirement ensures that companies operate within the framework of Malaysian law, contribute to economic development, and comply with health, safety, and environmental standards.
This article will walk you through the process of how to apply manufacturing license in Malaysia, explain the eligibility criteria, and address the important question: how much does it cost? We’ll also cover the benefits of obtaining a license and provide answers to common FAQs.
What is a Manufacturing License in Malaysia?
A manufacturing license is an official permit issued under the Industrial Coordination Act 1975 (ICA 1975). The licensing authority is the Malaysian Investment Development Authority (MIDA), which oversees and regulates the manufacturing industry in line with the country’s economic policies.
Not every company needs this license. It is mandatory if:
- The company employs 75 or more full-time workers, or
- The company has shareholders’ funds of RM 2.5 million or more.
Businesses below these thresholds are exempt but may still apply voluntarily, especially if they want to benefit from government incentives, tax breaks, or smoother expansion approvals in the future.
Eligibility Requirements
Before applying, businesses must ensure they meet the criteria set by MIDA. These include:
- Company Incorporation
- The company must be registered with the Companies Commission of Malaysia (SSM), usually as a Private Limited Company (Sdn. Bhd.).
- Capital Investment
- Shareholders’ funds must meet or exceed RM 2.5 million.
- Workforce Size
- A minimum of 75 full-time employees is required for the license to be compulsory.
- Compliance with Regulations
- Companies must adhere to environmental regulations, occupational safety laws, and approved manufacturing activities under MIDA.
Step-by-Step Process to Apply for a Manufacturing License
Step 1: Company Registration
- Register your company with SSM.
- Ensure the company structure is suitable (most commonly, Sdn. Bhd.).
Step 2: Determine Eligibility
- Verify if your company meets the capital and workforce requirements outlined in the ICA 1975.
Step 3: Prepare Documentation
Applicants must prepare and submit the following documents:
- Certificate of Incorporation.
- Company profile from SSM.
- Factory layout plan, including machinery.
- Project proposal with details on investment, workforce, and technology.
- Financial documents (latest audited accounts).
- Environmental approvals (if applicable).
Step 4: Submit Application via MIDA
- Applications are submitted online through the MIDA e-Manufacturing License (e-ML) portal.
- Attach all required documents and ensure accuracy to avoid delays.
Step 5: Review by Authorities
- MIDA evaluates the application.
- They may request additional documents or clarification.
- In certain cases, site inspections are conducted.
Step 6: License Approval
- If approved, the license will be issued and must be displayed at the company’s premises.
- Companies must comply with ongoing reporting and operational requirements.
How Much Does It Cost to Get a Manufacturing License in Malaysia?
One of the most frequently asked questions is about the cost of applying for a manufacturing license.
Government Fees
- The good news is that MIDA does not charge an application fee for manufacturing license submissions. The application itself is free of charge.
Associated Costs
While the application has no direct government fee, there are associated costs that companies should budget for:
- Professional Fees
- Many businesses hire consultants, legal advisors, or corporate service providers to handle the process. Costs vary but typically range from RM 5,000 to RM 20,000, depending on project complexity.
- Document Preparation Costs
- Preparing audited financial statements, engineering drawings, and environmental reports may incur additional expenses.
- Environmental Approvals
- If the project involves chemicals, waste, or potential environmental impact, an Environmental Impact Assessment (EIA) may be required, which can cost RM 10,000 to RM 50,000 or more, depending on the project scale.
- Operational Costs
- Factory set-up, machinery, and compliance-related investments (e.g., safety equipment, waste treatment facilities) also add to the total costs of becoming compliant.
Total Estimated Costs
On average, while the license itself is free, companies can expect to spend anywhere from RM10,000 to RM70,000 (or more) in professional and compliance-related expenses during the application process.
Benefits of Having a Manufacturing License
Securing a manufacturing license is not just about compliance—it comes with advantages:
- Access to Incentives: Companies may qualify for tax breaks, import duty exemptions, and investment allowances.
- Business Credibility: A licensed manufacturer gains trust from investors, banks, and suppliers.
- Expansion Opportunities: Licensed manufacturers enjoy smoother approvals when applying for expansions or new facilities.
- Legal Protection: Operating without a license when required is a violation under ICA 1975, leading to penalties or business closure.
Conclusion
Applying for a manufacturing license in Malaysia is a crucial step for medium- to large-scale manufacturers. While the permit itself is free of charge, businesses must be prepared for associated costs such as professional fees, environmental assessments, and compliance investments.
By following the proper application process and ensuring all documents are in order, businesses can avoid delays and increase their chances of approval. For many companies, hiring professional consultants is a worthwhile investment that saves time, reduces errors, and secures approval faster.
Malaysia remains a strong manufacturing hub, and securing a license ensures that your company can grow with the confidence of being fully compliant with local regulations.
FAQs on Manufacturing License in Malaysia
1. Who needs to apply for a manufacturing license in Malaysia?
Any company employing 75 or more full-time workers or having shareholders’ funds of RM 2.5 million or above must apply.
2. How long does the application process take?
On average, it takes 4 to 6 weeks, depending on the project’s complexity and the completeness of the submitted documents.
3. How much does it cost to apply for a manufacturing license?
The application itself is free, but businesses should budget between RM 10,000 and RM 70,000 for professional services, documentation, and compliance-related expenses.
4. Can small businesses apply for a license voluntarily?
Yes, smaller businesses may apply even if they are exempt. Doing so can enhance credibility, increase access to incentives, and facilitate easier future expansion.
5. What happens if a company operates without a license when required?
Operating without a license when it is legally required is a violation of the ICA 1975 and may result in fines, suspension, or business closure.
