TRADE AND LOGISTICS MALAYSIA: LICENSING REQUIREMENTS
Warehousing services
The licenses available for warehousing services are ordinary warehouse license and bonded warehouse license. Ordinary warehouse license is for warehouses within any government authority and to be approved by them. As for bonded warehouse license, it is for warehouses dealing with bonded goods for storing dutiable goods which duties and taxes are deferred until such goods are removed for domestic use or exported. This bonded warehouse license application shall be submitted to the Royal Malaysia Customs (“RMC”) for approval.
Under Section 65 of the Customs Act 1967, the bonded warehouse license is further divided into public bonded warehouse license (“Public BW”) and private bonded warehouse license (“Private BW”). The equity policy and capital requirements of the Public BW and Private BW are summarised as follows:-
Equity Policy
License | Equity Policy
|
Public BW
| A company must have at least 30% Bumiputra equity |
Private BW | There is no equity condition imposed |
Capital requirement
Category of Goods | Minimum Warehouse Space (square feet) | Minimum Paid-Up Capital (RM) | Minimum Value of Goods Stored in a Year |
Critical Goods
(Goods which are deemed to be critical by the Director General of Customs, namely motor vehicles, cigarettes, intoxicating liquor and petroleum / petroleum products, textile and mobile phones)
| 50,000 (Public BW) | 1,000,000 (Public BW)
150,000 (Private BW)
| RM5,000,000 (Private BW)
|
Non-Critical Goods
(Bank Guarantee shall be furnished to cover 10% from the total monthly average of the estimated custom duties or tax payable per year on the dutiable goods.)
| 20,000 (Public BW) | 250,000 (Public BW)
100,000 (Private BW) | RM2,000,000 (Private BW)
|
Transportation services / Postal and Courier Services
Companies that intend to provide transportation services to third party are required to apply for Carrier License A. According to Land Public Transport Agency (“APAD”), in order to apply for non-container carrier of Carrier License A, the companies must have minimum paid-up capital of RM250,000 and at least 51% of Malaysian equity (including 30% Bumiputra equity) and up to 49% foreign equity ownership is allowed. The container carrier of Carrier License A requires the companies to have minimum of RM500,000 paid-up capital. The container carrier of Carrier License A is currently frozen whereas the non-container carrier of Carrier License A is still open for registration.
Companies that intend to provide transportation for their own goods must obtain Carrier License C. There is no capital requirement for such license.
It should be noted that up to 100% foreign equity ownership is allowed for Carrier License A and C.
Carrier License A and C shall be obtained from APAD and Commercial Vehicles Licensing Board (“CVLB”) for operators in Peninsular Malaysia and Sabah / Sarawak respectively.
A two-year moratorium (from 14 September 2020 until 15 September 2022) has been imposed on the issuance of courier service license by Malaysia Communications and Multimedia Commission (“MCMC”). However, the license may be acquired through assignment or transfer of license by making an application to MCMC.
There are 2 types of courier licenses, which are universal service license and non- universal service license, the former is for postal services to be provided to consumers at the prescribed rates and the latter is otherwise. The universal service shall be valid for 20 years from the date of issuance, whereas non-universal service license is only valid for 3 years from the date of issuance.
The non-universal service is further divided into License A, B and C. The purposes and capital requirement of which are summarised as follows:-
Type of Licenses | Minimum paid-up capital requirement | |
Universal service license | RM100,000,000
| |
Non-universal service license
| License A To provide for international inbound and outbound courier service and domestic courier service in Malaysia
| RM1,000,000 |
License B To provide for international inbound courier service and domestic courier service in Malaysia
| RM500,000 | |
License C To provide for intra-state domestic courier service in Malaysia
| RM100,000 | |
Freight Forwarding / Customs Clearance and Shipping Services
According to Section 90 of the Customs Act 1967, for a company to qualify for Freight Forwarding Agents / Customs Agent License. it must first obtain an IILS status from Malaysian Investment Development Authority (“MIDA”) before it can acquire the relevant licences from the Royal Malaysian Custom.
There are three types of customer agents, which are forwarding agent, shipping agent and freight forwarder. Application for forwarding agent is closed except for company with IILS status, whereas applications for shipping agent and freight forwarder are still open. In order to apply as custom agents, the companies must have paid-up capital of minimum of RM100,000.
Besides, there are no equity requirements for shipping agent and freight forwarder. As for custom license of forwarding agent to be registered after 1990, the companies must have at least 51% bumiputra participation on share capital, management and employees, for custom license to be registered after 1976 and before 1990, 30% bumiputra requirement is required and for customer license to be registered before 1976, no bumiputra equity is required.
The Ministry of Finance (“MoF”) has, vide its letter dated 22 December 2020, provided an extension for the companies to comply with the bumiputra equity requirements until 31 December 2021. Subsequently in January 2021, MoF issued a letter to the Custom Agents requesting them to comply with the bumiputra equity requirements but did not specify the percentage.
International Integrated Logistics Services (“IILS”)
An IILS provider is a company that provides integrated and seamless logistics services (door-to-door) along the logistics supply chain as a single entity on a regional or global scale.
The qualifying requirements to apply for the IILS status are:-
Local incorporation under the Companies Act 2016;
- Must undertake the principal activities of warehousing, transportation and freight forwarding (including customs clearance);
- Must undertake at least of these activities, i.e. distribution, other related and value-added logistics services/activities and supply chain management;
- Manage at least 20 units of commercial vehicles and 5000 m2 of warehouse space;
- Employ majority Malaysians and preference must be given to local professionals;
- Use Malaysia as a hub for logistics supply chain services in the region;
- Have good networks with logistics service providers abroad in order to provide seamless integrated logistics services for the regional market;
- Substantial usage of ICT infrastructure throughout the logistics chain and value-added activities; and
- Compulsory attendance of the Customs Agent course conducted by Royal Customs Department.
It should be noted that companies with up to 100% foreign equity ownership are allowed to apply for the IILS status.
As at the time of writing, the bumiputra equity requirements to be complied with by the companies in the logistics services remained unclear and pending further directions from the government.
Reference list
“Licensed Warehouse.” Customs.gov.my, Royal Malaysian Customs Department, www.customs.gov.my/en/ip/Pages/ip_gl.aspx.
Malaysian Investment Development Authority (MIDA). LOGISTIC SERVICES MALAYSIA: INVESTMENT in the SERVICES SECTOR. www.mida.gov.my/wp-content/uploads/2020/07/20191220163458_BOOKLET-4-LOGISTICS-SERVICES.pdf.
Ministry of Finance (MoF). “Freight Forwarders given till December 2022 to Meet Bumiputera Equity Requirement – Tengku Zafrul.” Ministry of Finance Malaysia, 28 Sept. 2021, www.mof.gov.my/en/news/press-citations/freight-forwarders-given-till-december-2022-to-meet-bumiputera-equity-requirement-tengku-zafrul.
Mordor Intelligence. “MALAYSIA FREIGHT and LOGISTICS MARKET – GROWTH, TRENDS, COVID-19 IMPACT, and FORECASTS (2021-2026).” Mordorintelligence.com, 2019, www.mordorintelligence.com/industry-reports/malaysia-freight-logistics-market-study.
“Pembekuan (Moratorium) Pemberian Lesen Baharu Perkhidmatan Kurier (Con’t) | Malaysian Communications and Multimedia Commission (MCMC).” Malaysian Communications and Multimedia Commission (MCMC) | Suruhanjaya Komunikasi Dan Multimedia Malaysia (SKMM), 26 Oct. 2020, www.mcmc.gov.my/en/media/press-releases/pembekuan-moratorium-pemberian-lesen-baharu-perkhi.
Tan Siew Mung. “Bursa’s Transportation & Logistics Index Jumps to Record High as Shipping Rates, LNG Prices Soar.” The Edge Markets, 13 Oct. 2021, www.theedgemarkets.com/article/bursas-transportation-logistics-index-jumps-record-high-shipping-rates-lng-prices-soar.
The Customs Act. 1967, www.customs.gov.my/ms/PERUNDANGAN%20GAZETTE/CUSTOMS%20ACT%201967.pdf.
“THE EDGE WEEKLY: Regulatory Uncertainties Clogging up Economic Arteries.” Www.theedgemarkets.com, 11 Oct. 2021, www.theedgemarkets.com/content/edge-weekly-regulatory-uncertainties-clogging-economic-arteries.
The Land Public Transport Agency (APAD). “Perkhidmatan Kenderaan Barangan.” Portal Rasmi Agensi Pengangkutan Awam Darat (APAD), Ministry of Transport Malaysia, www.apad.gov.my/en/service-apad1/freight.
Disclaimer : This article is for information purpose only and is not intended to create solicitor-client relationship.
