# Trade and Logistics in Malaysia: Licensing Requirements

> Logistics licensing requirements in Malaysia explained: bonded warehouse, carrier, courier and freight forwarding licences, plus capital and equity rules.

Canonical URL: https://www.cecolaw.com/trade-logistics-licensing-malaysia/
Published: 2021-09-20
Updated: 2022-03-06
Author: Cecilia Lim (Associate), Ching, Elaine & Co — Advocates & Solicitors, Malaysia
Reviewed by: Lim Ching Yong (Partner)

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*Editor's note: This article was first published on 19 September 2021 and last updated on 5 March 2022. It describes the licensing and equity requirements in force at that time; readers should verify the current position before relying on it.*

The rise of e-commerce amid the COVID-19 pandemic drives demand for logistics services. The revenue for logistics and warehousing services has been increasing and is expected to be positive in the future. It has recently been brought to the attention of the public that the government is reviewing the equity safety net framework in this industry in light of the 51% Bumiputra equity requirement to be complied with by the integrated international logistics services (“**IILS**”) companies by end of this year. The main services of logistics services include warehousing services, transportation services, postal and courier services, customs agents and integrated logistics services.

## Warehousing Services

The licenses available for warehousing services are the ordinary warehouse license and the bonded warehouse license. The ordinary warehouse license is for warehouses within any government authority and is to be approved by them. As for the bonded warehouse license, it is for warehouses dealing with bonded goods, storing dutiable goods for 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 Malaysian Customs (“**RMC**”) for approval.

Under Section 65 of the Customs Act 1967, the bonded warehouse license is further divided into the public bonded warehouse license (“**Public BW**”) and the 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, 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(A bank guarantee shall be furnished to cover 10% of the total monthly average of the estimated customs 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 parties are required to apply for Carrier License A. According to the Land Public Transport Agency (“**APAD**”), in order to apply for the non-container carrier of Carrier License A, the companies must have a minimum paid-up capital of RM250,000 and at least 51% 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 a 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 Licenses A and C.

Carrier Licenses A and C shall be obtained from APAD and the 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 the courier service license by the Malaysian 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 the universal service license and the 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 license shall be valid for 20 years from the date of issuance, whereas the non-universal service license is only valid for 3 years from the date of issuance.

The non-universal service license is further divided into Licenses A, B and C. The purposes and capital requirements 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 ATo provide for international inbound and outbound courier service and domestic courier service in Malaysia | RM1,000,000 |
| License BTo provide for international inbound courier service and domestic courier service in Malaysia | RM500,000 |
| License CTo 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 the Freight Forwarding Agents / Customs Agent License, it must first obtain an IILS status from the Malaysian Investment Development Authority (“**MIDA**”) before it can acquire the relevant licences from the Royal Malaysian Customs.

There are three types of customs agents, which are the forwarding agent, the shipping agent and the freight forwarder. Application for forwarding agent is closed except for companies with IILS status, whereas applications for shipping agent and freight forwarder are still open. In order to apply as customs agents, the companies must have a minimum paid-up capital of RM100,000.

Besides, there are no equity requirements for shipping agents and freight forwarders. As for customs licenses of forwarding agents registered after 1990, the companies must have at least 51% Bumiputra participation in share capital, management and employees; for customs licenses registered after 1976 and before 1990, a 30% Bumiputra requirement applies; and for customs licenses 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 customs 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 one 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 5,000 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 the 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.

## Related Articles

- [Due Diligence in Malaysia](https://www.cecolaw.com/due-diligence-lawyer-malaysia/) — on the legal due diligence exercise typically carried out before acquiring a licensed business

- [Shareholders' Agreements in Malaysia](https://www.cecolaw.com/shareholders-agreement-in-malaysia-lawyers/) — on structuring shareholdings, relevant where equity conditions apply to a licensed company

- [Corporate Rescue, Receivership, Winding Up and Schemes in Malaysia](https://www.cecolaw.com/corporate-rescue-receivership-winding-up-schemes-malaysia/)

## Reference List

- “Licensed Warehouse.” Customs.gov.my, Royal Malaysian Customs Department, [www.customs.gov.my/en/ip/Pages/ip_gl.aspx](https://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](https://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](https://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](https://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](https://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](https://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](https://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](https://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](https://www.apad.gov.my/en/service-apad1/freight).

*Disclaimer: This article is for information purposes only and is not intended to create a solicitor-client relationship.*

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This commentary is general in nature and is not legal advice.
Ching, Elaine & Co, a boutique corporate law firm in Malaysia — https://www.cecolaw.com/ · info@cecolaw.com · +60 3-7664 2141