Licensed Manufacturing Warehouse (LMW) in Malaysia

Objective

Basically, the purpose of the introduction of Section 65A, in addition to Section 65 of the Customs Act 1967, is to enable manufacturing process to be carried out in licensed warehouses. The manufacturing operation inside the licensed warehouses is subject to minimal customs procedures. This is primarily intended to cater for the export oriented industries.
The licensed manufacturing warehouse can be set up speedily and anywhere in the Principal Customs Area without any need to be near to the ports of entry unlike the Free Zones established under the Free Zone Act 1990. Thus, the industries may be encouraged to be located in the rural areas. Raw Materials/ components used directly in the manufacturing process are exempted from customs duties and sales tax.

Location of Licensed Manufacturing Warehouse

A company that intends to get a licence to set up Licensed Manufacturing Warehouse facilities will need to locate the warehouse in a less developed areas, in line with Government’s policy to spread the export-oriented and labor intensive industries to those areas. However, in this respect, a certain degree of flexibility is exercised. The Director General of Customs can still consider the setting up of the Licensed Manufacturing Warehouse in the areas other than in the less developed areas, on the account of the special nature of the manufacturing operation.

Application for License

Application to establish a warehouse for the storage of dutiable goods under Section 65 and to manufacture such goods for the production of other dutiable goods under the provision of Section 65A can be made simultaneously. Application forms will need to be submitted to the State Customs Director where the proposed warehouse is to be located through the nearest customs office. All information required in the application form must be fully furnished together with certificates, plans and other supporting documents.

License Period

Licence under Section 65 and Section 65A is issued at the discretion of the Director General of Customs and the fee is fixed at RM2,402.00 (Two Thousand and Four Hundred Ringgit Malaysia for licence under Section 65 and a nominal two Ringgit Malaysia for licence under Section 65A). It is for a period of two years subjected to renewal. The licence so granted shall be subjected to such conditions as the Director General of Customs may specify.
If the product manufactured falls under the categories of goods liable to excise duty, an excise licence is required and its fee is as prescribed under the Third Schedule, Excise Regulations, 1977.

Types of Premises

Premises considered suitable as Licensed Manufacturing Warehouse must be of permanent construction and secured to the satisfaction of the Director General of Customs.
The building must contain separate storage space for raw materials and finished products. It must also provide separate space to be used solely for the manufacturing of duitable goods.

Take from Kastam Diraja Malaysia website