The Manufacturer’s Guide To Customs LMW Licenses

Though many manufacturers in Malaysia qualify for a licensed manufacturing warehouse (LMW), most don’t apply due to lack of awareness or a fear the process is too complicated.

The truth: Getting an LMW license isn’t easy but absolutely worth the hassle–but we’ll let you decide.

Below, we explain the basics of LMW applications with the Malaysian Customs Department, including:

• what a Licensed Manufacturing Warehouse is
• eligibility criteria
• building and compliance requirements
• fees, validity periods, and renewals,and
• steps in the application process

Let’s begin!

What’s a licensed manufacturing warehouse?

Paraphrasing Section 65A of the Customs Act 1967, a licensed manufacturing warehouses (LMWs) is a space where the licensee can import, store, and carry out manufacturing processes on imported:

• raw materials
• components, and
• equipment

All without paying customs duties until the finished products are sold locally or overseas.

If sold locally, the usual duties on the previously imported parts apply but if exported, the import duties are fully waived, making LMWs highly beneficial for export-focused businesses.

Eligibility criteria

Any business with a valid MIDA Manufacturing License and which exports over 80% of the total value of its finished goods over a 12 month period qualifies. 

Building requirements

If you want to apply for a LMW, it’s your responsibility to source or prepare a suitable location that meets conditions set by Customs:

• permanent, sturdy, and secure
• guarded by security
• have a security alarm system
• fenced to an appropriated height or with iron grilles installed
• have dedicated areas for manufacturing and storage of raw materials, finished goods, and waste respectively

Note: While this list makes it sound like you need an actual warehouse, even shophouses can be considered so long as they meet safety requirements. 

If you believe your current premises qualify, then you’re good to go!

Compliance requirements

LMW licensees must submit the following reports before the 28th of every month:

• Subcontract works
• Raw materials and other components
• Finished products, and 
• IPC / RDC activities

They must also submit a LMW Annual Statement before 31st January of the following year.

This is the part where many business owners groan in frustration, but think of it this way: The more work it takes to prepare a report, the more money you’ve saved on import duties!

Fees, validity periods, and renewals

An LMW license costs RM2,400.00 per year and comes with one or two year options.

Renewal submissions must be done at least one month before the expiry date.

Application process

Assuming you already have suitable premises, there are four main steps to obtain your LMW license.

Step 1: Prepare documents

• Form JKDM No 1 (General application form)
• Form A (LMW Application)
• company registration documents
• photo and copy of identity card of all directors
• copy of PBT licenses
• copy of MIDA Manufacturing License
• certified location, layout, and elevation plan
• flow chart of manufacturing process
• list of machinery, tools, raw materials, components, and finished goods
• copy of building deed or tenancy agreement
• copy of Certificate of Completion and Compliance

Step 2: Submit application

Submit the application and supporting documents at the nearest customs office to where your proposed LMW is located.

Step 3: Pass inspection

Customs officers will conduct an inspection of your premises to assess your manufacturing capabilities, based on the building requirements we mentioned above. 

If there are any changes required, they will notify you and give you time to make them.

Step 4: Receive approval and pay

Once you pass the inspection, your LMW license will be approved and issued once the fee is paid, and you can begin enjoying import duty exemptions.

From end to end, expect this process to take eight to 12 weeks. 

And that’s pretty much all you need to know for now 🙂

Let MISHU assist your LMW license application

If you have a better use of time than filling in forms and compiling documents, get in touch with us–we’d be happy to help you!