4 Foreign Retail Outlets That Need WRT Licenses To Operate In Malaysia

Examining the retail side of WRT licenses

As covered in our guide to WRT licenses in Malaysia, the Wholesale, Retail, and Trade License is a business permit issued to foreign-owned businesses in Malaysia operating within certain trade sectors.

In this post, we take a closer look at how the The Ministry of Domestic Trade and Costs of Living (KPDNHEP) defines four categories of foreign owned retail businesses.

Each category will include:

• the definition as set out by KPDNHEP
• minimum floor area
• minimum capital requirements
• minimum Malaysian shareholding requirements
• notable operational requirements (non-exhaustive, but we’ll cover the major ones)
• notable examples currently operating in Malaysia

All of our information is based on the official WRT license guidelines by the Ministry of Domestic Trade and Costs of Living which you can read in full here.

Let’s start!

1. Hypermarkets

Explanation

A standalone self-service distribution store with sales floor area of 5,000 square meters or more, selling a very wide variety of mainly consumer goods, comprising a mix of food and non-food products, in a range of transaction sizes or quantities and in different forms of packaging.

Notable examples: Aeon Malaysia (Japanese owned) and Lotus’s (Thai owned).

Capital and equity requirements

A combined paid-up capital and reserve of at least RM50 million, as well as a minimum of 30% shareholding allocated for Bumiputeras within three years of approval.

Notable operational requirements

As large retail outlets, hypermarkets are potential disruptors to the local economy and are subject to specific rules that account for national and public interest, namely:

1. No changes to floor size without permission from KPDNHEP.
2. Strict operating hours on certain days of the week (besides public holidays).
3. 30% of total SKUs displayed on shelves must be Bumiputera SMEs goods/products in all outlets.
4. Minimum of 50 parking lots per 1000 square meters business floor.
5. Not allowed to operate within 3.5 km radius of residential areas and town centres.
6. Not allowed to be constructed in locations with < 250,000 residents.
7. Requires interviewing traders and residents in proximity of the proposed site.

2. Superstores

Only companies running a hypermarket can open a superstore, so in practice, superstores are just smaller versions of the hypermarket for less populated locations.

Definition

A self-service distribution store with sales floor area of 3,000 square meters to less than 4,999 square meters retailing a very wide variety of mainly consumer goods, comprising a mix of food and non-food products.

Capital and equity requirements

A combined paid-up capital and reserve of at least RM25 million.

Notable operational requirements

1. Cannot be constructed in locations with < 200,000 residents (compared to 250,000 for hypermarkets).
2. No changes to floor size without permission from KPDNHEP.
3. Strict operating hours on certain days of the week (besides public holidays).
4. 30% of total SKUs displayed on shelves must be Bumiputera SMEs goods/products in all outlets
5. Minimum of 50 parking lots per 1000 square meters business floor.
6. Not allowed to operate within 3.5 km radius of residential areas and town centres.
7. Requires interviewing traders and residents in proximity of the proposed site.

3. Departmental Stores

Definition

A distribution store with sales floor area of varying sizes, usually engaged in retailing an extensive assortment of consumer goods that are departmentalized by gender, age or lifestyle, through self-service or with sales assistance, generally under one common store management. A departmental store may include a supermarket of not more than 2,000 square meters.

Notable examples: Marks & Spencer (British owned) and ISetan (Japanese owned).

Capital and equity requirements

A combined paid-up capital and reserve of at least RM20 million, subject to review every three years.

Notable operational requirements

Though no as big as hypermarkets, department stores are by no means small and are therefore largely subject to the same rules:

1. No changes to floor size without permission from KPDNHEP.
2. Strict operating hours on certain days of the week (besides public holidays).
3. 30% of total SKUs displayed on shelves must be Bumiputera SMEs goods/products in all outlets.
4. Minimum of 50 parking lots per 1000 square meters business floor.
5. Not allowed to operate within 3.5 km radius of residential areas and town centres.
6. Requires interviewing traders and residents in proximity of the proposed site.
7. Impact study on existing local retailers if operating in a standalone building or with business floor area of 5,000 square meters and greater.

4. Specialty Stores

Definition

Stores dealing with one main brand name / product / line of goods associated with one product, such as food and beverage, household appliances, electrical appliances, healthcare products, optical goods, footwear, clothing and apparel, and practically any retail sector that allows foreign owned businesses.

Notable examples: Gordon Ramsay Bar & Grill Restaurant (British owned)

Capital and equity requirements

A combined paid-up capital and reserve of at least RM1 million, subject to review every three years.

Notable operational requirements

Specialty store may be allowed to operate in the above categories if it fulfils the following criteria:

• contribution to the socio-economic development of Malaysia
• generate substantial foreign direct investment
• absence of local players in proposed formats
• create employment opportunities
• transfer of technology/skills
• unique / exclusive nature of business

We think Gordon Ramsay’s restaurant is a pretty good example of a specialty store that fulfils all the above requirements. It’s unlikely that his restaurant will rob local smaller F&B outlets of income, while employing locals will lead to transfer of culinary skill.

Plus, do you really want to be the guy who says no to Gordon?

As with departmental stores, an impact study on existing local retailers will be needed if operating in a standalone building or with business floor area of 5,000 square meters and greater.

Other retail distribution formats

Occasionally, new forms of business may appear that don’t quite fit in with existing definitions of floor space, especially in digital sectors.

KPDNHEP reserves the right to allow these businesses to be granted WRT licenses. In general, provided the same conditions of a specialty store have been met, there is a good chance the business will be allowed to operate in Malaysia, unless they fall under sectors that forbid foreign involvement.

Retail sectors off limits to foreign businesses

If you’re a foreign entrepreneur looking to establish a business in Malaysia under these sectors, direct involvement will be difficult as they do not allow foreign business ownership.

• Supermarket/ mini market (less than, 3000 square meters sales floor area).
• Provision shop/General vendor.
• Convenience store (that opens for business for 24 hours).
• News agent and miscellaneous goods store.
• Medical hall (inclined towards traditional alternative medicines plus general dry foodstuff).
• Fuel Station with or without without convenience store
• Permanent wet market store.
• Permanent pavement store.
• National Strategic Interest.
• Textile, restaurant (non exclusive), bistro, jewellery shops

You wouldn’t want to compete against Malaysians in the wet market scene anyway. We’re way too good at it!

Let MISHU assist your WRT license needs

If you’re looking to apply for a WRT license, consider engaging our team to do it on your behalf. With our expertise and experience in assisting entrepreneurs from various industries, we can expedite the application process and save you valuable time and frustration.

Government officials just melt at our smile – it’s a real thing!