A Full Guide To Opening A Factory In Malaysia
In addition to several non-negotiable requirements, setting up a factory in Malaysia can also include optional steps depending on a manufacturer’s specific business plans.
We’ve therefore divided this guide into two parts:
- mandatory steps to begin operating as soon as possible, and
- optional licenses and permits for additional advantages
Let’s begin.
Mandatory steps
There are four non-negotiable steps regardless of the manufacturing you plan to carry out.
Step 1: Incorporate Sdn Bhd
First, register a Sendirian Berhad (Sdn Bhd) with the Companies Commission of Malaysia (SSM).
A Sdn Bhd is the Malaysian version of a private limited company, with SSM being the federal agency overseeing company registrations and compliance.
Our guide to company registration covers it in full, but here are key requirements to know:
- at least one locally residing director
- minimum RM2,100 in paid up capital
- a name containing the word ‘Manufacturing’ or related terms
You’ll also need to check if your proposed company name is available!
Step 2: Secure factory location
Once your company is registered, find a suitable factory lot or industrial space.
The potential site must pass an Initial Site Assessment (PTA) by the state Department of Environment (DOE) who will evaluate the site suitability for your proposed plan.
If the site is in an area designated for industrial use, this is mostly a formality, but the DOE can order an Environmental Impact Assessment if the initial PTA is insufficient.
Once a site gets early DOE approval, you can sign a tenancy or purchase agreement.
Step 3: Local Authority composite license
With a site secured, time to apply for a composite license from the Local Authority (PBT).
A composite license is a combination of a premise and signboard license and will in turn require support letters from the following agencies:
- Fire & Rescue
- DOE
- Occupational Safety & Health (DOSH)
For full details, see our FAQs on PBT licenses.
Step 4: Apply for MIDA Manufacturing License
Finally, apply to the Malaysian Investment Development Authority (MIDA) either for a:
Which one you need depends on whether you meet two conditions:
- a workforce of minimum 80% Malaysian full-time employees
- either minimum shareholders’ funds of RM2.5 million or 75 full-time employees
Those who meet them need a full Manufacturing License; those who don’t apply for an Exemption Letter.
And that’s it! You can now begin operating legally.
And in case you’ve forgotten everything already, here’s a table summarising the above 😉.
Overview of mandatory steps
| Step | Wait Time | Cost |
| 1. Register Sdn Bhd | 1–3 working days | RM1,010 |
| 2. Find site & sign tenancy | Depends on you! | Deposit + 1–3 months’ rent upfront |
| 3. Apply for PBT composite license (and agency support letters) | 2–8 weeks (depending on PBT) | Varies by council, usually around RM1,000 / year |
| 3. Apply for MIDA manufacturing license | 4–8 weeks | RM2,500 for full Manufacturing License RM2,000 for Exemption |
All in all, it could take as little as 3 months and RM2,000 in licensing fees to register your factory as with PBT and MIDA licenses you can begin operating.
Of course, this doesn’t account for third party charges if you engage a service provider like MISHU to help you apply, but we promise we don’t charge that much 🙂
Optional steps
Depending on your operations, you may also consider the following:
- Licensed Manufacturing Warehouse (LMW): Full tax exemptions on import duties.
- Certificate of Origin: For exporters to benefit from trade agreements.
- Pioneer Status: 70% – 100% income tax exemption for up to 10 years.
- Investment Tax Allowance: 60% – 100% allowance on certain capital expenses.
- Employment Pass: To bring over foreign management / leadership.
Instead of dedicated sections for each of these, we’ll go straight to a summary table.
Overview of optional steps
| License | Wait Time | Cost |
| Customs LMW | 4–6 weeks | RM2,400 / year |
| Certificate of Origin | 1–3 working days | RM10 per document copy authentication RM20 per pad of 100 sheets of CO forms |
| Pioneer Status | 8–12 weeks | RM2,500 |
| Investment Tax Allowance | 8–12 weeks | RM2,500 |
| Employment Pass | 4–8 weeks | RM3,000–5,000 per pass |
Of course, there are other optional licenses and incentives available depending on your sector and goals, so get in touch and we’d be happy to advise you on them.
Either way, your very next step is to incorporate your Sdn Bhd.
Whether you go DIY or through us (or a competitor) we wish you all the best with your factory.
Let MISHU help you open a factory in Malaysia
Our licensing team is here to understand your needs and help you secure the necessary licenses for you to begin manufacturing in Malaysia with all the relevant incentives at your disposal.