Distributing a product

Evolution of the sector

The Chinese are commercially powerful and dominate the distribution network. Trade is the center of small family businesses and operates from a complicated structure of suppliers, entrepreneurs and sub-entrepreneurs.
The most influential persons in the economic activity are the public administrators, the Malaysian entrepreneurs (not many) and the Chinese entrepreneurs (who hold the most important private groups of the country).
To sell your products in the country you should call on importers/distributors (who may be a local company), foreign trading companies (which offer better specialization and more technical services than local companies) or medium sized local trading companies. Other alternatives are commission agents, setting up a representative office or making a local alliance with a Malaysian company; the last two are the most recommended options.

Market shares

Supply stores: 85.7%, Chinese medical shops: 6.4%, groceries: 3.8%, drugstores: 2.7%, supermarkets: 1.3%, hypermarkets: 0.08%, cash and carry: 0.02%. Although hypermarkets, supermarkets and department stores are dominant in urban areas, local retailers and small traders represent 57% of the local market in terms of sales income. Hypermarkets represent 10% of total retail sales. Groceries and service stations represent about 9% of total retail sales and are located in the main urban centers.

Organizations in the retail sector

Malaysia retailers association

We can identify professional tradeshows on your sector.

Market access procedures

International Conventions

Member of World Trade Organisation
Party to the Kyoto protocol
Party to the Washington convention on International trade in endangered species of wild fauna and flora
Party to the Basel convention on the Control of Transboundary Movements of Hazardous Wastes and their disposal
Party to the Montreal protocol on Substances that deplete the Ozone Layer

International economic cooperation

APEC, ASEAN, AFTA and the ASEAN - China Free Trade Area.
The country have signed a trade agreement with 21 other countries in the São Paulo Round of the Global System of Trade Preferences among Developing Countries (GSTP).

Non tariff barriers

Import regulations in Malaysia are liberal compared to other ASEAN countries' regulations. Most goods can be freely imported under General Open License. Some specific sectors, considered as strategic, are protected by a system of restricted import licenses. Items covered under this category are the iron and steel industry, cement, the sector of the automobile and its components and also polyethylene and polypropylene.
The restrictions in import licensing also affect other sectors in terms of approval (electrical products) and sanitary items (foodstuffs or veterinary products), without being a protectionist measure.
Quotas are not frequently applied to imports and apply to certain products whose local production is favored (rice, meat, fruits and vegetables). In extreme cases (frozen chicken, eggs, liquid milk or sugar), if it is considered that the local production is self-sufficient, import is forbidden. There are other products that are forbidden or subject to special licenses for safety, religion or morality reasons.

Customs duties and taxes on imports

8.56%

Customs classification

The Customs classification of goods is based on the International Nomenclature of the Harmonised System. A majority of Customs duties are calculated ad valorem and are specific only in certain cases. Imported goods, except for machinery, its parts and components, are subject to a sales tax which varies between 5 and 10%. In recent years, duties have dropped and now fluctuate between 15 and 25%. However, certain sectors can be taxed up to 30%. The Customs tariff is high when the imported product is also locally produced (from 30 to 50 %).
In January 1996, Malaysia, within the ASEAN market, subscribed to the Common Effective Preferential Tariffs (CEPT) arrangements, which significantly increase the product list of the previous Preferential Trading Arrangements (PTA). The introduction of the CEPT is meant to accelerate the establishment of a free trade zone within ASEAN countries (AFTA - ASEAN Free Trade Area). Before 2003, all products integrated into the CEPT, will undergo a duty from 0 to 5%. Non-taxed farm products remain outside the agreement. There is currently a list of temporary exclusion for some products, in force until January 1, 2000.
Malaysia benefits from the Generalised System of Preferences, under which 14% of its exports are carried out.

Import procedures

The Customs classification of goods is based on the International Nomenclature of the Harmonised System. A majority of Customs duties are calculated ad valorem and are specific only in certain cases. Imported goods, except for machinery, its parts and components, are subject to a sales tax which varies between 5 and 10%. In recent years, duties have dropped and now fluctuate between 15 and 25%. However, certain sectors can be taxed up to 30%. The Customs tariff is high when the imported product is also locally produced (from 30 to 50 %).
In January 1996, Malaysia, within the ASEAN market, subscribed to the Common Effective Preferential Tariffs (CEPT) arrangements, which significantly increase the product list of the previous Preferential Trading Arrangements (PTA). The introduction of the CEPT is meant to accelerate the establishment of a free trade zone within ASEAN countries (AFTA - ASEAN Free Trade Area). Before 2003, all products integrated into the CEPT, will undergo a duty from 0 to 5%. Non-taxed farm products remain outside the agreement. There is currently a list of temporary exclusion for some products, in force until January 1, 2000.
Malaysia benefits from the Generalised System of Preferences, under which 14% of its exports are carried out.

Importing samples

Textile samples must be cut or stamped "commercial sample" and there must not be more than three of them.

For further information

Royal Malaysian Customs Department
MATRADE

We can indicate you which are the customs duties applied to your product.

Find out the local taxes that apply to your product.

Organizing goods transport

Main useful means of transport

Train and truck are the most common means of goods transport.

Ports

The airline company Malaysia Airlines
The international airport of Kuala Lumpur
Website of railroads in Malaysia
The ports of Malaysia
The guide to transport in Kuala Lumpur

Airports

Kuala Lumpur Sepang International Airport
Penang International Airport
Langkawi International Airport
Kutching International Airport
Kota Kinabalu International Airport

Sea transport organizations

Bureau of maritime affairs

Air transport organizations

Department of Civil Aviation

Road transport organizations

Department of road transport (JPJ)

Rail transport organizations

Malaysian national railway company (KTMB)

Get a ballpark figure for transportation costs for your product in this country through a shipping estimate.

Identifying a supplier

Type of production

The manufacturing industry (31.6% of GDP, WTO 2004) has long been the driving force behind growth. Electronics (semi-conductors, electronic equipment and telecommunications equipment) is the leading manufacturing activity, followed by the production of audio-video equipment, and office equipment. The manufacturing sector represents more than 80% of exports. Exporting industries, especially for electronic and electrical products, chemicals, and plastic and wood products, represent more than 70% of the index of manufacturing production. The manufacturing sector oriented towards the domestic market, which represents about 28% of the industry, includes mainly the manufacturing of metal products, products linked to building, foodstuffs and transport equipment. The mining industry (7% of GDP, WTO 2004) exploits tin, oil, copper, iron ore, natural gas and bauxite.

Business directories

Malaysia Business Directory
MalaysianBiz

Manufacturers associations of the main industries

Malaysian Plastics Manufacturers Association
Malaysian Textile Manufacturers Association   
Construction Industry Development Board Malaysia

Trade Agencies and their representations abroad

Malaysian International Chamber of Commerce and Industry
National Chamber of Commerce and Industry of Malaysia
Association of Chambers of Commerce and Industry of Malaysia

Enterprises federation

SMI Association of Malaysia
Directory of Associations of SMEs and SMIs.
Malaysian Textile Manufacturers Association (MTMA)

Standards

National standards organizations

Department of Standards Malaysia (DSM)

Integration in the international standards network

Malaysia is a member of the International  Organization for Standardization, the International Electrotechnical Commission, the International Telecommunication Union and the Codex Alimentarius Commission. Considerable progress has been made in harmonizing Malaysian standards with international standards, in accordance with Malaysia's obligations which ensue from the OTC agreement with the WTO. Malaysia is also working on negotiating mutual recognition agreements with several APEC economies, basing itself on guidelines established by the international organizations.

Classification of standards

The Malaysian standard is the NM.

Online consultation of standards

Standards can be consulted on the website Malaysia Standards Online Store (registration required).

Certification organizations

Department of Standards Malaysia (DSM)
Standard and Industrial Research Institute of Malaysia

Find out the standards and labelling requirements that apply to your products.

Intellectual Property

National organizations

Inside the Ministry of Trade and Consumption (Kementerian Perdagangan Dalam Negeri Dan Hal Ehwal Pengguna) the Enforcement Division deals with problems of counterfeiting and pirating.

The central organization in charge of the protection and promotion of intellectual property rights is the Malaysian Intellectual Property Corporation (MyIPO).

The appliction for a patent must be directly presented in Malaysia and will cover the whole country. Inventions can only be patented if they are new, not obvious and have an industrial application. A patent expires after 15 years but it can be extended in certain cases.

In order to register a trademark, it is necessary to seek its registration from the Registrar of Trade Marks and to indicate a user of the brand in the country. As soon as the trademark is registered, it becomes protected and its use is continuous.

Regional organizations

Malaysia is a signatory to the ASEAN framework agreement on cooperation regarding intellectual property.

International membership

Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention for the Protection of Intellectual Property
Membership to the TRIPS agreement - Trade-Related Aspects of Intellectual Property Rights (TRIPS)