What is Licensed Manufacturing Warehouse (LMW) ?

Licensed Manufacturing Warehouse (LMW) is a warehouse license under the provision of section 65/65A of the Customs Act 1967, Malaysia. A type of facility designated by the Malaysian government to promote manufacturing activities within the country. LMWs are essentially bonded manufacturing warehouses where raw materials and components can be imported duty-free for manufacturing purposes. These facilities are typically utilized by manufacturers to carry out various stages of production, assembly, or processing of goods.

Key features of Licensed Manufacturing Warehouses include:

1. Duty-Free Importation: Raw materials, components, and machinery can be imported into the LMW without paying customs duties and taxes.

2. Customs Facilities: LMWs are equipped with customs facilities allowing for streamlined import and export processes.

3. Manufacturing Activities: These warehouses are intended for manufacturing activities such as processing, assembly, or packaging of goods.

4. Export-Oriented: The products manufactured within LMWs are often intended for export markets, contributing to Malaysia's export-oriented industrial strategy.

5. Government Oversight: LMWs are regulated by Malaysian authorities to ensure compliance with rules and regulations regarding manufacturing, customs, and taxation.

6. Incentives: Companies operating within LMWs may enjoy various incentives provided by the Malaysian government to encourage investment and promote economic growth.

Benefits of Having a Licensed Manufacturing Warehouse (LMW)

LMW is eligible for the same tax advantages as Free Industrial Zone or FIZ, such as a complete tax exemption for raw materials, components, machinery, and equipment utilised directly in manufacturing.

Eligibility for Application to an LMW License

Manufacturers who desire to obtain import duty exemptions and want to apply for LMW status must meet the requirements listed below:-

• Execute manufacturing operations following the Customs Act of 1967's definition of 'manufacture'.

• Must export 80% or more of the finished product. When the project is approved, the Ministry of International Trade and Industry or MITI will decide the actual export percentage.

• Customs will determine the export rate for producers exempt from licensing under Industrial Coordination Act or ICA 1975.

• The project has received MITI approval, and MITI has either issued a license under the ICA 1975, or the project is exempt from licensing under that Act (if the company paid up capital less than RM2.5 million or workers less than 75 people).

General Flowchart For LMW Application

Documents Required for an LMW License Application

1. Covering letter

2. Form JKED No 1

3. Form A – Application for Licensed Manufacturing/ Warehouse under Section 65/65A of the Customs Act 1967

4. Copy of Certificate of Fitness

5. Copy of business license/ certificate issued by Local Authority

6. Company registration documents (Form A and D; M&A, Form 9, Form 49, Form 44 Form 24)

7. Copy of Manufacturing License issued under the ICA 1975

8. Location plan, layout plan, elevation plan (certified by Registered Architect)

9. Flow chart of the manufacturing process

10. List of machineries and tools, raw material/ components, finished goods

11. Input/ output ratio

12. Rental of premises agreement letter

13. A passport size photo and copy of identification card for each Director

14. Other relevant documents

Sample Drawing Layout

For the premises considered suitable as Licensed Manufacturing Warehouse, it must be permanently constructed building and secured to the requirement of the Director General of Customs. It is a must have separate storage space for raw materials, finished goods, production area, and packaging area in the building.