Malaysia is a major trading nation in Southeast Asia, with imports accounting for a significant portion of its economy. The country imports a wide range of goods, including machinery, electronics, chemicals, and food.
There are a number of reasons why businesses import goods to Malaysia. More prominent ones include educated, skilled yet low-cost labor to produce goods and access to a rapidly growing market of over 30 million people.
Importing goods into Malaysia can be complex. Learning first-hand knowledge about the importing process will help you factor in all hidden costs when negotiating prices with your overseas supplier. Continue reading this blog to learn key aspects when importing goods for business to Malaysia.
What are Import and Export Licensing Rules in Malaysia?
There are a number of import and export licensing rules in Malaysia. These rules are designed to safeguard the local economy and security, as well as to ensure the safety of its citizens.
The Customs (Prohibition of Import) Order 2017 put absolute prohibition and a conditional prohibition on selected import goods to Malaysia.
- Generally, any imported goods sensitive to any religion, or belief in Malaysia are absolutely prohibited.
- Certain imported items, including pharmaceutical items, rubber products, intoxicants, wildlife, food & beverage products, etc., require import licensing.
- All incoming processed livestock and meat products must be certified halal. Interestingly, any items originating from Israel may also face conditional restrictions. You may refer to the full list here.
- Approvals for the import of certain other goods into Malaysia require additional approvals from the concerned departments per the below table:
|Goods category||Import permit/licensing authority – Malaysia|
|Animals – dead or alive||Wildlife Department & Department of Veterinary Services|
|Chemicals||Ministry of Health|
|Pesticides||Ministry of Agriculture|
|Radio Active Materials||Director General of the Atomic Energy Licensing Board|
|Wastes & Toxins||Director General of Environmental Quality|
|Wheat or Meslin Flour||Ministry of Domestic Trade and Consumer Affairs|
How Much are Customs Fees to Import Goods to Malaysia?
Malaysia’s import tax is on an ad-valorem basis. The custom fee that you will need to pay to import goods to Malaysia depends on the value of the goods.
Any imported goods to Malaysia attract 5% or 10% or a specific rate depending on the category of goods.
There may be an additional Malaysian Custom Excise import levy on some foods, such as a 15% tax on some drinks. Further, Malaysia’s import taxes and duties on goods already having a significant local production are set at a higher rate to protect local small businesses.
The Malaysian Customs Department has a tariff schedule listing applicable duties and import taxes. You can visit the official website or contact the concerned government department directly to answer yourself how much customs fees are to import goods to Malaysia.
Step-by-Step Process on Importing Goods Into Malaysia
Here’s how you can import goods to Malaysia
Step 1: Receive a registration
Your first step in importing goods into Malaysia begins with the Companies Commission of Malaysia (SSM). To register, you must provide the following information:
- The name of your company
- Your business address
- The type of your company (proprietorship, partnership, limited liability)
- Your directors’ and shareholders’ names and addresses
Step 2: Get an import license (optional)
Not all, but some commodities require an import license. You can visit the Ministry of International Trade and Industry (MITI) website or contact the MITI Trade Licencing Division to see if your items require a license to import goods to Malaysia. You can apply for one via the MITI e-licensing system.
Step 3: Obtain a Customs Import Permit
Once you have obtained an import license, you must get a customs import permit. To do this, you will need to submit the following documents to the Royal Malaysian Customs Department:
- Your import license
- A commercial invoice
- A bill of lading
- A packing list
- A certificate of origin
Step 4: Select an overseas supplier
Once you have chosen the products you want to import into Malaysia, you must find a suitable overseas supplier. There are many ways to find suppliers, including online directories, trade shows, and word-of-mouth.
When finding an overseas supplier in Malaysia, there are a few key things to look for.
- Reputation: Check the supplier’s reputation online and with other businesses that have worked with them. Additionally, if possible, you can visit their factory and request samples.
- Communication: Make sure you can reach the supplier easily and that they respond to your inquiries.
- Lead time: Ask the supplier how long it will take to make and deliver your purchase. This is important if you have a tight deadline.
- Price: Get quotes from multiple suppliers to ensure you get the best possible price.
Step 5: File documentation for importing goods into Malaysia
For importing goods into Malaysia, the following papers are necessary:
- Import declaration form: You may need to file the following customs forms as applicable electronically through the privatized single digital window called Dagang Net to import goods to Malaysia.
|Customs No.1 (K1)||Declaration of Goods Imported|
|Customs No.3 (K3)||Permit to Transport Duty Paid Goods Within The Federation|
|Customs No.8||Application / Permit / to Move / Transship Duty Unpaid Goods|
|Customs No.9||Permit to remove goods from Warehouse|
- Invoice: It must be in English and include the following information:
- Name and address of your overseas supplier
- Your business name and address
- HS (harmonized system) code of the goods
- Quantity and description of the goods
- Value of the goods
- Terms of payment
- Packing list: The list must be in English and include the following information:
- Number of packages
- Weight and dimensions of each package
- Contents of each package
- Bill of Lading (BL) or Air Waybill (AWB): The BL or AWB must be original and in English. It must show the carrier’s name, loading port, discharge port, and the date of shipment.
- Certificate of origin: It is required for goods that are subject to preferential tariffs. Usually, the Chamber of Commerce or another authorized body in the country of origin issues this certificate.
- Import permit – This is required for certain goods, such as food, drugs, and hazardous materials. The relevant government agency must obtain the permit before the goods can be imported.
- Other documents –
- A phytosanitary certificate for agricultural products
- A veterinary certificate for animal products
- A fumigation certificate for wood products
- A testing certificate for certain goods, such as electrical appliances
It is important to note that the documentation requirements for importing goods into Malaysia can change at any time. It is always advisable to check with the Malaysian Customs Department for the latest information.
Step 6: Evaluate the Costs of Importing Your Goods to Malaysia
Let’s evaluate the costs of your imported goods to Malaysia based on the following:
- Negotiation with overseas suppliers: You must negotiate a price for importing goods to Malaysia. When negotiating the price, consider the shipping cost, Malaysia import tax, customs fee, and any other expenses.
- Freight costs: This includes the cost of shipping the goods from the country of origin to Malaysia. The freight cost varies depending on the weight and volume of the goods, the distance they are being shipped, and the mode of transportation used.
- Customs duties and taxes: Goods imported into Malaysia are subject to customs duties and taxes. The amount of duty and tax will vary depending on the imported goods type, their value, and the country of origin.
- Brokerage fees: A freight forwarder or customs broker may charge a fee to handle the customs clearance process. The cost varies according to the services offered and how complicated the package is.
- Warehouse the goods: If the goods need to be stored in a warehouse before they are distributed, you must pay for warehousing fees. The fee will vary depending on the time the goods are stored and the size of the warehouse space.
- Market and sell the goods: Once the goods are in your possession, you can start marketing and selling them. You may have to factor in costs incurred in marketing and selling goods online, including through your own website, e-commerce marketplaces, and social media.
- Fulfill orders: When a customer orders a product from you, you will need to fulfill the order. The fulfillment cost will vary depending on the mode of transportation used, shipping distance, shipment size, and other operational expenses.
Step 7: Compare your freight options
Your overseas supplier will determine the freight forwarder for exporting to Malaysia. You may indicate your preference for a particular freight forwarder for importing goods into Malaysia based on the following factors:
- Shipping method: There are several shipping methods available, including air freight, sea freight, and express shipping. Each method has its advantages and disadvantages, so it is important to choose the best method for your needs.
- Shipping time: It can vary depending on the shipping method you choose. For instance, air freight is the fastest but the most expensive option. Sea freight is the slowest option but also the most affordable.
- Shipping cost: Shipping costs can vary depending on the weight and size of your shipment, as well as the shipping method you choose. The most expensive choice is air freight, while the least expensive is sea freight.
- Customs clearance: The process of releasing imported goods at Malaysian customs can be time-consuming and costly, so it is important to factor this into your shipping costs.
Step 8: Track your goods
Once you have paid the import duty and Malaysia import taxes, you will need to clear your goods through customs. To do this, you will need to present the following documents to the Customs Department:
- Your customs import permit
- A copy of your import license
- A copy of the commercial invoice
- A copy of the bill of lading
- A copy of the packing list
- A copy of the certificate of origin
Once your goods have been cleared through customs, the shipment is transported from customs to the final destination by your chosen courier provider. You can track your goods with your courier provider.
Tips When Importing to Malaysia
You can consider the following factors before choosing products to import:
- Demand: Is there a demand for the product in Malaysia?
- Competition: How much competition is there for the product?
- Price: Can you sell the product at a competitive price?
- Shipping costs: How much will it cost to ship the product to Malaysia?
- Customs duties: Will you have to pay any customs duties on the product?
Once you have decided which product to import, make sure to:
- Use the privatized single digital window called Dagang Net to declare your imported goods for business.
- Use uCustoms for goods clearance. It offers a “Single Window” for customs clearance and is a fully integrated, end-to-end customs modernization solution.
- Pay all duties/customs taxes imposed on imported goods to Malaysia in advance for faster release.
- Work with a freight forwarder to help you with the import process, including arranging shipping, clearing customs, and delivering the goods to your destination.
- Don’t forget to insure your imported goods to Malaysia against loss or damage during shipping.
- Consider consulting an experienced freight forwarder or customs broker before importing goods into Malaysia.
In addition to the above, the language barrier may be an issue. This includes dressing appropriately, being aware of religious sensitivities, and avoiding offensive language. Malaysia is a multilingual country, with Malay, English, Chinese, and Tamil being the most commonly spoken languages. It is advisable to hire a translator to help you communicate with customs officials and other parties involved in the import process.
Benefits When Importing to Malaysia
Businesses may benefit from importing to Malaysia through the:
- Free Industrial Zones and Free Commercial Zones
You may get an exemption from import tax if the goods are used to produce goods exported from Malaysia. The amount of exemption you can get will depend on the type of goods and the value of the goods.
Presently, there are 22 Free Industrial Zones and 21 Free Commercial Zones located across Malaysia.
- Free Trade Agreements:
Malaysia has free trade agreements with several countries. If you are importing goods from one of these countries, you may be able to get an exemption from import tax. The amount of exemption you can get depends on the type and value of the goods.
You must apply for a Preferential Certificate of Origin (PCO) through Malaysia’s single window clearance, Dagang Net, to get an exemption.
|Bilateral FTAs||Regional FTAs|
|Australia||Association of Southeast Asian Nations (ASEAN)|
|China||ASEAN-China Free Trade Agreement (ACFTA)|
|India||ASEAN-Korea Free Trade Agreement (AKFTA)|
|Japan||ASEAN-Japan Comprehensive Economic Partnership (AJCEP)|
|New Zealand||ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA)|
|Pakistan||ASEAN-India Free Trade Agreement (AIFTA)|
|Turkey||ASEAN-Hong Kong Free Trade Agreement (AHKFTA)|
|Regional Comprehensive Economic Partnership (RCEP)|
|Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)|
- Special scheme:
The Malaysian Customs Department has several special schemes that can help you get an exemption from import tax. These schemes are designed to promote certain industries or activities.
To determine if you are eligible for a special scheme, contact the Malaysian Customs Department.
Importing goods into Malaysia can be a great way to expand your business and reach new markets. By doing your research, getting the necessary permits and licenses, working with a freight forwarder, and factoring in all the hidden import costs, you can ensure that your import experience to Malaysia is positive.
Alternatively, working with a reputable freight forwarder can make the process of importing goods into Malaysia smooth and efficient.