Manufacturing License Malaysia (MIDA): Complete 2026 Regulatory Guide
Complete guide to obtaining a manufacturing license from MIDA in Malaysia. Covers ICA 1975 eligibility criteria, the InvestMalaysia portal application process, required documents, fees, investment incentives, and compliance obligations for manufacturers.
Do You Need a Manufacturing License in Malaysia?
If your company manufactures products in Malaysia and meets either of two thresholds under the Industrial Co-ordination Act 1975 (ICA 1975), you are legally required to obtain a manufacturing license from the Malaysian Investment Development Authority (MIDA). Operating without one carries penalties up to RM2 million and imprisonment up to 1 year.
The two thresholds are simple: shareholders' funds of RM2.5 million or more, OR 75 or more full-time employees. Meet either one and you must apply. This is not optional and there is no grace period for companies that have already started manufacturing.
| Threshold | Requirement | How It's Measured | Common Mistake |
|---|---|---|---|
| Capital threshold | Shareholders' funds RM2,500,000 or more | Based on paid-up capital + retained earnings in audited accounts | Ignoring that retained earnings push you over the threshold even with low paid-up capital |
| Employment threshold | 75 or more full-time employees | All full-time staff including foreign workers on payroll | Not counting contract workers or staff at multiple locations |
Companies below both thresholds are exempt but may choose to apply voluntarily to access investment incentives like Pioneer Status and Investment Tax Allowance. This voluntary application makes financial sense for companies planning to expand.
Manufacturing License vs Other Factory Licenses in Malaysia
The MIDA manufacturing license is often confused with other licenses required to operate a factory. These are separate approvals from different authorities. You likely need all of them, not just one.
| License | Issuing Authority | Purpose | Who Needs It | Penalty for Non-Compliance |
|---|---|---|---|---|
| Manufacturing License | MIDA | Authorise manufacturing activity under ICA 1975 | Companies meeting capital or employment threshold | Up to RM2,000,000 fine and/or 1 year imprisonment |
| PBT Factory License (Lesen Kilang) | Local Council (PBT) | Zoning compliance, building and premises approval | All factories regardless of size | Varies by PBT; premises closure possible |
| DOSH Factory Registration | DOSH (JKKP) | Safety and health compliance under FMA 1967 | Factories using machinery or prescribed processes | Up to RM250,000 and/or 3 years imprisonment |
| BOMBA Fire Certificate | JBPM (BOMBA) | Fire safety system compliance | All commercial and industrial premises | Up to RM100,000 and/or 3 years imprisonment |
| Environmental Compliance | DOE (JAS) | Environmental impact and waste management | Factories with scheduled waste or prescribed activities | Up to RM500,000 and/or 5 years imprisonment |
A common compliance error is obtaining the MIDA license but neglecting PBT, DOSH, or BOMBA approvals. Each authority operates independently and can enforce its own penalties. Being compliant with one does not satisfy the others.
Types of MIDA Manufacturing License Applications
MIDA processes three types of manufacturing license applications depending on your situation. Each has different requirements and triggers.
| Application Type | When Required | Key Documents | Processing Time |
|---|---|---|---|
| New Manufacturing License | Starting manufacturing for the first time | Full application with all supporting documents | 5-10 working days (standard); up to 30 days (complex) |
| Diversification | Adding new product lines not in original license | Updated product list, process flowcharts, capacity projections | 5-10 working days |
| Expansion | Increasing production capacity beyond 30% of licensed capacity | Expansion justification, updated machinery list, financial projections | 5-10 working days |
Manufacturing products outside your licensed scope is a condition breach that carries penalties up to RM1 million. Always apply for diversification approval before introducing new product lines.
Step-by-Step Application Process via InvestMalaysia Portal
All manufacturing license applications are submitted through the InvestMalaysia portal (investmalaysia.mida.gov.my). Paper submissions are no longer accepted. The process involves six stages from registration to license issuance.
| Step | Action | Key Requirements | Common Rejection Reasons |
|---|---|---|---|
| 1 | Register on InvestMalaysia portal | One account per company; authorised signatory required | Using personal email instead of company email |
| 2 | Complete e-ML application form | All fields must be filled completely; no blanks allowed | Incomplete sections returned without processing |
| 3 | Upload supporting documents | PDF format; legible after upload; compress large files | Blurry scans, missing pages, wrong file format |
| 4 | Pay application fee online | Payment through InvestMalaysia portal | Payment not completed before submission |
| 5 | MIDA review and site verification | MIDA officers may visit premises to verify information | Factory setup does not match submitted layout plan |
| 6 | Approval and license issuance | Electronic license issued with specific conditions | N/A |
Apply at least 3 to 6 months before your intended start of operations. Do not begin manufacturing before receiving your license. Operating without approval is a criminal offence under Section 10 of ICA 1975.
Required Documents for MIDA Manufacturing License
Incomplete or incorrect documentation is the number one reason for application delays and rejections. Prepare all documents before starting your application to avoid unnecessary back-and-forth with MIDA.
| Document | Details Required | Common Mistakes |
|---|---|---|
| SSM registration (Form 9 and Form 24/49) | Current company registration showing directors and shareholders | Outdated forms not reflecting recent changes |
| Audited financial statements | 3 years of audited accounts; pro-forma for new companies | Submitting management accounts instead of audited statements |
| Factory layout plan | Dimensions, machinery placement, storage areas, office space | Generic floor plans without actual machinery locations |
| Machinery schedule | List of all machinery with functions and specifications | Using brand names without functional descriptions |
| Manufacturing process flowchart | Complete production flow including quality control points | Oversimplified charts missing QC checkpoints |
| Manpower plan | Breakdown of local and foreign workers by department and role | Not distinguishing between local and foreign workers |
| EIA (Environmental Impact Assessment) | Required for prescribed activities under Environmental Quality Act | Not checking if your activity is prescribed |
| Tenancy agreement or land title | Minimum 3 years remaining on lease | Lease with less than 3 years remaining |
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MIDA License Conditions and Ongoing Compliance
A MIDA manufacturing license does not expire but remains valid only as long as you comply with the conditions attached to it. MIDA actively monitors compliance through annual ICA returns and periodic inspections.
| Compliance Area | What MIDA Monitors | Consequence of Breach |
|---|---|---|
| Product scope | Only approved products manufactured at licensed premises | License revocation or fine up to RM1,000,000 |
| Equity structure | Shareholding matches approved structure | License suspension, conditions revision |
| Employment ratios | Local/foreign worker ratios as specified in approval | Foreign worker quota restrictions, warning |
| Annual ICA return | Timely submission of production, employment, and export data | Fine up to RM50,000; show-cause letter |
| Factory location | Operations only at approved premises address | Criminal offence under ICA 1975 |
| Incentive conditions | Meeting conditions tied to Pioneer Status or ITA approval | Clawback of incentives, additional tax assessments |
The annual ICA return is the most commonly neglected obligation. Many manufacturers treat it as a formality, but late or missing submissions trigger show-cause letters and can result in license suspension. Set a recurring reminder to submit before the deadline each year.
Penalties for Non-Compliance Under ICA 1975
Penalties under ICA 1975 are severe and have been enforced consistently. These are not theoretical threats. MIDA conducts inspections and collaborates with other enforcement agencies to identify unlicensed manufacturers.
| Offence | Section | Maximum Penalty |
|---|---|---|
| Manufacturing without a valid license | Section 10 | Fine up to RM2,000,000 and/or imprisonment up to 1 year |
| Breaching license conditions | Section 10 | Fine up to RM1,000,000 and/or imprisonment up to 1 year |
| Failure to submit annual ICA return | Section 7 | Fine up to RM50,000 |
| Providing false information | Section 15 | Fine up to RM1,000,000 and/or imprisonment up to 2 years |
| Continuing offence (daily) | Section 10 | Additional fine up to RM5,000 per day |
Beyond financial penalties, non-compliance results in loss of access to government incentives, inability to apply for foreign worker quotas, and difficulties with business permits and financing. Banks and government agencies routinely verify MIDA license status.
Investment Incentives for Licensed Manufacturers
One of the biggest advantages of holding a MIDA manufacturing license is access to investment incentives that can significantly reduce your tax burden. These incentives are only available to licensed manufacturers.
| Incentive | Benefit | Eligibility | Duration | Key Condition |
|---|---|---|---|---|
| Pioneer Status (PS) | 70% to 100% income tax exemption on statutory income | Promoted activities under PIA 1986 | 5 years (extendable to 10) | Cannot combine with ITA |
| Investment Tax Allowance (ITA) | 60% to 100% allowance on qualifying capex | High-tech and strategic projects | 5 years from first qualifying expenditure | Cannot combine with PS |
| Reinvestment Allowance (RA) | 60% allowance on qualifying capex for expansion/modernisation | Existing manufacturers (min 36 months operation) | 15 consecutive years | Must have been operating for at least 36 months |
| Import Duty Exemption | Full or partial exemption on import duties | Raw materials and machinery not available locally | As approved by MOF | Must demonstrate items unavailable locally at acceptable quality |
| Sales Tax Exemption | Exemption from 5-10% sales tax | Raw materials and machinery for manufacturing | Ongoing while licensed | Must be used in manufacturing process |
Pioneer Status and ITA are mutually exclusive. You must choose one or the other. The right choice depends on your capital intensity and projected profit timeline. Companies with heavy upfront capital investment typically benefit more from ITA, while companies expecting early profitability benefit more from Pioneer Status. Consult your tax advisor before deciding.
Foreign Ownership Rules for Manufacturing in Malaysia
Malaysia allows 100% foreign equity in most manufacturing sectors without mandatory Bumiputera equity requirements. This is one of the most favourable foreign ownership policies in Southeast Asia.
| Aspect | Current Policy | Notes |
|---|---|---|
| Foreign equity limit | 100% permitted in most manufacturing sectors | No mandatory Bumiputera equity for manufacturing |
| Restricted sectors | Limited sectors may have equity conditions | Check MIDA's current list of promoted and restricted activities |
| Free Industrial Zones (FIZ) | 100% foreign equity; manufacturing license still required | Additional customs benefits for export-oriented manufacturers |
| Local incorporation | Must incorporate a Malaysian company (Sdn Bhd) | Foreign branch offices cannot hold manufacturing license |
Insurance Requirements for Licensed Manufacturers
MIDA does not specify insurance requirements directly. However, other regulatory bodies, landlords, financiers, and supply chain partners will require various types of insurance before you can operate. A licensed manufacturer should have the following insurance programme in place.
| Insurance Type | What It Covers | Who Requires It | Priority |
|---|---|---|---|
| Fire Insurance | Building, stock, and machinery damage from fire, lightning, explosion | Landlords (lease condition), banks (financing condition) | Essential |
| Industrial All Risks (IAR) | All risks of physical damage including flood, accidental damage | Risk management best practice for factories RM10M+ assets | Recommended |
| Machinery Breakdown | Sudden mechanical or electrical failure of machinery | Capital-intensive manufacturers, production-dependent operations | Recommended |
| Workmen Compensation | Employee injuries, occupational disease, and death | WCA 1952 (mandatory for foreign workers), OSHA 1994 | Legally required |
| CGL (Public Liability) | Third-party bodily injury and property damage | Supply chain requirements, risk management | Recommended |
| Business Interruption (BI) | Lost gross profit during downtime after insured material damage | Risk management for production-dependent manufacturers | Recommended |
For specific insurance guidance based on your manufacturing sector, refer to our industry-specific guides for manufacturing, electronics and semiconductor, food manufacturing, and chemical plants.
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Common Mistakes That Cause Application Delays
| Mistake | Why It Causes Delays | How to Avoid |
|---|---|---|
| Starting manufacturing before approval | Criminal offence under ICA 1975; MIDA will not approve retroactively | Apply 3-6 months before intended start date |
| Submitting management accounts instead of audited statements | MIDA requires audited financials; application returned for correction | Engage auditors early; prepare pro-forma if company is new |
| Generic factory layout plans | MIDA verifies layout during site visit; mismatch causes rejection | Use actual measurements with specific machinery placements |
| Using brand names for machinery without functional descriptions | MIDA needs to understand what each machine does | List function, capacity, and purpose alongside brand/model |
| Oversimplified process flowcharts | Missing quality control checkpoints raise questions about product quality | Include all QC/QA checkpoints in the manufacturing flow |
| Not checking EIA requirements | Prescribed activities need EIA approval before MIDA will process | Check DOE's prescribed activities list before applying |
| Lease with less than 3 years remaining | MIDA expects operational stability; short leases signal risk | Secure a lease with minimum 3 years before applying |
Application Checklist Before Submission
| No. | Checklist Item | Status |
|---|---|---|
| 1 | Company incorporated with SSM and documents current | Ready / Not Ready |
| 2 | Confirmed above either threshold (RM2.5M capital or 75 employees) | Ready / Not Ready |
| 3 | Audited financial statements (3 years) or pro-forma prepared | Ready / Not Ready |
| 4 | Factory layout plan with actual dimensions and machinery placements | Ready / Not Ready |
| 5 | Machinery schedule with functions and specifications | Ready / Not Ready |
| 6 | Manufacturing process flowchart with QC checkpoints | Ready / Not Ready |
| 7 | Manpower plan (local vs foreign breakdown) | Ready / Not Ready |
| 8 | Tenancy agreement or land title (min 3 years remaining) | Ready / Not Ready |
| 9 | EIA completed (if prescribed activity applies) | Ready / Not Applicable |
| 10 | InvestMalaysia account created with authorised signatory | Ready / Not Ready |
| 11 | Incentive eligibility assessed (PS or ITA) | Ready / Not Applicable |
| 12 | Factory insurance programme arranged | Ready / Not Ready |
Frequently Asked Questions
How long does it take to get a MIDA manufacturing license?
Standard applications are processed within 5 to 10 working days. Complex applications involving promoted activities, incentive applications, or requiring additional verification may take up to 30 days. Incomplete submissions are returned without processing, which can add weeks to the timeline. Apply 3 to 6 months before your planned start of operations.
Can I start manufacturing before receiving the license?
No. Operating without a valid manufacturing license is a criminal offence under Section 10 of ICA 1975. The penalty is a fine up to RM2,000,000 and/or imprisonment up to 1 year. There is no grace period or provisional approval. You must have the license in hand before beginning any manufacturing activity.
What is the difference between a MIDA manufacturing license and a PBT factory license?
The MIDA manufacturing license authorises your manufacturing activity under federal law (ICA 1975). The PBT factory license is a local council approval covering zoning, building compliance, and premises suitability. They are issued by different authorities and you typically need both to operate legally.
Does the MIDA manufacturing license expire?
No. The license remains valid indefinitely as long as you comply with the conditions attached to it and submit annual ICA returns on time. Non-compliance with conditions or failure to submit returns can result in license suspension or revocation by MIDA.
Is 100% foreign ownership allowed for manufacturing in Malaysia?
Yes. Malaysia permits 100% foreign equity in most manufacturing sectors without mandatory Bumiputera equity requirements. The company must be incorporated in Malaysia as a Sdn Bhd. Foreign branch offices cannot hold a manufacturing license.
What happens if I manufacture products not listed in my license?
Manufacturing outside your licensed product scope is a condition breach with penalties up to RM1,000,000 and/or imprisonment up to 1 year. You must apply for a diversification approval through MIDA before introducing any new product lines. Do not assume that similar products are covered under your existing scope.
What is an annual ICA return and when is it due?
The annual ICA return is a mandatory submission containing your production data, employment figures, equity structure, and export performance. It is submitted through the InvestMalaysia portal. The due date varies but MIDA will notify you. Failure to submit carries a fine up to RM50,000 and can lead to license suspension.
Can I apply for Pioneer Status after getting my manufacturing license?
Yes. You can apply for Pioneer Status or Investment Tax Allowance as a separate application through MIDA. However, applying during your initial manufacturing license application is more efficient as MIDA reviews both together. Pioneer Status provides 70% to 100% income tax exemption for 5 years (extendable to 10 years).
What insurance do I need as a licensed manufacturer?
At minimum, you need fire insurance (usually required by landlords and banks), workmen compensation (legally required for foreign workers), and SOCSO contributions (for Malaysian workers). Recommended additions include IAR, machinery breakdown, CGL, and business interruption insurance depending on your operations.
Is assembly the same as manufacturing under ICA 1975?
It depends on whether the assembly process commercially alters the product. Simple packing, labelling, or repacking is generally not considered manufacturing. Assembly that transforms components into a different finished product is considered manufacturing. If you are unsure, consult MIDA directly for a determination on your specific activity.
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