Application for Exemption from Manufacturing Licence MIDA | Malaysian Investment Development Authority
- Roger Pay
- May 8
- 5 min read
The Malaysian Investment Development Authority (MIDA) is the primary government agency in Malaysia responsible for the promotion and coordination of industrial development. The Industrial Co-ordination Act 1975 (ICA) requires manufacturing companies with shareholders' funds of RM2.5 million and above OR those employing 75 or more full-time paid employees to obtain a manufacturing license.
However, companies that do not meet either of these criteria may apply for an exemption from the Manufacturing Licence. Upon approval, MIDA will issue a Confirmation Letter for a Company Exempted from Manufacturing Licence (ICA10).
Here's a breakdown of the exemption process:
Eligibility for Exemption:
A company can apply for an exemption if it meets both of the following conditions:
Shareholders' funds do not exceed RM2.5 million. This refers to the aggregate amount of the company's paid-up capital, reserves (excluding capital reserves from asset revaluation and provisions), and balance of profit and loss appropriation account. Bonus shares issued from capital reserves by revaluation of fixed assets are not included in paid-up capital.
Employs not more than 75 full-time paid employees. A full-time paid employee is someone working at least six hours a day and at least 20 days a month for 12 months a year and receives a salary. This includes sales, engineering, maintenance, and repair personnel under the company's control, as well as directors (unless paid solely for attending board meetings).
How to Apply for Exemption:
The application for a Confirmation Letter for Exemption from Manufacturing Licence (ICA10) must be submitted online through the InvestMalaysia portal:
Key steps in the application process:
Register an account on the InvestMalaysia portal if you are a first-time user.
Follow the "Guideline on Application for Exemption from Manufacturing Licence" available on the MIDA website or portal for a step-by-step guide.
Submit the online application along with the required supporting documents.
Timeline for Application for Exemption from Manufacturing Licence with MIDA (Processing Times)
The typical timeline for the Application for Exemption from Manufacturing Licence with MIDA can vary, but here's a general expectation:
Online Application: The application is submitted online through the InvestMalaysia portal.
Initial Review: MIDA aims to issue an interim letter of approval within six to eight weeks from the date of receiving a complete application.
Final Approval: After the interim approval, you'll need to provide supporting documents as requested by MIDA. The final approval for the Exemption Letter (ICA10) can take anywhere from seven to 60 days after submitting the complete supporting documents.
Therefore, the entire process can potentially take approximately 2 to 4 months from the initial online submission to receiving the final Exemption Letter.
Key factors that can influence the timeline:
Completeness of the Application: Submitting a complete application with all required documents from the outset is crucial for a faster processing time. Incomplete applications will be returned, causing delays.
Accuracy of Information: Ensure all information provided is accurate and consistent. Any discrepancies can lead to queries and prolong the process.
Responsiveness to MIDA's Requests: Promptly responding to any requests for clarification or additional documentation from MIDA is essential to keep the application moving forward.
MIDA's Workload: Processing times can be influenced by the volume of applications MIDA is handling at any given time.
Fees and Validity:
The fee for the Exemption of Manufacturing Licence application is RM1,000.
Once approved, the exemption is typically valid for five years and needs to be renewed through the same online portal.
Benefits of Obtaining an Exemption Letter:
Even with an exemption letter, your company may be eligible to apply for various facilities and incentives from the Malaysian government, such as:
Import duty exemptions on machinery, equipment, and raw materials under the Customs Duties (Exemption) Order 2017.
Sales tax exemptions under the Sales Tax (Persons Exempted From Payment of Tax) Order 2018.
Other incentives like Pioneer Status (partial income tax exemption) and Investment Tax Allowance (ITA), provided the company engages in promoted activities or sectors beneficial to the Malaysian economy.
Important Notes:
The Industrial Coordination Act 1975 also lists specific activities that are automatically exempt from requiring a Manufacturing Licence, regardless of shareholders' funds or employee count. These include milling of paddy into rice, milling of oil palm fresh fruits into crude palm oil, and the production/processing of raw natural rubber.
Companies that meet the threshold for a Manufacturing Licence (shareholders' funds ≥ RM2.5 million OR employees ≥ 75) must apply for a Manufacturing Licence, not an exemption. The fee for a new Manufacturing Licence is RM1,500.
MIDA's online portal is the central platform for all Manufacturing Licence and Exemption applications, as well as applications for various incentives. The previous e-ML system is no longer accepting new applications.
Contacting MIDA:
For further inquiries or clarification, you can contact MIDA through the following channels:
MIDA Headquarters:
Address: MIDA Sentral, No. 5, Jalan Stesen Sentral 5, KL Sentral, 50470 Kuala Lumpur, Malaysia.
Tel: +603 2267 3633
Email: investmalaysia@mida.gov.my
Website: www.mida.gov.my
You can also find contact details for MIDA's global and state offices on their website.
It is recommended to refer to the official MIDA website and guidelines for the most up-to-date information and procedures.
How Bestar can Help
Application for Exemption from Manufacturing Licence MIDA | Malaysian Investment Development Authority
Engaging professional services can significantly enhance your application for an Exemption from Manufacturing Licence with MIDA. Here's how Bestar can help:
1. Ensuring Accurate Assessment of Eligibility:
Thorough Review of Criteria: Bestar can meticulously assess your company's shareholders' funds and employee count to definitively determine if you meet the exemption criteria. This prevents wasted effort on an application you're not eligible for.
Proper Calculation and Documentation: We can ensure accurate calculation of shareholders' funds (understanding which components to include and exclude) and proper documentation of employee numbers according to MIDA's definitions.
2. Streamlining the Application Process:
Navigating the InvestMalaysia Portal: Bestar can guide you through the registration, form filling, and document uploading process, ensuring all steps are completed correctly and efficiently.
Understanding Required Documentation: We know exactly which supporting documents are necessary (e.g., audited financial statements, employee lists, company registration documents) and can help you gather and organize them appropriately.
Avoiding Common Pitfalls: We can anticipate potential issues or missing information that could lead to delays or rejection.
3. Preparing a Strong and Comprehensive Application:
Clear and Concise Information: Bestar can help you present the required information in a clear, concise, and professional manner, adhering to MIDA's expectations.
Justification and Supporting Statements: While the exemption criteria are primarily quantitative, Bestar can help articulate any relevant context or supporting statements that might strengthen your application.
Ensuring Compliance: We can ensure all aspects of the application comply with the latest MIDA guidelines and regulations.
4. Liaison and Communication with MIDA:
Acting as a Point of Contact: Bestar can act as your liaison with MIDA, handling inquiries and providing clarifications on your behalf.
Following Up on the Application: We can proactively follow up on the status of your application and address any requests for additional information promptly.
Understanding MIDA's Processes: Our experience allows them to understand MIDA's internal processes and timelines, potentially leading to a smoother and faster outcome.
5. Potential for Future Benefits:
Positioning for Incentives: Even with an exemption, your company might be eligible for certain investment incentives. Bestar can advise you on these opportunities and help with future applications if your company expands and requires a full Manufacturing Licence later.
Long-Term Compliance: Engaging Bestar early on can establish good practices for future interactions with regulatory bodies.
Bestar Can Help:
Handle company registration, compliance matters, and can assist with regulatory applications.
Provide expertise in business setup, licensing, and navigating government agencies.
Ensure accurate financial reporting and can assist with documenting shareholders' funds.
Offer professional advice on regulatory compliance and can assist with complex applications.
In summary, while the application for exemption might seem straightforward, engaging Bestar can save you time, reduce the risk of errors, ensure compliance, and potentially expedite the process. Our expertise and understanding of MIDA's requirements can significantly increase the likelihood of a successful outcome.
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