Licensed Manufacturing Warehouse (LMW)

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Objective

Basically, the purpose of introducing Section 65A in addition to Section 65 of the Customs Act 1967, is to enable manufacturing process to be carried out in licensed warehouses. Manufacturing operation therein is subjected to minimal customs procedures. It is primarily intended to cater for export oriented industries.

The Licensed Manufacturing Warehouse or better known as LMW can be set up speedily and anywhere in the Principal Customs Area without any need to be near to ports of entry unlike the Free Trade Zones established under the Free Zones Act 1990.

Industries may thus be induced to be located in rural areas. Raw materials or components directly used in the manufacturing process are exempted from payment of customs duty and sales tax.

Location of LMW

A company wishing to have LWM facilities should be located in less developed area so as to be in line with the government policy to disperse export oriented and labour intensive industries to less developed areas.

However, in this respect, a certain degree of flexibility is exercised. If there are compelling reasons to select a specific area, not in a less developed area, on account of special nature of manufacturing operation, etc, the Customs Director-General may consider granting the LMW in such a case.

Application for License

Application to establish warehouse for storage of dutiable goods under Section 65 and to manufacture such goods for production of other dutiable goods under the provision of Section 65A can be made simultaneously.

It should be submitted to the State Customs Director where the proposed warehouse is to be located through the nearest Customs office. All information required in the application must be fully furnished together with certificates, plans and other supporting documents as required.

Period of LMW License

License under the Section 65 and 65A of the Customs Act 1967 is issued at the discretion of the Customs Director-General on payment of fees currently fixed at RM2400.00 and the license so granted shall be subjected to such conditions as the Customs Director-General may specify.

Te license is for a period of two years subject to renewal. Apllication for renewal of license must be made at least one month before the expiry date of the existing license.

If the product manufactured falls under categories of goods liable to excise duty, an excise license is required and its fees is as prescribed under the Third Schedule of the Excise Regulations 1977.

Types of Premises

Premises considered suitable as LMW plant must be of permanent construction and secured to the satisfaction of the Customs Director-General.

The building must also contain a detailed separate storage space for raw materials and finished goods and it also must provide a separate area to be used solely for manufacturing dutiable goods.

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