Licensed Manufacturing Warehouse (LMW)

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The purpose of incorporating Section 65A in addition to Section 65 of the Customs Act 1967 is to allow 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 (LMW) can be set up speedily and anywhere in the Principal Customs Area without any need to be near to ports of entry unlike Free Zones which is 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 LMW facilities should be located in less developed area so as to in line with the government's policy to disperse export oriented and labour intensive industries to less developed areas.

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

Application for LMW

Application to establish a 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 5A can be made simultaneously.

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

Period of LMW Licence

The LMW licence under Section 65 and Section 65A is issued at the discretion of the Director-General of Customs on payment of fees currently fixed at RM2400 (Ringgit Malaysia Two Thousand Four Hundred Only).

The licence so granted shall be subjected to such conditions as the Director-General of Customs may specify. It is for a period of two years subjected to renewal. Application for renewal of licence shall be made at least one month before expiry date of the current LMW licence.

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

Types of Premises

Premises considered suitable as LMW must be of permanent construction and secured to the satisfaction of the Director-General of Customs. The building must contain separate storage space for raw materials and finished goods. It must also provide separate space to be used solely for manufacturing dutiable goods.

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