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TRADE POLICY

Malaysia’s external trade policy has evolved against a background where the external sector has been an important contributor to the country’s economic growth.  About two-thirds of the country’s GDP are from external trade.  Being a small country with a population of about 22.2 million in 1998, Malaysia has to venture beyond its borders to market its products and services.

The external sector is an important source of capital, input and technology.  The commitment to a multilateral trading system that is predictable and stable is thus imperative for Malaysia’s economic prosperity.  These factors underline Malaysia’s approach to trade and trade-related policy formulation.

Malaysia has an open and outward oriented trade regime replacing the largely imported substitution policies of the 1960s and early 1970s.  While seeking better international prospects for its products and services, and access to better inputs, components and technology, Malaysia also accepts responsibilities and obligations commensurate with its level of economic development.

These principles are embodied in Malaysia’s trade policy objectives which are:

~

to undertake liberalisation measures through regular reviews of the trade regime;
~ to maintain and expand Malaysia’s trade with major trading partners;
~ to diversify and expand trade in new and emerging markets;
~ to promote and develop exports of manufactured and value added resource-based products;
~
 
to seek improved and favourable market access for Malaysia’s exports of processed commodities and manufactured products;
~ to promote and develop exports of Malaysia’s services; and
~ to strengthen and expand intra-ASEAN trade through closer economic and trade cooperation.

Consistent with its liberal and outward-oriented trade policies, Malaysia trades with over 200 countries.

TRADE REGULATIONS

Exchange Regulations

The Controller of Foreign Exchange, who is also the Governor of the Bank Negara Malaysia (the Central Bank), administers foreign exchange control regulations.

The exchange control regime is liberal and applies uniformly to transactions with all countries, with the exception of Israel, Serbia and Montenegro; special restrictive rules apply to transactions with these countries.

Export proceeds are required to be repatriated in accordance with the prescribed manner and the payment schedule as specified in the sales contract, which currently is limited to six months from the date of export.  The export proceeds in foreign currency other than the restricted currencies repatriated must either be sold for Ringgit or retained in a foreign currency account, subject to overnight limits of between US$1 million and US$10 million.

Exporters are required to complete Form KPW X for each shipment exceeding RM100,000 f.o.b and submit quarterly statements to certify the receipt of all export proceeds.  However, exporters who declare their export through EDI (Electronic Data Interchange) system are not required to submit Form KPW X, with effect from 1 January 1997.

Bank Negara Malaysia

Tel: 603-298 8044
Fax: 603-291 2990
Homepage: http://www.bnm.gov.my
E-mail: info@bnm.gov.my

Credit and Payment Conditions

Usual terms: Exporters should review their terms for sale, especially with respect to firms dependent on domestic demand.  Minimum terms are sight drafts, with letters of credit being the recommended terms.  Credit terms of 60 to 90 days often provided.

Customs Tariff

The Malaysian tariff nomenclature is in accordance with the International Convention on the Harmonized Commodity Description and Coding System (HS) and the Standard International Trade Classification (SITC).

These tariff schedules apply to all items, with the exception of certain goods, mainly petroleum products and live animals.

The exception also extends to goods either manufactured locally or abroad that are transported between Peninsular Malaysia, Sabah and Sarawak.

Most goods are subjected to import duties ranging from zero to 30 percent.  Higher rates apply to luxury goods, automobiles, tobacco, alcoholic beverages and processed and high-value food products.

Customs Authority

Director General of Customs, Royal Customs and Excise Department,
Block 11, 6th Floor, Jalan Duta, Kuala Lumpur 50596,
Malaysia
Tel: (603) 651 6088 Fax: (603) 651 2548
Homepage: http://www.customs.gov.my
E-mail: kastam@hq.recd.gov.my

Duties

Malaysia adopted the World Trade Organisation’s (WTO) procedures for valuing imports, effective January 1, 1998.

These procedures determine the value of the goods based on the transferred price, rather than the previous Brussels Convention method of accessing the open market value of the goods.

In the event where duties are applicable on imported goods, all relevant duties must be paid before such goods can be released.  Where export duties are leviable, such duties must be paid before goods are allowed to be exported.  The rates of import / export duties on different categories of goods are as indicated in the Customs Duties Order 1996.

Sales Tax

The rates of sales leviable are as stated in the Sales Tax (Rate of Tax) Order 1972 and the Sales Tax (Rate of Tax) Order 1997.  Three rates of tax at 5%, 10%, or 15% are leviable on the gross value of all goods imported except those which are exempted under the Sales Tax (Exemption) order 1988.

The following goods are subject to a sales tax of 15% ad valorem:

Beer, ale, stout and porter, intoxicating beverages, cigars, cheroots, cigarillos, cigarettes and beedies.

Anti-Dumping Duties, Subsidies and Countervailing Duties:

Malaysia’s Countervailing and Anti-Dumping Act was passed in 1993.  Under this law, provisional anti-dumping duties usually range between zero and 99 percent.  As a member of the WTO, Malaysia is required to adhere to the WTO Conventions covering Anti Dumping Duties, Subsidies and Countervailing Duties.

PRODUCT STANDARD, REGULATIONS AND REQUIREMENTS

Malaysia adheres to the WTO’s “Standard Code” on Technical Barrier To Trade.  As the appointed standards development agency, SIRIM Berhad published Malaysian Standard (MS) and provides quality certification services.  Today, more than 2600 MS are available.  About 200 new MS are published every year.  The current MS are also reviewed every five years or earlier whenever required so that it can be updated to the latest technological development.  Many of these MS are implemented in product certification, quality management system and environmental management system certification.

Permission to use the SIRIM Quality Mark on products or services is given to manufacturers and companies whose products and services consistently conform to the relevant MS and whose factory has adequate quality control procedures.  To ensure compliance to the requirement of the Mark, SIRIM periodically tests the product, makes both regular and unannounced visits to factories and regularly checks their quality control and procedures. Implementations of new standards are constantly being added to the list.

SIRIM Berhad has established ISO 9000 and ISO 14000 standards.  There is a high level of interest and awareness of the ISO 9000 and ISO 14000 standards in Malaysia both in the government and private sectors including and manufacturing industry.

At present, SIRIM Berhad has signed MOU’s and is affiliated with the following overseas certification bodies:

~ Singapore Productivity and Standards Board (PSB)
~ Turkish Standards Institute (TSE)
~ Japanese Quality Assurance (JQA)
~ Japan Electrical Testing Laboratory (JET)
~ Reinisch Westfalischer Technischer
~ Uberwachungsa Verein (RWTUV) of Federal Republic of Germany
~ British Standards Institution Quality Assurance (BSI QA)
~ Underwriter Laboratory (UL)
~ VDE-Pruefstelle, F.G Germany (VDE)
~ State Administration of Import and Export Commodities of China (SACI)
~ Canadian Standards Association (CSA)
~ Tot Kevring van Leektrotechnische Materialen, Netherlands (KEMA)
~ Standards Association of Australia (SAA)
~ Standard Association of New Zealand (SANZ)
~ Canadian General Standards Board (CGSB)
~ MITI, Japan (For JIS Certification)
~ Vehicles Certification Agency, UK (VCA)
~ Association of Short-Circuit Testing Authority Inc. (ASTA)

Some of the above-mentioned agencies have appointed SIRIM as an inspection agent to conduct inspection on their behalf for Malaysian companies wishing to export overseas.

SIRIM

Tel: 603-5592601 
Fax: 603-5508095
Homepage: http://www.sirim.my

TRANSPORTATION

Ports

Ninety percent of Malaysian trade goes by sea.  Major ports in Peninsular are Port Klang, Penang Ports, Pasir Gudang Port, located in Sarawak is designated as the first liquefied natural gas port.  The government is in the process of expanding Port Klang into a regional hub.  In addition, a new port at Tanjung Pelepas in Johor is under construction and is expected to be in operation by the end of 1999.  The main Sabah ports are in Sandakan, Labuan, Tawau and Kota Kinabalu.  Sarawak’s main ports are Miri, Kuching and Rajang.  Since March 1995, Port Klang implemented an electronic data interchange (EDI) system, linking a number of banks, shipping agents and freight forwarders with the customs and port authorities.  The EDI system has improved efficiency and productivity, as well as reduced operation costs.

Air Cargo Service

The following carriers have cargo services out of major Malaysian International airports:

~ Air India ~ Indian Airlines
~ Air Lanka ~ Japan Airlines
~ Air Mauritius ~ Korea  Air
~ Air New Zealand ~ Kuwait Airways International
~ Air France ~ Lufthansa
~ Asiana Airlines ~ Malaysian Airlines
~ Air Maldives ~ Myanmar Airways International
~ All Nippon Airways ~ Northwest Airlines
~ Aeroflot-Russian International Airlines ~ Nippon Cargo Airlines
~ Bangladesh Airlines ~ Pakistan  Airlines
~ Balkan/Bulgarian Airlines ~ Philippines Airlines
~ China Airlines ~ Quanta's
~ Cathay Pacific ~ Royal Jordanian
~ China Southern Airlines ~ Royal Air Cambodia
~ Cargo Lux ~ Royal Brunei
~ Continental Cargo ~ Singapore Airlines
~ Canadian Airlines International ~ Saudi Arabia
~ Eva Airlines ~ Sempati Air
~ Federal Airlines ~ Thai International Airways
~ Garuda Indonesia ~ Uzbekistan Airways
~ Gulf Air ~ Vietnam Airlines
~ Iran Air ~ Virgin Atlantic Cargo

Malaysian Airlines Cargo Sdn Bhd or MASkargo, is Malaysian wholly owned freighter services subsidiary of Malaysian Airlines.

MASkargo offers total cargo and transshipment solutions including:  cargo handling, build-up, breakdown, storage and documentation processing services.  At the new Kuala Lumpur International Airport in Sepang, it has the state-of-the-art Advanced Cargo Centre (ACCA).

The ACC is designed to be the premier cargo and transshipment center for the region.  The new cargo center will handle one million tones of cargo annually with an expansion capacity of up to 3 million tones.

Links to more Malaysian Government Departments and Local Authorities

 

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