Q&A on Licensed Manufacturing Warehouse (LMW) in Malaysia

KAIZEN啓源

2025-11-24

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What is a Licensed Manufacturing Warehouse (LMW)?

An LMW is a manufacturing facility licensed under Section 65/65A of the Customs Act 1967 that allows companies to manufacture goods in a bonded environment with special customs control and tax privileges. It is commonly used by export-oriented manufacturers.

Who is eligible to apply for an LMW license?

Companies engaged in manufacturing activities with a significant portion of their production intended for export (generally 80% or more) are eligible. Approval is subject to Customs’ evaluation of production activities, facility readiness, and compliance capabilities.

Can an LMW company sell goods locally?

Yes, but local sales are subject to customs duties and sales tax that would have been exempted earlier. Companies must declare the local sales to Customs, pay the applicable taxes, and maintain proper documentation.

What are the key benefits of a LMW license?

(1) Import duty and sales tax exemptions on raw materials, components, parts, and machinery used in manufacturing.

(2) Streamlined customs procedures for import/export activities.

(3) Improved cash flow due to tax savings.

Are there specific requirements for the premises of an LMW?

Yes, the premises must have:

(1) Properly designated manufacturing and storage areas

(2) Security measures to prevent unauthorised access

(3) Fire safety and environmental controls

(4) Equipment that complies with operational standards

Kaizen, together with its associate firms in Malaysia, can help the clients to perform these compliances formalities so as to maintain the Malaysia company in good standing. Please call and talk to our professional accountants in Kaizen for further clarification.