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FY 1999: Malaysia |
CHAPTER VI: TRADE REGULATIONS AND STANDARDSThe Ministry of International Trade and Industry (MITI) is primarily responsible, within the Government of Malaysia, for the formulation and implementation of trade regulations and policies. Information about licensing and tariffs is available from the Customs Department.
The Government of Malaysia operates a system of import licensing. Import permits are required for a number of items, including arms and explosives; motor vehicles; certain drugs and chemicals; plants; soil; tin ore, slag or concentrates; and various essential foodstuffs. Prohibited imports include multi-color copying machines, any "indecent or obscene" articles and certain poisonous chemicals. Malaysia follows the Harmonized Tariff System (HTS) for the classification of goods.
Due to the recent economic downturn, the government has added to the number of goods requiring permits, for example, heavy construction equipment and certain electrical household goods. Also recently, the Ministry of Domestic and Consumer Affairs, which has oversight over retail and direct selling companies, announced that foreign direct sellers would be required to increase the local content of their products and that no new direct selling licenses would be issued to foreign firms. No new laws or regu- lations have yet been promulgated from this announcement, however.
All imported beef and poultry products must originate from facilities which have been approved by Malaysian authorities as "halal", or acceptable for consumption by Muslims.
Raw materials used directly for the manufacture of goods for export are exempted from import duties if such materials are not produced locally or if the local materials are not of acceptable quality and price. This provision, for example, applies to the very large Malaysian imports of semi-conductor components for the fabrication of completed semiconductors for export. Exemptions from duties are also available for machinery and equipment used directly in the manufacturing process or not available locally.
Import duties range from nil to 300 per cent, with the trade- weighted average tariff being 8.1% in 1997. The higher rates apply to luxury goods, including completely built-up automobiles. There are also high tariffs on leaf tobacco, cigarette products, and alcoholic beverages. In December 1993 and April 1994 pro- tective tariffs (five year duration) were imposed on imports of plastics, resins, and kraftpaper. Imports of chicken parts are regulated through licensing and sanitary controls.
The sole authorized rice importer is a government corporation with the responsibility of ensuring purchase of the domestic crop and wide powers to determine imports. In addition to import duties, a sales tax of 10% is levied on most imported goods. Like import duties, however, this sales tax is not applied to raw materials and machinery used in export production.
All imported consumer goods are required to be labeled to identify the importing agent. This is typically accomplished by affixing a label after goods have cleared customs. Prepacked drugs must be labeled in English or Bahasa Malaysia indicating the sub- stance and its components. Food labels must indicate the use of additives and shelf life.
Quantitative import restrictions are seldom imposed except on a limited range of products for protection of local industries or for reasons of security. Recently, for example, a system of quantitative licenses has been instituted for the import of cer- tain plastic resins, for the purpose of protecting a domestic petrochemical operation.
Malaysia also has a system of export licensing. In some cases, such as textiles, the system of export licenses is used to ensure compliance with bilateral export restraint agreements. In some other cases, such as rubber exports, special permission from government agencies is required. Export duties are imposed on the principal commodities: petroleum, timber, rubber, pepper, palm oil, and tin. In the case of petroleum this is a flat rate of 25%. In the case of other commodities, it is calculated on the basis of a threshold price, and no duty is charged if the price falls below the given threshold. The government has recently revised export levies for timber-based products -- removing them entirely for some species -- to encourage and spur exports in light of the economic downturn. Rubberwood, however, is subject to an export quota. Malaysia introduced a "cess" in 1990 to assist in the management of loggedover forests. Funds raised from the Forest Development Cess will be used to implement a program designed to achieve the international tropical timber organi- zation guidelines that all timber must come from sustainably managed forests by the year 2000. The state of Sabah, however, does not impose a cess and does not impose levies.
Malaysia has Free Zones (FZs) in which export-oriented manu- facturing and warehousing facilities may be established. Raw material, products and equipment may be imported duty free into these zones with minimum customs formalities. Companies which export not less than 80% of their output and depend on imported goods, raw materials and components may be located in these FZs. Goods sold into the Malaysian economy by companies within the FZs must pay import duties. In addition to the FZs, Malaysia permits the establishment of licensed manufacturing warehouses, which give companies greater freedom of location while enjoying privi- leges similar to operating in a FZ.
In an effort to divert shipping to Malaysian ports, the GOM has designated Port Klang as a "free port." The free port status is aimed at promoting transshipment trade, diverting and redistributing shipping traffic from neighboring ports to Port Klang. Other Malaysian ports, namely those on the east coast, are also to be given so-called "free port" status. Recently, Transport Minister Datuk Seri Dr. Ling Liong Sik has stated that the government is studying a proposal to make it mandatory for local exporters to use Port Klang.
Malaysia is a member of the ASEAN Free Trade Area (AFTA), which aims to reduce trade barriers between the member countries (Malaysia, Indonesia, Singapore, Thailand, the Philippines, Brunei, Vietnam, Laos and Myanmar) over a fifteen year period. Progress to date, has been relatively slow, though the target date for completing AFTA has been advanced to 2003.
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