Description
If you are a manufacturer in Malaysia looking to reduce import duties, improve cash flow, and stay competitive on exports, the LMW license is one of the most powerful tools available to you.
Yet most manufacturers either do not know it exists, or assume the application is too complicated to bother with.
This guide covers everything you need to know: what an LMW license is, who qualifies, how to apply, what it costs, and what you must do after approval. By the end, you will have a clear picture of whether this license is right for your business and exactly how to get it.
What Exactly is a LMW License ?
An LMW license, short for Licensed Manufacturing Warehouse, is an official licence issued by the Royal Malaysian Customs Department (Jabatan Kastam Diraja Malaysia / RMCD) under Section 65A of the Customs Act 1967.
In simple terms, it gives your manufacturing facility the legal status of a licensed warehouse, allowing you to:
- Import raw materials, components, and equipment without paying customs duties upfront
- Store and manufacture those imported goods within your premises
- Export finished goods with full duty exemption on all previously imported inputs
The key benefit is duty suspension, you do not pay import duties on your raw materials until your finished goods are sold locally. And if your finished goods are exported, those import duties are fully waived.
This is not a tax incentive given selectively to large corporations. Any qualifying manufacturer in Malaysia can apply, including SMEs.
LMW License vs Manufacturing License: What Is the Difference?
This is the most common point of confusion among business owners. An LMW license and a manufacturing license are two separate licences issued by two different government bodies. Depending on your business, you may need both.
The important point: You must hold a valid MIDA or MITI Manufacturing License before you can apply for an LMW license. The manufacturing license is a prerequisite, not an alternative.
| LMW | Manufacturing License | |
|---|---|---|
| Full Name | Licensed Manufacturing Warehouse | Manufacturing License |
| Issued By | Royal Malaysian Customs (RMCD) | MIDA or MITI |
| Purpose | Duty suspension on imported inputs | Legal authorisation to manufacture in Malaysia |
| Who It Targets | Export-oriented manufacturers | All manufacturers above threshold |
| Key Benefit | Import duty exemption | Compliance with Industrial Coordination Act 1975 |
| Prerequisite | — | Required before LMW application |
| Cost | RM2,400 / year | Varies by agency |
| Renewal | Annual or biennial | Periodic |
MIDA vs MITI — Which Manufacturing License Do You Need?
- MIDA (Malaysian Investment Development Authority): For companies with shareholders’ funds of RM2.5 million and above, or with 75 or more full-time paid employees
- MITI (Ministry of International Trade and Industry): For companies below the MIDA threshold — this covers most SMEs
If you are unsure which applies to your company, check your current shareholders’ fund and headcount. When in doubt, consult a licensed company or business consultant before proceeding.
Who Qualifies for an LMW License?
Basic Eligibility
- Hold a valid MIDA or MITI Manufacturing License
- Export at least 80% of the total value of your finished goods over a 12-month period
- Operate from a suitable premises that meets Customs requirements (see Section 5)
If your export volume is currently below 80% but you plan to scale exports, you should still speak to a consultant, there are scenarios where companies are granted an LMW pending compliance milestones.
Industry Types That Commonly Qualify
The LMW scheme is widely used across these sectors in Malaysia:
- Electrical & Electronics (E&E) — the largest LMW sector in Malaysia
- Rubber and rubber products
- Plastics and packaging
- Textile and apparel
- Precision engineering and machinery parts
- Medical devices
- Chemical manufacturing
Benefits of LMW License
For export-oriented manufacturers, the LMW license means one thing: stop paying duties on inputs that never enter the local market.
Duty Suspension on Raw Materials and Components
No upfront customs duties on imported inputs. Duties only apply on local sales, fully waived on exports.
Electronics manufacturer importing RM5M in components annually = saves up to RM1.25M in duty costs on exported goods.
- Duty Exemption on Machinery and Equipment Production machinery, equipment, and spare parts used in manufacturing may also qualify for duty exemption.
- Improved Cash Flow
Free up working capital previously tied up in upfront duty payments. - Competitive Export Pricing
Lower input costs = more competitive pricing on overseas contracts. - Subcontracting Flexibility
Move goods in and out for subcontract work without triggering duty obligations — with proper documentation. - Pathway to AEO Status
A clean LMW record supports your Authorised Economic Operator (AEO) application — giving you expedited customs clearance and stronger trade credibility.
Step-by-Step LMW License Application Process
Assuming your manufacturing licence is in place and your premises are ready, the application process involves four stages.
Step 1: Prepare Your Documents
Compile all required documents (see the full checklist in Section 7). Incomplete submissions are one of the leading causes of delays and rejections.
Step 2: Submit Application to Customs
Submit your completed application — Form JKDM No. 1 (general application) and Form A (LMW-specific form) — together with all supporting documents at the nearest Customs office to your proposed LMW premises.
You cannot submit this online. Physical submission is required.
Step 3: Premises Inspection by Customs Officers
After submission, a Customs officer will conduct a physical inspection of your premises. They will assess:
- Whether the building meets structural and security requirements
- Whether your designated zones are clearly demarcated
- Whether your manufacturing process aligns with what is declared in your application
If changes are required, Customs will issue a notice and give you a timeline to comply. Once rectified, inspection will proceed.
Step 4: Approval, Payment, and Licence Issuance
Once inspection is passed, your LMW licence is approved. Pay the licence fee of RM2,400, and your licence will be issued. You may then begin importing under LMW conditions.
Total processing time: 8 to 12 weeks from submission to issuance, assuming no major issues.
Common Reasons LMW Applications Get Rejected
Most rejections are avoidable, and they all come down to the same root cause: submitting before you are ready.
The mistakes happen across premises compliance, document completeness, HS code classification, and export ratio verification. Each one adds weeks to your timeline or results in outright rejection by Customs.
Frequently Asked Questions
Can an SME apply for an LMW licence?
Yes. There is no minimum company size or revenue threshold for LMW eligibility. The key requirements are a valid manufacturing licence and an export ratio of at least 80% of your total finished goods output.
How long does it take to get an LMW licence
From submission of a complete application, expect 8 to 12 weeks for approval and issuance. If you still need to obtain a manufacturing licence first, add another 2 to 3 months.
How long is an LMW licence valid?
One or two years, depending on the option you select at application. The annual fee is RM2,400; the biennial option is RM4,800.
Do I need a bank guarantee to apply for an LMW licence?
Customs may require a bank guarantee or general bond as security depending on your company’s import volume and risk profile. This is assessed during the application process. Plan for this early by speaking to your bank before you submit.
Can my shophouse qualify as an LMW premises?
Yes, if it meets all the structural and security requirements set by Customs — permanent structure, secure fencing or grilles, alarm system, security guard, and clearly demarcated zones for manufacturing, raw materials, finished goods, and waste.
