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Business Premise Licence for Factory or Warehouse in Malaysia

Posted by admin on November 24, 2023

Commencing a business in Malaysia necessitates the possession of a legitimate business license. Applications for business licenses will be processed by the Licensing Authority (Pihak Berkuasa Melesen, or PBM), contingent on the location and nature of your business activity.

Regardless of whether it's a broad license, an industry-specific permit, or an activity-specific authorization, every company is required to possess at least one. This category encompasses registrations, approvals, licenses, and permissions.

Compliance regulations vary based on the industry, company type, and geographical location. Foreign individuals intending to establish a private company in Malaysia need to be mindful of the specific licenses required for their venture.

Understanding the Various Business Licenses in Malaysia

Engaging in business without the requisite licenses exposes enterprises to considerable liability. It is crucial to comprehend the diverse licenses necessary in Malaysia when initiating a business in the country.

General Business License

General Business licenses include the necessary licenses and will apply when the investor decides to start a business in Malaysia. A list of general licenses that apply to all businesses:

  • Company Registration
  • Company and Employee Income Tax Registration
  • Employees Provident Fund (EPF)
  • Social Security Organization (PERKESO)
  • Human Resources Development Fund (HRDF)
  • Business premises licenses and signboard licenses (a rental or sale and purchase agreement is needed)

Businesses in Malaysia are required to submit applications to the appropriate local authority for business premises permits and signboard licenses. Every local government may have different application criteria.

Industry Specific Licenses

An industry-specific license is a permit for a particular industry or sector that the government has identified. This comprises the regulations that control the growth of a specific industry or sector in accordance with changes in governmental policy.

Here is a list of some special license examples, including the governance body, according to the industry available in Malaysia:

  • Manufacturing: Manufacturing License from the Malaysian Investment and Development Authority (MIDA)
  • Distributive Trade: Wholesale and Retail Trade (WRT) License for Trading, Import and Export, Consultancy, and Restaurant Business Management from the Malaysian Ministry of Domestic Trade and Consumer Affairs (MDTCA), or KPDNKK.
  • Telecommunication and broadcasting: Publication License for Magazines and Books and Broadcasting License for Music, Singing, TV, and Radio from Malaysian Communications and Multimedia (MCMC)
  • Banking: Central Bank License for Banking, Financing, and Leasing from Bank Negara Malaysia
  • Construction: Construction Industrial Development Board and Engineering License from Construction Industry Development Board (CIDB)
  • Oil Exploration: Business Licensing and Procurement from Petronas

Licenses Tailored to Specific Activities

Licenses that control specific activities and may apply to one or more sectors or industries are known as activity-specific licenses. For this license, the investor must abide by detailed rules created to safeguard the public interest, employment, worker safety, environment, and citizen interest.

Examples of activity-specific licenses are:

  • Certificate of Fitness for Certified Machinery
  • Approval for Expatriate Posts
  • Authorisation to install, resite, or alter air pollution control equipment
  • Building Plan Approval
  • Sales Tax License

Steps for Obtaining a Business Premise License for a Factory or Warehouse in Malaysia

Factory or warehouse business premises licenses normally involve the Local Authority Licensing Department and three external departments, which are the Department of Occupational Safety and Health (DOSH), the Department of Environment (DoE), and the Fire and Rescue Department (BOMBA).

These three external departments must be approved before continuing with the Local Authority Licensing Department.

Documents needed by the Department of Occupational Safety and Health (DOSH)

  • Key plan, site plan, and location plan
  • The architectural plan, including the location of machinery and equipment shown
  • Paid-up capital and annual sales turnover
  • Workers detail
  • A complete list of machinery and equipment with details
  • The main materials to be used
  • Types of wasted materials, whether solid, liquid, or gas (if any)
  • A brief description of waste handling and waste disposal

Documents needed by the Department of Environment (DoE)

  • Key plan, site plan, and location plan
  • The architectural plan, including the location of machinery and equipment shown
  • A complete list of machinery and equipment with details
  • Filled out AS PAT form (Preliminary Site Assessment for Development Project), which includes:
  • Type of application
    • Land use in accordance with the planning zone
    • Conceptual plan (if applicable)
    • Raw materials used and product
    • Schedule of operations
    • Production process with a relevant diagram attached
    • Fuel supply, energy, and process water usage information
    • Pollution information with pollutant types stated and points of emission or discharge indicated in process flow diagrams
    • Waste disposal process

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Documents Needed by the Fire and Rescue Department (BOMBA)

  • Key plan, site plan, and location plan
  • The architectural plan, including the location of machinery and equipment shown
  • Occupant load calculation
  • Fire appliance access is indicated.
  • The location of the fire hydrant is shown.
  • Architectural plan for change or addition of structure
  • Active and passive fire safety installation

Department Responsible for Local Authority Licensing

The application procedures and prerequisites for Business Premise Licenses for Factories or Warehouses can differ between various Local Authority Licensing Departments. However, it is generally necessary to obtain letters of support from DOSH (Department of Occupational Safety and Health), DoE (Department of Environment), and BOMBA (Fire and Rescue Department of Malaysia).

Ramifications of Operating Your Business Without the Proper Permits and Licenses

While it’s widely known that businesses require the right permits and licenses to function, it’s crucial to understand the potential repercussions if they are lacking. Let’s delve into the possible penalties that business owners may encounter in the absence of the necessary permits and licenses.

1. Forced to Close

If a business continues to operate without the required permit, the government may enforce a shutdown. In some instances, permits can be secured, but if the local authority rejects the sought-after permit, it could take a year or more before the business is allowed to resume operations.

2. Penalties and Fines

Operating without a permit is against the law, and the severity of the offense depends on factors such as the nature of the business, its location, and the specific authorization requirements. For instance, an accountant providing services without proper authorization might face minor penalties, including fines and potential reimbursement of fees owed to the local authority. On the other hand, a shipping company conducting operations without a permit could incur fines and expenses not only from the local jurisdiction but also from state and federal authorities.

3. Tarnished Reputation

If a business operates without a permit, it can raise concerns among local customers about the ethical or operational capabilities of the business. This situation may lead customers to believe that if a business does not adhere to legal requirements for operation, it might also neglect consumer expectations and orders.

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