A Free Trade Zone (FTZ) in Malaysia is an area in which commercial and industrial activities are carried out under the supervision of the MoF.
A Free Trade Zone (FTZ) in Malaysia is a designated area in which commercial and industrial activities are carried out under the supervision of the Ministry of Finance.
Free Trade Zones (FTZs) offer local and international companies the benefits of reduced transport and handling costs, time savings, and improved efficiency.
The main function of FTZs is to promote trade by providing a simplified and efficient customs procedure. Goods can be brought into an FTZ without being subject to customs duties and excise duties.
Before determining whether you want to set up your company in the Free Trade Zone, you need to know the difference between Free Industrial Zone (FIZ) and Free Commercial Zone (FCZ). Normally, manufacturing activities will occur in the Free Industrial Zones (FIZs) and trading activities in the Free Commercial Zones (FCZs).
What is a Free Industrial Zone?
Free Industrial Zone is a special economic zone where businesses manufacture goods for export. If your company wishes to set up a free industrial zone in Malaysia, it must export at least 80% of its outputs and raw materials. If your company receives special approval from the Ministry of International Trade and Industry (MITI), it can reduce its export requirement to 60%.
What are the benefits of setting up a Free Industrial Zone?
There are 2 key benefits you must setup your company in Free Industrial Zone. Firstly, your company can enjoy duty-free imports of specific raw materials and equipment. Next, your company can enjoy exemption from sales tax, excise tax and GST. Remember that machinery and raw materials not directly used in the manufacturing process are not qualified for exemption from taxes.
List of Free Industrial Zone
Bayan Lepas Free Industrial Zone
The Bayan Lepas Free Industrial Zone is situated in Penang and is known as the island's main industrial hub. It is well-known for its technology and high-tech manufacturing firms. There are 4 phases developed in this free industrial zone. Companies in phase 1 include Osram Opto Semiconductors, Bosch, Formosa Engineering, Inter-Quartz, AKN, Tonlek Manufacturing, Northen Telecom, Penshin Components, Eu Engineering, Clarion, Benchmark Electronic, Syarikat Granek and Amphenol. Companies in phase 2 include Dynacraft, Fairchild, Towam, Spansion, Aesculap Surgical Industries, Lemtronics, Renesas, Plexus and B. Braun. For phase 3, there are more companies ranging from high tech to light industry, such as Intel, Radiola Corporation, Cristal Precision, Clarion, ITW Meritex, Okuni Seiko, GUH Holding, Malaysia Engineering Plastic, Applied Magnetic, Mapa, Sanyo, Pently, Tan Brothers, Shina, OE Design, Lumileds Lighting, Western Digital, Fastron, Advanced Micro Devices, Iso Technology, KESP, Avago Technology, Agilent Technologies and Woodard Textile Mills. Some well-known companies in phase 4 include Globetronics, Dufu Industries, Dell Inc, Intel, Vitrox and Motorola.
Known as the “Silicon Valley of the East”, it is also the primary labour market in Penang. If you set up your company here, you can benefit from a skilled and semi-skilled labour force on the island.
Pasir Gudang Free Industrial Zone
Pasir Gudang Free Industrial Zone is situated in Johor where the companies focus on transportation, logistics, shipbuilding, petrochemicals and other heavy industries. Some well-known companies that establish their presence here are Sime Darby Oils Pasir Gudang Refinery, Pantech Stainless & Alloy Industries Sdn Bhd, Pride-Chem Industries Sdn Bhd and Amtech Sdn Bhd.
The perk of setting up companies in Pasir Gudang Free Industrial Zone is you can enjoy exemption from customs duties for your warehouses. All you have to do is pay custom duties if the cargo exported from the port is used for domestic consumption.
Port Klang Free Zone
Port Klang Free Zone is a free industrial zone and a free commercial zone. With an integrated 1,000 acre free commercial and industrial zone, it provides state-of-the-art facilities for international cargo distribution and consolidation center. It is ranked as the world’s 12th port in 2019 in terms of throughput volume. Some well-known companies such as Baerlocher, GE Power Solution, Aker Solution, Gyrodata International, Schlumberger, Cargill, Petikemas, Orientage, Ohreco and DRB-HICOM Auto Solutions.
Besides, you also enjoy tax incentives, financial benefits, and supporting infrastructures such as leased office blocks, light industrial units, and prepared industrial land for the construction of warehouses and factories.
Advantages of Malaysia Free Trade Zones
Facilitation of transport activities
Since these industrial zones are located near ports, airports and expressways, it makes the transportation of goods and raw materials much easier. Many customers normally store and transport items such as automotive parts, television components, aluminum bars, aluminum extrusions, aluminum ingot, tobacco based items. Visko Industries is known for its self adhesive tape manufacturing, it set up its manufacturing plant in Port Klang Free Zone to provide quick and easy access to South East Asian markets. New Asia Logistics, an experienced logistics partner, handling sea freight, land transportation and air freight, has been handling commodities such as agriculture commodities, metal, steel coils & products, palm oil and oleo-chemical products, auto parts, furniture, FMCG goods, construction and geo-sciences materials, machinery and parts, DG chemical products and cosmetics on a daily basis.
Provision of support infrastructure
Most Free Zones have a well-integrated transport and communication network to support and facilitate the business activities within the Zone. In the Port Klang zone, some well-known logistics companies such as Petikemas, New Asia Logistics, Mearsk and Sea Hawk Logistics. Petikemas is known as a full-fledged logistics service provider offering warehousing, transportation, freight forwarding, customs clearance and ancillary services. New Asia Logistics, an experienced logistics partner, handling sea freight, land transportation and air freight, has been handling commodities such as agriculture commodities, metal, steel coils & products, palm oil and oleo-chemical products, auto parts, furniture, FMCG goods, construction and geo-sciences materials, machinery and parts, DG chemical products and cosmetics on a daily basis. Mearsk offers a complete guide to ship to and from Malaysia. Mearsk offers end-to-end solutions from import, export, local services ranging from custom service to inland services. Seahawk Logistics is another logistics solution partner, providing ocean freight, air freight, ship agency, project cargo, customs management, warehouse distribution and commodities.
How IndustrialMalaysia can help you maximise the benefit of warehouses?
We have a variety of bonded warehouses. Since we have extensive experience working with third-party logistics partners, thus we can offer independent and professional advice to help you choose.
