THE INDUSTRIAL CO-ORDINATION ACT 1975
Malaysia's Industrial Co-ordination Act 1975 (ICA) aims to secure orderly development and growth in the country's manufacturing sector.
The ICA requires manufacturing companies with shareholders' funds of RM2.5 million and above or engaging 75 or more full-time employees to apply for a manufacturing licence for approval by the Ministry of International Trade and Industry (MITI).
Applications for manufacturing licences are to be submitted to the Malaysian Industrial Development Authority (MIDA), an agency under MITI in charge of the promotion and coordination of industrial development in Malaysia.
The ICA defines:
This includes traveling sales, engineering, maintenance and repair personnel who are paid by and are under the control of the establishment.
It also includes directors of incorporated enterprises except those paid solely for their attendance at board of directors meetings. The definition encompasses family workers who receive regular salaries or allowances and who contribute to the Employees Provident Fund (EPF) or other superannuation funds.
GUIDELINES FOR APPROVAL OF INDUSTRIAL PROJECTS
Malaysia's industrial growth has been rapid over the last decade. This has created a high demand for labour in the manufacturing sector which, in turn, has caused a tightening in the labour market situation.
In view of this, the government's guidelines for approval of industrial projects in Malaysia are based on the Capital Investment Per Employee (C/E) Ratio. Projects with a C/E Ratio of less than RM55,000 are categorised as labour-intensive and thus will not qualify for a manufacturing licence or for tax incentives. Nevertheless, a project will be exempted from the above guidelines if it fulfils one of the following criteria:
EXPANSION OF PRODUCTION CAPACITY AND PRODUCT DIVERSIFICATION
A licensed company which desires to expand its production capacity or diversify its product range by manufacturing additional products will need to apply to MIDA