Manufacturing in Malaysia

Manufacturing sector data

Key highlights of the manufacturing sector in 2021

Malaysia's manufacturing sector continues to play a crucial role in the country's economic transformation. Despite global economic uncertainties, the sector's contribution to Malaysia's export revenue and job creation has ensured overall economic growth. The focus remains on producing more high-value-added, diversified, and complex products, particularly in catalyst sub-sectors such as electrical and electronics (E&E), machinery and equipment (M&E), and chemical and chemical products. Additionally, efforts will be directed towards two other high-growth potential sub-sectors: aerospace and medical devices

Malaysia's manufacturing industry policies

Policies in the manufacturing sector include local company registration and manufacturing license applications. There are no restrictions on foreign equity ownership, and the policy features a liberal foreign employment policy. The manufacturing policies encourage the free flow of foreign investment into Malaysia. Intellectual property (IP) is strongly protected. Corporate tax is 25%, and personal income tax rates range from 0% to 26%. Minimum employment conditions must comply with the Employment Act of 1955. Manufacturing policies encourage responsible labor union formation and harmonious labor relations. These policies also include double taxation agreements and controllable environmental management policies

Local company registration

Manufacturing license application
No restrictions on foreign equity ownership
Liberal foreign employment policy
Free flow of foreign capital in Malays
Intellectual property protection

– Corporate tax rate: 25%

– Personal income tax rates: 0% to 26%

– Must meet the minimum employment conditions specified by the Employment Act of 1955

– Responsible labor unions and harmonious labor relations mandatory contributions refer to：

- Employees’ Provident Fund (EPF)
- Social Security Organization (SOCSO)
- Human Resources Development Fund (HRDF)
Investment Guarantee Agreement
Double Taxation Agreement
Controllable Environmental Management Policies

The main industries covered in Malaysia's manufacturing sector.

Construction technology

The construction technology manufacturing sector focuses on the non-metallic minerals industry and the industrialized building systems (IBS) industry

Chemicals and new materials

Malaysia’s abundant natural resources are an advantage for the country’s chemicals and chemical products industry. This sector is a major contributor to manufacturing, with petrochemicals and oil-based chemicals being the main products

Electrical and electronics

Electronic components are fundamental elements embedded in all electrical and electronic devices, such as consumer electronics, industrial electronics, and appliances

Food technology

Large-scale and high-impact agricultural projects have the opportunity to help Malaysia achieve self-sufficiency in food production and, over time, reduce the country’s reliance on imported food

Life sciences and medical technology

Malaysia is committed to improving healthcare standards and providing world-class medical products and technologies. The country’s medical device industry produces high-value and technologically advanced products, such as pacemakers, stents, orthopedic implants, electronic medical devices, therapeutic and monitoring equipment

Machinery and metals

The machinery and equipment (M&E) industry is a key pillar of industrial growth and development, facilitating Malaysia’s transition to a competitive, high-tech, Industry 4.0-ready nation

Transportation technology

The industry remains a strategic growth area for Malaysia, with a diverse range of active foreign and local industry participants. Approximately 230 companies are involved in maintenance, repair, and overhaul (MRO), aerospace manufacturing, education and training, system integration, and engineering and design activities.

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