Cost to Set Up a Factory in Malaysia 2026: Move-In, Fit-Out, Power, Approvals and Running Costs

Key Takeaways

• Renting: budget about 4 months' rent at signing (2 months' security deposit, 1 month's utility deposit, 1 month's advance rent). On the Selangor median of RM20,300 a month for 10,000 to 30,000 sq ft units, that is RM81,200, plus RM2,925 stamp duty on a 2-year tenancy.
• Buying: on a RM2 million factory, the 10% deposit, transfer stamp duty (RM64,000), legal fees and loan costs come to about RM316,740 in cash with a 90% loan, or about RM513,580 with an 80% loan.
• Power: TNB's connection charge for low-voltage supply runs from RM4,050 (61 to 90 kW) to RM38,250 (721 to 850 kW). Above 350 kVA (about 505A) you also need a new substation, which can take 3 to 12 months.
• Fire and approvals: a Bomba fire certificate costs RM400 for a factory or warehouse (RM620 for hazardous processes), with yearly renewal at half the fee. Larger factories move from hose reels to automatic detection and then sprinklers under the UBBL Tenth Schedule.
• Running costs: low-voltage electricity is 50.68 sen/kWh plus the monthly fuel adjustment (+3.61 sen in October 2026), and SST-registered landlords add 6% service tax to rent.

The cost to set up a factory in Malaysia has five parts: the entry cost of the building (deposits if you rent, or deposit, stamp duty and legal fees if you buy), fit-out and M&E works, any power upgrade, fire systems and approvals, and the monthly running costs. A tenant taking a mid-sized Selangor factory needs roughly four months' rent in cash before fit-out, while a buyer needs about 16% to 26% of the price before fit-out. Fit-out and power upgrades vary the most, so price them from quotes against your own process.

The factory setup cost map

Cost bucket	One-off or recurring	What sets the number	Where the figure comes from
Rental deposits and advance rent	One-off (refundable deposits)	Monthly rent, tenant profile, lease terms	Landlord's offer letter
Tenancy stamp duty	One-off	Annual rent and lease term	Stamp Act rates
Purchase deposit, stamp duty, legal and loan fees	One-off	Price and loan amount	Stamp Act tiers, SRO 2023 scale
Fit-out and M&E	One-off	Your process, office size, finishes	Contractor quotes
Power upgrade and substation	One-off	Maximum demand in kW or kVA	TNB Connection Charge Book plus your works
Fire systems and Bomba	One-off, then yearly FC	Floor area, volume, what you store	UBBL Tenth Schedule, Bomba fee schedule
Approvals and consultants	One-off	Scope of works and licences needed	Council, TNB, Bomba, MIDA, DOE, DOSH
Rent or loan instalment	Monthly	Rent, or loan size and rate	Lease or letter of offer
Quit rent and assessment tax	Yearly or half-yearly	State land office and council valuations	Latest bills
Electricity, water, insurance, maintenance	Monthly or yearly	Usage, maximum demand, sum insured	TNB tariff, insurer, service contracts

One-off entry costs if you rent

Deposits and advance rent

The usual Klang Valley structure is 2 months' rent as security deposit, 1 month's rent as utility deposit and 1 month's rent paid in advance. Expect more for a new, small or foreign company, heavy power or water use, polluting or fire-risk processes, a weak CTOS or CCRIS record, landlord-funded renovation, or units with a crane, cold room or substation. Large or listed tenants can sometimes pay less.

Worked example: a 10,000 to 30,000 sq ft factory in Selangor

JPPH-recorded industrial tenancies in Selangor to July 2026 give a median rent of RM20,300 a month for units of 10,000 to 30,000 sq ft, and a median term of 24 months (Selangor industrial transactions).

Item	Basis	Amount
Security deposit	2 months' rent	RM40,600
Utility deposit	1 month's rent	RM20,300
Advance rent	1 month's rent	RM20,300
Tenancy stamp duty	RM3 per RM250 of annual rent (term over 1 to 3 years)	RM2,925
Duplicate copy	RM10 each	RM10
Cash at signing	Before fit-out and legal fees	about RM84,135
Service tax on rent	6% if the landlord is SST-registered	RM1,218 a month

Stamp duty is charged on one year's rent: RM1, RM3, RM5 or RM7 per RM250 for terms up to 1 year, over 1 to 3, over 3 to 5 and over 5 years. The RM2,400 exemption ended on 1 January 2025, the tenant normally pays, and the agreement must be stamped within 30 days. Our tenancy agreement stamp duty guide has a table for other rents and the lease clauses that move costs between landlord and tenant.

Service tax on rent is 6% from 1 January 2026, charged only by SST-registered landlords. Tenants with annual sales up to RM1.5 million can apply for exemption through MyPMK. Legal fees for drafting the tenancy are quoted by the lawyer, so agree in the offer letter who appoints the lawyer and who pays.

One-off entry costs if you buy

A purchase needs a 10% deposit (about 2% to 3% with the offer, the balance at the SPA), the part of the price the loan does not cover, and the transaction costs.

Item on a RM2 million factory	80% loan	90% loan
Deposit (10%)	RM200,000	RM200,000
Balance not covered by the loan	RM200,000	Nil
Transfer stamp duty (1% / 2% / 3% / 4% tiers)	RM64,000	RM64,000
SPA legal fees (SRO 2023) plus 8% service tax	RM22,950	RM22,950
Loan stamp duty (0.5%)	RM8,000	RM9,000
Loan legal fees plus 8% service tax	RM18,630	RM20,790
Cash needed before valuation and disbursements	about RM513,580	about RM316,740

The full working is in our how to buy a factory guide and cost table. Transfer stamp duty is 1% on the first RM100,000, 2% on the next RM400,000, 3% on the next RM500,000 and 4% above RM1 million; the stamp duty guide for factory buyers shows more price points. Foreign buyers pay the same tiers on industrial property, because the 8% flat rate for foreigners applies to residential property only, but in Selangor a foreigner must pay at least RM3 million for an industrial building.

Before you price the fit-out, check that the building is legal. A factory on agricultural land without conversion may fall under Selangor's unauthorised factory programme; our KTK guide explains the conversion premium, discounts and deadlines, which can add a large cost that a normal budget leaves out.

Fit-out and M&E: what drives the bill

Fit-out varies most, because two factories of the same size can need completely different works: racking and a small office, or cold rooms, drains and washable finishes for a food plant. A single per-square-foot rate hides that, so build the budget line by line from quotes:

Fit-out item	What drives the cost	Approval or certificate to budget for
Office, toilets, pantry, partitions	Office area, finishes, ceiling and air-conditioning	Council plan or permit for alterations
Floor works (repair, hardener, epoxy)	Area, existing slab condition, chemical or forklift traffic	Structural engineer if loads increase
Lighting and power distribution	Ceiling height, lux level, number of machines, cable runs	Registered electrical contractor; consultant above 100A
Ventilation, exhaust, dust or fume extraction	Process heat, fumes and dust	DOE if emissions are regulated
Compressed air, process water, gas piping	Machine list and run lengths	DOSH for pressure vessels such as air receivers; check gas works with the supplier
Racking and mezzanine	Height, pallet loads, floor loading	Racking height affects fire design
Overhead crane	Capacity, span, whether runway beams exist	DOSH design verification and Certificate of Fitness
Loading docks, levellers, roller shutters	Number of bays and truck sizes	Council if openings change
Effluent pre-treatment, scheduled waste store	What you discharge and store	DOE effluent and scheduled waste rules
Security, CCTV, IT, signage	Site size and access points	Council for signage

Three cost rules hold everywhere:

1. Changing the building needs plans. Under the Uniform Building By-Laws (UBBL), plans for additions or alterations, including subdividing rooms, go to the local authority (by-law 14), and minor works can proceed on a permit issued from sketch plans (by-law 18). Councils in Selangor include MBSA in Shah Alam, MBDK in Klang, MBSJ in Subang Jaya and Puchong, and MBPJ in Petaling Jaya.
2. Cranes are regulated equipment. Power-driven lifting machinery needs design verification and a valid Certificate of Fitness from DOSH, so an existing crane only saves money if its papers are current.
3. Waste and effluent drive process costs. Plants that produce scheduled waste fall under the Environmental Quality (Scheduled Wastes) Regulations 2005, and those that discharge process water under the Industrial Effluent Regulations 2009. Storage areas, treatment plants and licensed contractors all go into the budget.

The cheapest fit-out is the one you do not need. A unit that already has the power, crane, ceiling height and floor loading you need usually beats a cheaper unit that must be upgraded, once the upgrade bill and the months of waiting are counted.

If you rent, settle three points in the offer letter before you spend on fit-out: who pays for which works (power and fire upgrades especially), whether you must reinstate the unit at the end of the lease, and whether any rent-free fitting-out period applies. Works you fund stay with the building when you leave.

Power upgrade and TNB substation costs

Power is often the largest single upgrade, and the slowest. TNB plans supply around your declared maximum demand, and its Electricity Supply Application Handbook sets the thresholds:

• Up to 100 kVA (about 144A at 400V): supply from the existing low-voltage network, subject to a TNB study.
• 100 to 350 kVA (about 145A to 505A): TNB decides after a system study.
• Above 350 kVA (about 505A): direct cable from a new substation, so you provide the land and building.
• From 1,000 kVA (about 1,440A): 11kV supply, with your own transformers and switchgear.

What you pay TNB is the connection charge in the TNB Connection Charge Book:

Declared maximum demand	Approx. amps at 400V	Connection charge
61 to 90 kW	104A to 153A	RM4,050
181 to 240 kW	307A to 408A	RM10,800
361 to 480 kW	613A to 815A	RM21,600
721 to 850 kW	1,224A to 1,443A	RM38,250
Medium voltage (11kV and above)	n/a	RM45 per kW

An upgrade pays the difference between the new and existing load charge, so going from a 400/5 to an 800/5 metering band costs RM10,800 in connection charge. The real bill sits around it: the substation land (handed to TNB for a nominal RM10), the substation building or compact plinth, cabling to your switchroom, consultant and contractor fees, and a deposit of about two months' estimated bill. Loads above 100A must be applied for by a BEM-registered Electrical Consultant Engineer. TNB's typical lead time with a new substation is 3 to 12 months at 400V and 6 to 12 months at 11kV.

Size the load from your machine list before you sign. Our TNB amperage guide shows typical needs by industry, and the TNB substation guide covers land sizes, compact versus indoor substations and the Connected Load Charge risk of over-declaring.

Fire systems and Bomba costs

Fire protection is set by the building's size, height and use, and it changes when you change what you store. The Tenth Schedule of the UBBL sets the minimum extinguishing system, fire alarm and emergency lighting by building type, number of storeys, floor area and volume. In broad terms, a small single-storey factory needs hose reels and a manual alarm, a larger one adds automatic detection, and the largest factories and combustible-goods warehouses need sprinklers. The schedule was amended in 2021, so have your fire consultant confirm the category and the area thresholds that apply to your building and storage before you budget.

If your process or racking pushes the building into a higher category, the sprinkler, tank and pump upgrade can be a major cost, and Bomba must approve the plans first. Larger factories and warehouses also need a yearly fire certificate. Under the Bomba fee schedule, the fee is RM400 for a factory or warehouse and RM620 where hazardous processes take place, with renewal at half the fee. Our fire certificate guide lists which buildings need one and what to check before you rent or buy.

Approvals and consultant fees

Approval	When you need it	Cost to budget
Council plans or permit	Alterations, extensions, new openings, mezzanines	Council fees plus architect or engineer fees
Bomba plan approval and fire certificate	Fire system changes; FC for designated premises	RM400 or RM620 FC fee, consultant and installer costs
TNB supply application	New supply or upgrade	Connection charge, consultant fee above 100A
MIDA manufacturing licence	Shareholders' funds of RM2.5 million or more, or 75 or more full-time employees	Preparation time; smaller firms can get an exemption letter
DOE	Scheduled waste, effluent, emissions	Treatment works, storage, licensed contractors
DOSH	Cranes, boilers, pressure vessels and similar equipment	Inspection, certification and competent persons
Council business or premises licence	Operating from the premises	Council fee and renewal

The manufacturing licence threshold comes from MIDA's approvals page: companies with shareholders' funds of RM2.5 million and above, or 75 or more full-time paid employees, apply through MIDA for MITI approval. Ask consultants (architect, structural, M&E and electrical engineers) for lump-sum quotes that name every submission included.

Recurring costs after you move in

Recurring cost	How it is charged	What to check before you commit
Rent	Monthly, plus 6% service tax if the landlord is SST-registered	Rent review clauses and who pays SST
Loan instalment	Monthly, priced off the bank's BR, BLR or cost of funds	The rate in the letter of offer; OPR is 2.75%
Quit rent (cukai tanah)	Yearly to the state land office	Latest receipt; arrears on the title
Assessment tax (cukai taksiran)	Council bill, paid in halves (MBDK runs a second-half collection each August)	Latest bill and who pays under the lease
Electricity	Per kWh, plus maximum demand charges on medium voltage	12 months of TNB bills
Water and sewerage	Per use	Meter size and past bills
Insurance	Yearly premium	Sum insured for building, machinery and stock
Maintenance and compliance	Service contracts and renewals	Fire system servicing, FC renewal, DOSH inspections, M&E upkeep

Electricity costs for a factory

Since July 2025, factories pay by supply voltage. On TNB's current schedule, low voltage is 50.68 sen/kWh (27.03 energy, 8.83 capacity, 14.82 network) plus RM20 a month. Medium voltage is 29.83 sen/kWh plus RM89.27 per kW of maximum demand and RM200 a month. The fuel adjustment is added to every unit and was +3.61 sen/kWh for October 2026.

Two examples at October 2026 rates, before the 1.6% Renewable Energy Fund levy:

• A low-voltage factory using 30,000 kWh a month: 30,000 x 54.29 sen + RM20 = about RM16,300.
• A medium-voltage plant using 120,000 kWh with a 300 kW maximum demand: RM35,796 energy + RM4,332 fuel adjustment + RM26,781 demand charges + RM200 = about RM67,100.

The TNB tariff 2026 guide covers Time of Use, power factor surcharges and how to cut maximum demand.

Insurance and maintenance

Insurers price each risk on the sum insured (building, machinery, stock), construction, occupancy, fire protection and the site's flood history. If you take a loan, check the letter of offer for insurance conditions. Maintenance covers the fire system, roof, M&E servicing and regulated equipment, and the lease should say which of these the tenant carries.

Area examples in Selangor

Our area cost breakdowns apply this map to specific rental markets: the total cost of renting a factory in Kapar near Port Klang and Sungai Lalang Semenyih on the eastern side of the Klang Valley. Use them for local rents, and use this guide for the setup items they do not cover in depth: power upgrades, fire systems and approvals.

Factory setup budgeting checklist

Step	What to get	From whom
1	Process brief: machines, kW, floor loads, crane, water, waste	Your production team
2	Entry cost: deposits and stamp duty, or deposit, stamp duty, legal and loan fees	Landlord's offer or SPA, lawyer, bank
3	Building checks: CCC, title, land use, approved plans, FC	Seller or landlord, lawyer
4	12 months of TNB bills, approved maximum demand, meter and breaker ratings	Seller or landlord
5	Power study and upgrade quote if needed	Electrical consultant, TNB
6	Fire system review for your use and storage height	Fire consultant or M&E engineer
7	Fit-out quotes, line by line, with approvals named	Contractors, architect
8	Licences: MIDA, DOE, DOSH, council	Consultants, agencies
9	Running cost estimate: rent or loan, utilities, assessment, quit rent, insurance, maintenance	Bills, insurer, bank
10	Timeline: approvals and TNB lead time against your move-in date	Consultants, TNB

For the full sequence of permits, from land use to the operating licence, see our factory approvals map for Malaysia.

FAQ

How much does it cost to set up a factory in Malaysia?

It depends on whether you rent or buy, and on your process. A tenant usually pays about 4 months' rent at signing plus tenancy stamp duty, which is about RM84,000 on a Selangor median rent of RM20,300 a month for a 10,000 to 30,000 sq ft unit. A buyer of a RM2 million factory needs about RM316,740 to RM513,580 in cash depending on the loan. Fit-out, power upgrades and fire systems come on top and must be quoted for your use.

How much deposit do I pay to rent a factory?

The usual structure is 2 months' security deposit, 1 month's utility deposit and 1 month's advance rent. Landlords ask for more from new or small companies, foreign companies, heavy power users, polluting or high fire-risk processes, or when they fund renovation. TNB also takes its own deposit, about two months' estimated bill.

How much does a TNB power upgrade cost for a factory?

The TNB connection charge for low-voltage supply runs from RM4,050 for 61 to 90 kW up to RM38,250 for 721 to 850 kW, and an upgrade pays the difference between bands. Medium voltage is RM45 per kW. Above about 505A you also need a new substation, so add land, the substation building, cabling and consultant fees, and allow 3 to 12 months.

Do I need a manufacturing licence to set up a factory?

Under the Industrial Co-ordination Act 1975, a manufacturing company needs a licence if its shareholders' funds are RM2.5 million or more, or it has 75 or more full-time paid employees. Smaller companies can obtain an exemption letter from MIDA. Applications go to MIDA for MITI approval.

Is there SST on factory rent in Malaysia?

Yes, if the landlord is registered for SST. Service tax on rent has been 6% since 1 January 2026. Tenants with annual sales up to RM1.5 million can apply for exemption through MyPMK.

What are the yearly costs of owning a factory?

Quit rent to the state land office, assessment tax to the local council, insurance, maintenance and, for designated premises, the yearly Bomba fire certificate (RM400, or RM620 for hazardous processes, at half the fee on renewal). Then add the loan instalment and electricity, which on medium voltage also depends on your maximum demand.

Buying or renting, talk to us

FactoryHub is the industrial-only platform of Peter Tan (REN 12771) and Jason Low (PEA 1478), registered with BOVAEP under CID Realtors Sdn Bhd E(1) 1855. We handle both rent and sale, and we co-broke across the whole market, so if the right unit is another agent's listing we will still put it in front of you.

Send us the numbers that decide the shortlist: required amps, built-up area, floor loading, preferred area and target date. We reply with what actually exists, including units that are not advertised publicly. For 800A to 4,000A+ requirements, see high-power factories in Selangor.

Agent	Licence	Mobile / WhatsApp	WeChat
Peter Tan	REN 12771	+6016-666 6872	peterindustrial
Jason Low	PEA 1478	+6012-288 1834	massiveaction

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