Manufacturing Licence in Malaysia: Who Needs One, ICA10 Exemption, MIDA Fees and How to Apply

Key Takeaways

• You need a manufacturing licence in Malaysia if your company manufactures and has shareholders' funds of RM2.5 million or more, or 75 or more full-time paid employees. It comes from the Industrial Co-ordination Act 1975, and you apply through MIDA for approval by MITI (MIDA).
• Below both thresholds you do not need the licence, but you can apply for an ICA10 exemption letter (RM1,000). The letter is what lets a small manufacturer apply to MIDA for duty exemptions, incentives and expatriate posts.
• A new application costs RM1,500, and fees are non-refundable. MIDA's charter promises 7 working days on the fast track or 60 working days on the normal track, counted from complete information (charter).
• The licence belongs to the company and the place, not the building. Each factory needs its own licence, and buying a factory does not hand you the seller's licence (Act 156, sections 4 and 7).
• Manufacturing without one is an offence: a fine of up to RM2,000 or up to six months' jail, plus up to RM1,000 for every day it continues.

The licence matters to anyone choosing a factory because it depends on your headcount, your capital and even your rent. This guide covers who needs it, how the numbers are counted, the fees, the timeline and what changes when you buy, rent or move. It is general information, not legal advice, so confirm your case with MIDA or a lawyer.

What is a manufacturing licence in Malaysia?

It is the federal licence to carry on manufacturing under the Industrial Co-ordination Act 1975 (Act 156, the ICA). Section 3 of the Act says no person shall engage in manufacturing activity without one. Applications go to the Malaysian Investment Development Authority (MIDA), an agency under the Ministry of Investment, Trade and Industry (MITI), which approves them.

The Act defines manufacturing activity as making, altering, blending, ornamenting, finishing or otherwise treating or adapting any article or substance for its use, sale, transport, delivery or disposal. It includes assembling parts and ship repairing, and excludes activity normally associated with retail or wholesale trade.

So a warehouse that only stores and distributes goods is normally outside the definition. One that starts assembling parts or adapting goods may fall inside it, so ask MIDA before you commit. Our trade licence guide covers the WRT approval and council licences that apply to trading companies instead.

Who needs a manufacturing licence, and who is exempt?

Your company	What applies
Shareholders' funds of RM2.5 million or more, or 75 or more full-time paid employees	Must apply for a manufacturing licence
Below RM2.5 million and fewer than 75 full-time employees	May apply for an ICA10 exemption letter
Milling paddy into rice, milling oil palm fruit into crude palm oil, or processing raw natural rubber	Exempt because of the activity
Previously exempt, and now at RM2.5 million or 75 employees	Required to be licensed, through a regularisation application

These rules come from MIDA's guideline of 6 June 2024, the latest version we could find.

How do you count the RM2.5 million?

Shareholders' funds means paid-up capital, reserves, the balance of the share premium account and the balance of the profit and loss appropriation account. Two points catch owners out:

• Retained profit counts, so a profitable small manufacturer can cross RM2.5 million without injecting new capital.
• Revaluing a factory does not count: MIDA's definition leaves out capital reserves created by revaluing fixed assets, and bonus shares issued from them.

How do you count the 75 employees?

A full-time paid employee normally works at least six hours a day and 20 days a month for 12 months of the year, and is paid directly by your company. That includes travelling sales, engineering, maintenance and repair staff under your control, and directors, unless they are paid only for attending board meetings. Note that either test alone triggers the licence: a company with 10 staff and RM3 million in funds still needs one.

What are the requirements for a manufacturing licence?

Crossing the threshold is what makes you apply. These eligibility criteria are what MIDA then measures, through self-assessment and self-declaration:

Criterion	Minimum	How it is worked out
Capital Investment Per Employee (CIPE)	RM140,000	Capital investments divided by full-time employees. Fixed assets count, including 10 years of rent for land and building
Malaysian workforce	80%	Full-time Malaysians divided by all full-time employees. Outsourced workers not on your payroll are left out
Skilled staff or value added	25% or 40%	Managerial, technical and supervisory staff as a share of full-time staff, or factory price (100%) minus the percentage cost of raw materials and components
National objectives	Case by case	The project must fit national economic and social objectives

The guideline's relaxation of the 80% rule ran only until 31 December 2024. Here is what the ratios mean for a company with 80 full-time staff: it needs at least 64 Malaysians, at least 20 skilled staff (or 40% value added) and RM11.2 million of capital investment. If raw materials and components take 65% of your factory price, value added is 35%, so you would need the skilled staff route.

If you are over the threshold but miss a criterion, you may still have to apply, subject to consulting MIDA, as Azmi & Associates, a law firm, explains. The ICA10 guideline does not list these ratios for exempt companies.

How does renting or buying a factory change the CIPE sum?

This is where the choice of building meets the licence. Take a company with 75 full-time employees, which needs RM10.5 million of capital investment (75 x RM140,000). The arithmetic below is ours, for illustration, using JPPH-registered figures for Klang and Port Klang:

• Renting. The registered median rent for a detached factory is RM19,700 a month for about 15,090 sq ft (301 tenancies recorded in 24 months). Ten years of that rent is RM2,364,000, so RM8,136,000 must come from machinery and other fixed assets.
• Buying. The registered median price for a detached factory is RM14.9 million (69 deals recorded in 24 months), which on its own would exceed RM10.5 million as fixed asset investment.

A tenant with light machinery can therefore fall short where an owner would not. MIDA assesses your actual figures, so run the sum before you sign anything.

How do you apply for a manufacturing licence through MIDA?

Everything is online. MIDA's FAQ confirms it takes no hardcopy applications.

1. Pick the category. MIDA's fee list names new, expansion, diversification and regularisation applications. Azmi & Associates explains that expansion means more capacity for approved products, diversification means a different product, and regularisation is for a company already operating above the threshold without a licence.
2. Register on the InvestMalaysia portal and get a digital certificate in the name of your authorised representative, usually at managerial level or above, to sign the application.
3. Complete the form. The guideline's appendix points to the sections MIDA uses for its sums: project cost, project financing, manpower and product pricing.
4. Pay through the MIDA Payment Channel, the only method allowed.
5. Answer MIDA's questions. Incomplete applications are returned, and submissions after 3.00 pm count from the next working day (portal notes). MIDA issues an acknowledgement letter naming the officers handling your file, and it may ask for more documents or visit the premises.
6. Receive the decision. MIDA's Investment Compliance Division processes issuance of the licence certificate, checking compliance with the ICA and state government legislation.

MIDA's Selangor office is on the 22nd floor of Wisma MBSA, Shah Alam, tel 03-5518 4260. The headquarters line is 03-2267 3633.

How much does a manufacturing licence cost?

Application	MIDA fee
New manufacturing licence	RM1,500
Expansion, diversification or regularisation	RM1,500
Appeal	RM750
Post licensing, such as change of factory location or company name	RM750
ICA10 exemption, new application or appeal	RM1,000

These figures are from MIDA's fee list updated March 2025. That list also places "Issuance of Licence" under post licensing at RM750, so ask MIDA whether to budget for it. MIDA's fee FAQ says there are no waivers and no refunds, including when an application is rejected or withdrawn, so check your eligibility first.

How long does it take?

MIDA's client charter sets 7 working days on the fast track and 60 working days on the normal track, from the date complete information is received. MIDA introduced the fast track for non-sensitive industries it determines, so ask which track applies to your product. Sixty working days is about 12 weeks. Azmi & Associates puts the whole process, from first submission to final approval, at about 3 to 5 months. Allow for that when you negotiate vacant possession or a rent-free fit-out period.

Which industries face extra limits?

Steel is the clear case. MIDA's expatriate FAQ of 1 June 2026 says the moratorium ran from 15 August 2023 to 14 August 2025, that MITI extended it on 20 February 2025 for upstream long and flat steel until the policy is reviewed, and that it has been lifted for other steel products. Licence and ICA10 applications for those upstream products stay deferred.

An earlier MIDA notice from November 2024 had freed 26 downstream HS 73 tariff codes, kept 29 HS 72 codes under the moratorium, and kept non-ferrous recycling and recovery under it too. The Malaysia Steel Institute, writing as at 30 July 2026, says scrap-recycling licences and ICA10 exemptions are assessed on project merit. If you make steel or recycle metal, call MIDA's Machinery and Metal Technology Division on 03-2267 3633 before you commit to a factory.

What changes when you buy, rent or move a factory?

• Buying a factory. A licence is not transferable without the licensing officer's approval (section 7), so the seller's licence does not come with the property.
• Moving. A change of factory location is a post licensing application to amend the licence certificate. It costs RM750, and MIDA's FAQ says it is processed within 30 days of complete information.
• Adding a factory. One application can cover several sites, but section 4(2) requires a separate licence for each place of manufacturing.
• New products or more capacity. Section 7A bars products not on your licence without prior approval, and MIDA requires an application to expand or diversify.
• Everything else still applies. Section 8 says the licence does not excuse other laws. You still need the right land category, a CCC, Bomba and DOE clearance and a council licence. In Klang, this guide to MBDK's industrial licence lists what the council checks.
• Foreign-owned companies. Foreign investors can hold 100% of the equity in new, expansion or diversification projects. State consent and Selangor's minimum price are separate, and our foreign company guide covers them. To size the building itself, start with our factory requirements by industry.

What does the ICA10 exemption letter do?

Being below the thresholds means you need no licence, yet the letter still has practical uses. It confirms your exempt status, which makes you eligible to apply for import duty exemptions on machinery and raw materials, sales tax exemptions and investment incentives, subject to the criteria in force. MIDA's 2026 expatriate guideline also requires a manufacturing company to hold a licence, an Interim Approval Letter or an ICA10 letter before it can apply for Employment Passes.

MIDA's FAQ lists the documents: your memorandum and articles or SSM corporate profile, a business licence from the local authority and a manufacturing process flow chart. A council licence is tied to a premises, so secure a suitable factory early.

What happens if you operate without a licence?

Section 3(2) sets a fine of up to RM2,000 or up to six months' jail, plus up to RM1,000 a day while the default continues. Under section 19, directors and managers can be deemed guilty unless they prove the offence was without their knowledge and that they took due care. Section 6 lets the licensing officer revoke a licence for breaching a condition, ceasing the activity or making a false statement. Section 13 gives you 45 days to appeal to the Minister.

The 2006 reprint we read lists no amendment after 1981. In April 2024 the minister said a revision was under discussion; we did not find an amending Act when writing this guide, so check for updates.

Common mistakes:

1. Assuming the threshold only counts paid-up capital, when retained profit counts too.
2. Staying on an old ICA10 letter after growing past RM2.5 million or 75 staff.
3. Assuming 10 years of rent alone will reach RM140,000 per employee.
4. Moving factory without amending the licence.
5. Signing a tenancy before checking whether your product is subject to a moratorium.

Frequently Asked Questions

Who needs a manufacturing licence in Malaysia?

Any company engaged in manufacturing with shareholders' funds of RM2.5 million or more, or with 75 or more full-time paid employees. Either test alone is enough. Companies below both may apply for an ICA10 exemption letter, and paddy milling, crude palm oil milling and raw natural rubber processing are exempt by activity.

How much is the MIDA manufacturing licence fee?

A new application costs RM1,500 on MIDA's fee list updated March 2025, and the same applies to expansion, diversification and regularisation. Post licensing changes and appeals cost RM750, and an ICA10 application costs RM1,000. Fees are non-refundable, even if the application is rejected.

How long does it take to get a manufacturing licence?

MIDA's client charter sets 7 working days on the fast track and 60 working days on the normal track, from the date it has complete information. The fast track was introduced for non-sensitive industries. One law firm puts the whole process at about 3 to 5 months, so build that into your factory timeline.

Does a manufacturing licence need to be renewed?

The Act has no renewal section, and MIDA's fee list has no renewal category. A licence can however be revoked if you breach a condition, stop the activity or made a false statement. Check any conditions on your own certificate, and ask MIDA if you are unsure.

How do I check my MIDA manufacturing licence status?

Log in to the InvestMalaysia portal, where online applications can be tracked. MIDA also issues an acknowledgement letter naming the officers handling your file, and it advises applicants to contact them for updates. The headquarters line is 03-2267 3633.

Can a foreign company get a manufacturing licence in Malaysia?

Yes. Foreign investors can hold 100% of the equity in new, expansion and diversification manufacturing projects, a policy in place since June 2003. The company must still meet the criteria, including the 80% Malaysian workforce rule, and buying property brings separate state consent rules.

Is a manufacturing licence the same as a council factory licence?

No. The manufacturing licence is federal, under the Industrial Co-ordination Act 1975, and is applied for through MIDA. The council's business or industrial licence is local and covers your premises. Section 8 of the Act says holding a manufacturing licence does not excuse you from other laws, so most factories need both.

What is ICA10?

ICA10 is the application for exemption from a manufacturing licence, made online through InvestMalaysia for a RM1,000 fee. MIDA issues a letter confirming the exemption. The letter is what lets a small manufacturer apply for duty exemptions, incentives and expatriate posts.

FactoryHub is dedicated to helping every client find the right factory or warehouse. Talk to Peter Tan (REN 12771) at 016-666 6872 or Jason Low (PEA 1478) at 012-288 1834.