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Import-Export Procedures in Malaysia: Best Practices

Cover of Import Export Procedures in Malaysia, Best Practices

Malaysia is a rapidly developing economy and a key member of the Association of Southeast Asian Nations (ASEAN). The government of Malaysia has been continuing to liberalize its economy, thus making imports and exports less cumbersome and more lucrative. As of 2019, Malaysia’s exports were pegged at RM 986.4 billion while total imports were estimated to be about RM 849 billion. The FTAs signed by Malaysia as a participating member of the ASEAN and as part of bilateral agreements with countries such as India, Australia, China, and Japan, continue to open doors for importers in the country and exporters across the world.

Import export container overlaid with Malaysian flag
Courtesy of aseanbriefing.com

Basics of Import and Export

All companies practicing international trade
in Malaysia require to be registered with the Companies Commission of Malaysia.
The Ministry of International Trade and Industry (MITI) also issues appropriate
licenses for the import and export of the following goods –

  • Agricultural products and food
  • Animals and animal products
  • Vehicles and automobiles
  • Plants
  • Iron and iron equipment
  • Heavy equipment and machinery

Documentation Needed for Export/Import

While a trader in Malaysia importing goods may require vendor due diligence and clearances, an exporter of goods to Malaysia will additionally need to furnish the following documents – 

  • Commercial invoice
  • Packing list
  • Delivery letter
  • Insurance certificate
  • Bill of lading
  • Licenses (if necessary)
  • Customs forms (as specified by the Royal Malaysian Customs Department)
  • Proof of payment of customs duties, import tax, and sales tax

Exporters from Malaysia may require the appropriate licenses apart from documents required by the destination country. The exporter may also need to furnish –

  • Customs bond/declaration
  • Legal undertaking (LUT)
  • Letter of credit
  • Commercial invoice
  • Packing list
  • Certificate of origin
  • Insurance certificate

Understanding Taxes and Tariffs

All goods imported into Malaysia are subject to a GST of 6 percent. Apart from this, a tariff is imposed which may vary depending on the product which is imported. Most industrial goods are subject to a 6.1 percent tariff. An additional sin tax may be imposed on products such as pork and alcohol. Exported products too are subject to a tariff varying between 0 and 10 percent.

Trade Agreements

Importers in Malaysia and vendors exporting to Malaysia may take advantage of the numerous bilateral and multilateral trade agreements that Malaysia has in place with other countries. Malaysia has signed free trade agreements with Australia, Chile, India, Japan, New Zealand, Pakistan, and Turkey. These and other ASEAN countries are preferential trade partners and imports from and exports to these countries qualify for a reduction in tariffs and taxes.

Escrow Platforms - Increasingly Popular Choice

Online escrow platforms such as Tazapay are now becoming an increasingly popular choice for importers and exporters in Malaysia. A third-party escrow service provider is a reliable enterprise chosen by both the seller and the buyer. Buyers from Malaysia can fund the Tazapay escrow service with their local bank account using the local currency (Malaysian Ringgit). When the vendor has despatched or shipped the goods, the escrow account will transfer the amount to the vendor’s account (upon furnishing proof of shipping and verification). Escrow service is specifically designed for international trade. It offers protection and risk mitigation to both buyer and seller. The escrow fee is transparently charged at 1.8% of the transaction amount (capped at USD 250) making it very cost-efficient. Online escrow platforms such as Tazapay are very safe and secure and are powered by global payment networks and regulated under Singapore rigorous laws.

 

The use of Tazapay escrow service providers is also beneficial as they provide several additional services such as providing supplier due diligence checklists and dispute resolution.

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