Malaysia WT/TPR/S/225 
 Page 23 
 
 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
(1) INTRODUCTION  
1. Since its previous Trade Policy Review in 2006, Malaysia has continued to liberalize its trade 
and trade-related policies, mainly unilaterally, notw ithstanding the global economic crisis that erupted 
in 2008.  Nonetheless, trade and trade-related policy instruments, applied both at the border and 
internally, remain integral parts of Malaysia's br oad development policy.  This is more evident in 
certain sectors, including automobile manuf acturing, and in government procurement.  
2. The tariff is the main border measure affecti ng imports.  The simple average applied MFN 
tariff was 7.4% in 2009;  about 60% of tariff lines were duty free.  Around one fifth of tariff lines were unbound, and the simple average bound MFN ra te was roughly double the applied rate, leaving 
considerable scope for the authorities to employ prot ective measures, such as raising tariffs within the 
bound levels.  Although the authorities have raised tariffs in only a few cases, these involve tariff rate 
quotas, which Malaysia has started applying to several tariff lines since 1 April 2008.
1  Patterns of 
MFN tariff dispersion and escalation have changed little since 2006.  Malaysia grants preferential 
access to imports from Japan, China, the Republic of Korea, Pakistan, and other ASEAN countries 
under preferential bilateral/regional free-trade agreements.   
3. Apart from import prohibitions, implemented, inter alia,  for national security, religious, and 
environmental reasons, various non-ta riff border measures are also used  as instruments of Malaysia's 
trade and industrial policy.  A considerable portio n of Malaysia's tariff lines are subject to import 
licensing, most of which is non-automatic.  While au tomatic licensing is intended for data collection,  
the authorities maintain that non-automatic licences are mainly for sanitary and phytosanitary reasons 
(for agriculture);  non-automatic licensing is also intended to regulate the flow of imports and to 
promote selected strategic industries identified for certain socio-economic objectives.  During the 
period under review, Malaysia initiate d a variety of anti-dumping actions against 10 Members;  in the 
same period, 13 Members took anti-dumping actions  against Malaysian products.  Malaysia has 
introduced a Safeguards Act 2006 and Safeguards Regulations 2007. 
4. Import duty exemptions or drawbacks are pr ovided for intermediate goods used in the 
production of exports so that the import duties do  not feed through to become implicit taxes on 
exports.  The exemptions or drawback s greatly reduce, or eliminate, th e implicit export taxes, but they 
tend to increase the complexity of the border taxation.  Rebates of internal sales taxes are also used to 
ensure that exported goods are not taxed tw ice (in both Malaysia and importing country). 
5. Explicit export taxes and export promotion measures  also continue to play an important role 
in Malaysia's industrial policy.  Export taxes and/ or export licence requirements, which are applied to 
certain goods (such as timber), have the effect of discouraging the export of those products and 
reducing their domestic prices, thereby assisting dow nstream processing of the products concerned.  
Export promotion measures include export processing zones, concessionary cr edits, insurance, and 
guarantees, as well as government-sponsored promotion and marketing assistance.   
6. Tax incentives have long been an important instrume nt of Malaysia's industrial policy.  Direct 
and indirect tax incentives apply, inter alia,  to investments in the manufacturing, agriculture, tourism 
and approved services sectors, R&D, training, and environmental protection activities.  No estimates 
of total tax revenue forgone as a result of these ince ntives have been made available.  Experience in 
other countries suggests that tax incentives are rarely  cost-effective.  The publication of estimates of 
                                                      
1 The authorities maintain that these tariff rates are within Ma laysia's commitments under the Uruguay 
Round. WT/TPR/S/225 Trade Policy Review 
Page 24 
 
 
tax revenues forgone as well as studies evaluating th e cost effectiveness of incentives would improve 
fiscal transparency in Malaysia and cont ribute to a more effective tax policy. 
7. Standards and standardization activities are among Malaysia's priorities for achieving 
developed-nation status by 2020.  Malaysia aims to align Malays ian standards with international 
standards;  in 2008, some 58% of Malaysian st andards were aligned, up from 51% in 2005.   
8. Preferential government procurement procedures c ontinue to be used as an instrument of 
industrial policy to favour locally owned businesses;  international tenders are invited only if goods 
and services are not available locally.  Malaysia is not a party to the WTO Agreement on Government Procurement.   
9. Government-linked companies (GLCs) continue to  play an important role in the Malaysian 
economy through their involvement in the provision of essential services, such as transport, energy, 
telecommunications, and financial services.  The Gove rnment aims to improve productivity of GLCs.  
As in the case of government procurement, GLCs  are encouraged to purchase from locally owned 
businesses.  
10. Recent initiatives taken by the Government in  regard to corporate governance include a 
revision to the Malaysian Code on Corporate Governance, which entered into force on 
1 October 2007. 
11. Malaysia does not have a comprehensive compe tition law;  however, it is in the process of 
drafting such a law.   
12. Since 2006, the Government has further strengthe ned its intellectual property regime.  It has 
also made further efforts to improve enforcement,  such as the establishment of IP courts, although 
problems of piracy and counterfeiting seem to remain. 
(2) M
EASURES DIRECTLY AFFECTING IMPORTS  
(i) Customs procedures, trade facilitation, cu stoms valuation, and rules of origin  
(a) Customs procedures and trade facilitation 
13. Since 2006, there have been no major changes in the registration requirements for imports 
into Malaysia.  Under customs laws importers ar e generally required to file a declaration with 
Customs;  additional declarations are required for th e purpose of post clearance audit for goods valued 
over RM 20,000.  No fees are imposed for custom s procedures by the Royal Malaysian Customs 
(RMC).    
14. The RMC administers Malaysia's customs-re lated laws including the Customs Act 1967.  
Malaysia has been party to the World Cu stoms Organization Revised Convention on the 
Simplification and Harmonization of Customs Procedure (Revised Kyoto Convention) since 
30 June 2008.  
15. Malaysia has continued to shift customs clearance from clearance-based controls to 
post-clearance audit controls;  it has also been a dopting measures to coordinate the activities of the 
various agencies involved in border controls.  Cust oms clearance has been fully computerized since 
2007, i.e. submission of declaration, assessme nt, payment, and customs release are done 
electronically.  The authorities are developing an internet portal for the RMC.  The Customs Intelligence Centre, established in August 2003, collects data on seizures by the Enforcement Division 
of RMC.   Malaysia WT/TPR/S/225 
 Page 25 
 
 
16. In 2007, cargo clearance (i.e. shipment arrival to release) took on average 3.2 days for sea 
cargo and 0.8 days for air cargo (latest available data provided by the RMC);  customs formalities 
(e.g. registration, inspection and collection of du ties) took 13 hours for sea cargo and 30 minutes for 
air cargo.  For importers registered as Customs Golden Clients (CGCs)2, the average time from the 
declaration to the release of goods is reduced to 15 minutes. 
17. The Government introduced Customs Rulings on Classification and Valuation on 
1 April 2007.  The authorities consider that impl ementation of the rulings has helped the business 
community to deal with goods clearance by informi ng them in advance on the tariff classification and 
valuation system, expected duty, and permit requirements. 
18. In the Doha Development Agenda negotiations, Malaysia supports the establishment of an 
Agreement on Trade Facilitation.  The authorities c onsider it important that new obligations are not 
additional burdens or too onerous for implementation, and that multila teral rules should ensure faster 
and more efficient clearance of goods, reduction in the cost of doing business, and improved transparency and predictability in international trade.   
(b) Customs valuation 
19. Since its previous Review, there has been no ch ange in the basic framework of Malaysia's 
customs valuation system.  Under the current  Customs (Rules of Valuation) Regulation
3, imports are 
valued on the c.i.f. value, which is taken to be the transaction value of the imports. 
20. Malaysia introduced the Customs Verification Initia tive (CVI) in November 2007;  this is part 
of the RMC Risk Management Programme to identify declarations of potentially high-risk 
consignments, using systematic and automated tools in the Customs Information System.  By the end 
of 2008, CVI had been implemented nationwide.  Clause 11 of the Customs (Rules of Valuation) 
Regulation 1999 empowers the Minister of Finance to determine the minimum value of goods;  the 
authorities state that this has never been applied. 
21. The Customs (Values of Imported Completely Built-up motor vehicles (New)) Order 2006 
gives the Minister of Finance power to fix the valu e of imported CBU cars, as  deemed appropriate, in 
accordance with Section 12 of the Customs Act 1967, with a view to tackling under-declaration.  
Importers of CBU cars must submit information in cluding the transaction value of the goods, to the 
Valuation Section of Customs Headquarters.  A committee comprising officers from the Ministry of 
Finance review all documents and prices submitted be fore recommending the value to the Minister for 
approval.  
(c) Appeals 
22. The Government established a Customs App eal Tribunal on 1 June 2007 to improve the 
appeals system.  Complaints against decisions taken by Customs may be made to the Director General 
of Customs, in accordance with the Customs Act 1967.  Further appeals may be lodged with the 
Minister of Finance (only concerning forfeited goods), the Customs Appeal Tribunal, and with the 
High Court.  In 2008, there were 23 appeals to Di rector General of Customs and the Minister of 
Finance (27 appeals in 2007), 11 appeals to the Customs Appeal Tribunal (zero in 2007), and one appeal to the High Court.   
                                                     
 
2 The CGC system, which was introduced in September 2004, for companies with records of high legal, 
regulatory, and security compliance, offers approved companies simplified and expedited clearance, drawback, 
and refund claims through self-accounting, and deferred duty payment.   
3 The Customs (Rules of Valuation) Regulation 1999, which has been in force since 1 January 2000. WT/TPR/S/225 Trade Policy Review 
Page 26 
 
 
(ii) Tariffs 
23. Malaysia extends at least MFN treatment to all of its trading partners while providing tariff 
preferences to China (under the ASEAN–China FTA), Japan (under the Malaysia–Japan FTA and 
ASEAN–Japan Comprehensive Economic Partnership (CEP)), Pakistan (under the Malaysia–Pakistan 
FTA), the Republic of Korea (under the ASEAN–Ko rea FTA), and other ASEAN countries (under the 
ASEAN Common Effective Preferential Tariff (CEPT)).4  The simple average applied MFN tariff rate 
was approximately 7.4% in 2009, compared with 8. 1% in 2005;  the simple average bound rate was 
15.6% (Tables III.1 and AIII.1).  Malaysia reviews it s tariff rates annually, mainly during the process 
of formulating its national Budget:  the authoriti es seek feedback from industry associations during 
the review.  Tariff rates are also reviewed dur ing multilateral, regional,  and bilateral trade 
negotiations. 
Table III.1 
Malaysia's tariff structure, 2005 and 2009 
(Per cent)  
  MFN 2005 MFN 2009 Final bounda 
1. Bound tariff lines (% of all tariff lines) .. .. 80.6 
2. Simple average applied rate 8.1 7.4 15.6 
 Agricultural products (HS01-24) 3.2 2.7 11.2 
 Industrial products (HS25-97) 8.7 8.0 16.5 
 WTO agricultural products 3.2 2.8 11.0 
 WTO non-agricultural products 8.7 7.9 16.5 
 Textiles and clot hing 12.5 12.2 20.4 
 ISIC 1 – Agriculture, hunting, fishing 0.4 0.7 7.1 
 ISIC 2 – Mining 0.8 0.8 8.1 
 ISIC 3 – Manufacturing 9.6 8.7 16.2 
 Manufacturing excluding food processing 10.3 9.4 16.7 
 First stage of processing 0.9 1.1 7.8 
 Semi-processed products 9.0 8.7 16.9 
 Fully processed products 10.4 9.1 16.3 
3. Tariff quotas (% of all tariff lines) .. 0.2 .. 
4. Domestic tariff "peaks" (% of all tariff lines)b 13.9 11.7 0.4 
5. International tariff "peaks" (% of all tariff lines)c 23.4 22.2 45.2 
6. Overall standard deviati on of tariff rates 12.6 11.5 12.3 
7. Coefficient of variation of tariff rates 1.6 1.6 0.8 
8. Duty-free tariff lines (% of all tariff lines) 57.8 60.3 5.7 
9. Non- ad valorem  tariffs (% of all tariff lines) 0.7 0.8 4.7 
10. Non- ad valorem  tariffs with no AVEs (% of all tariff lines) 0.7 0.8 4.7 
11. Nuisance applied rates (% of all tariff lines)d 0.2 0.1 0.5 
.. Not available.  
a Implementation of the U.R. was achieved in 2005.  Calcula tions for final bound rates are ta ken from the CTS database. 
b Domestic tariff peaks are defined as those exceeding three times the overall simple average applied rate. 
c International tariff peaks are defined as those exceeding 15%. d Nuisance rates are those greater than zero, but less than or equal to 2%. 
Note: Calculations exclude in-quota rate s and specific rates, and include the ad valorem part of alternate and compound rates.  The 
2005 tariff schedule is based on HS02 nomenclature, consisting of  10,581 tariff lines;  2009 tariff schedule is based on HS07 
nomenclature, consisting of 10,389 tariff lines. 
Source : WTO calculations, based on data provided by the Malaysian authorities. 
                                                      
4 No exact data regarding the value of imports subject to MFN applied tariff rates, or preferential tariff 
rates were provided by the authorities.  Malaysia's imports from other ASEAN countries, Japan, Pakistan, 
China, and Korea, with which it has FTAs, accounted for about 55% of total imports in 2008 (the share only serves as a proxy for the share of imports subject to preferential tariff rates).    Malaysia WT/TPR/S/225 
 Page 27 
 
 
(a) Forms of tariffs 
24. Malaysia's tariff classification systems, for preferential and MFN tariffs, are aligned to the 
Harmonized System at 9-digit level;  preferentia l tariffs for intra-ASEA N trade remain under the 
AHTN classification system.  The current Malaysian customs nomenclature (for MFN duties) is based 
on the 2007 Harmonized System (HS).  The Malaysian tariff comprises 10,389 lines at the 9-digit 
level.  Almost all rates (99.2%) are ad valorem ;  the remainder are specific, compound, or alternate 
duties.  Malaysia has no plans to convert all of its non- ad valorem  duties to ad valorem  duties5;  it 
continues to maintain non- ad valorem  duties for agricultural products  to protect small and rural 
farmers.  Given that these duties conceal relativel y high AVEs, the level of applied tariff protection  
could be considerably higher than the simple average of all ad valorem  rates of 7.4% in 2009.6  
In 2009, 32 of the top 50 tariffs entailed non- ad valorem  rates. 
25. Regular reviews of the tariff structure and tari ff rates are held through dialogues between the 
authorities and the business community.  The Speci al Advisory Committee on Tariffs (SACT), under 
MITI, receives and considers applications for tari ff review, which may then be announced in the 
annual Budget.   
(b) Tariff bindings 
26. There has been little change in Malaysia's tari ff bindings since its previous Review;  about 
20% of Malaysia's tariff lines are unbound.7  The relatively high proportion of unbound lines creates a 
degree of unpredictability as there is significant scope for the authorities to raise tariffs.8  T h e  
authorities maintain that they will consider increasi ng the binding coverage s ubstantially in the Doha 
round of negotiations. 
27. Malaysia's final overall bound rate (i.e. for 2005) was 15.6%.  The average bound rate was 
11.0% for agricultural products (WTO defin ition) and 16.5% for non-agricultural products.9 
(c) Applied MFN tariff levels 
28. Since its previous Trade Policy Review, Malays ia has eliminated and reduced applied MFN 
tariffs on a range of products partly in accord ance with its WTO commitments, but mainly 
                                                      
5 The authorities state that they do not plan to c onvert specific duties applied to alcoholic beverages 
into ad valorem  duties. 
6 In view of transparency, the authorities provided ad valorem  equivalents (AVEs) for 46 out of 
80 non- ad valorem  tariff lines;  AVEs for 73 tariff lines are based on import data for 2003-05, and those for 
7 lines on data for 2005-07.  AVEs were not provided for alcoholic beverages, possibly indicating the 
prohibitive nature of tariff rates for these products.  If the AVEs provided are included, the simple average MFN 
applied tariff rate becomes 9.1% (7.4% excluding AVEs), and the simple average MFN applied rate becomes 18.1% for agricultural products (WTO definition) (2.8% excluding AVEs) and 7.9% for non-agricultural 
products (also 7.9% exclud ing AVEs).  Three tariff lines have AVEs  exceeding 1,000%;  they involve bananas 
and tobacco refuse.  The simple average of AVEs provided is 392%. 
7 Following its participation in the Information Technology Agreement (ITA), Malaysia reduced and 
bound at duty-free levels its import duties on a number of products (WTO document WT/Let/176, 19 September 1997).  Malaysia revised its schedule of tariff bindings to reflect the Second Amendment to the 
Harmonized System Nomenclature (HS96);  the revised schedule was made effective on 6 September 2005.  
WTO document WT/Let/498, 11 October 2005. 
8 The authorities maintain th at unbound tariffs give them some space to raise tariffs, but this has rarely 
been done. 
9 The average bound rate was 11.2% for agricultu re (HS 01-24) and 16.5% for industrial products 
(HS 25-97).   WT/TPR/S/225 Trade Policy Review 
Page 28 
 
 
unilaterally.10  These products include some dairy products , prepared/preserved fish, preparations of 
fruits/vegetables/nuts, mineral and chemical fer tilizers, plastics and articles thereof, glass and 
glassware, electrical ignition and starting equipm ent, electric apparatus for switching/protecting 
electrical circuits, electric heating apparatus, a nd motor vehicles.  Malaysia's 2009 Budget included 
the elimination of import duties on several food ite ms (including vermicelli, biscuits, some fruit 
juices, and canned sweet corn), and the reducti on of import duties on selected consumer durables 
including blenders, rice cookers, microwave ovens, and electric kettles.  The current average applied MFN tariff (7.4%) is around half the average bound rate (15.6%);  the resulting gap provides ample  
scope for the authorities to raise applied tariff rates.   The only tariff-rate increases adopted since 2005 
concern tariff-rate quotas introduced in 2008 (section (e) below).  Nonetheless, as applied MFN tariff 
rates have fallen since 2005, there has been a widening of the gap betw een bound and applied MFN 
rates, largely owing to unilateral tariff cuts (Chart III.1). 
0.05.010.015.020.025.030.0
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21Per centChart III.1
Simple average applied MFN rates, by HS section, 2005 and 2009
Calculations exclude specific rates and include the ad valorem part of alternate and compound rates.  Averages for 2005 are based 
on HS02 nomenclature, and for 2009 on HS07.   
WTO Secretariat calculations, based on da ta provided by the Malaysian authorities.Note:
Source :01   Live animals & products        
02   Vegetable products03   Fats & oils      04   Prepared food, etc.05   Mineral products06   Chemicals & products07   Plastic & rubber
08   Hides & skins09   Wood & articles10   Pulp, paper, etc.11   Textiles & articles12   Footwear, headgear13   Articles of stones
14   Precious stones, etc.15   Base metals and products16   Machinery17   Transport equipment18   Precision instrument19   Arms & ammunition
20   Miscellaneous manuf.21   Works of art, etc.MFN 2005
MFN 2009
Average applied rate 
2005 (8.1%)
Average applied rate 
2009 (7.4%)
 
                                                      
10 Reduction and elimination of tariff rates indicated in the annual Budget is effective in Malaysia's 
tariff schedule when the Budget is tabled in the Parlia ment.  For example, the reductions and eliminations 
indicated in the Budget 2009 were effective on the day the Budget was tabled in the Parliament 
(29 August 2008).  The tariff schedule will remain unchanged until the next amendment (including the tabling of the next annual Budget).   Malaysia WT/TPR/S/225 
 Page 29 
 
 
(d) MFN tariff dispersion and escalation 
29. The dispersion of MFN tariff rates has been largely unchanged since 2005, judging from the 
coefficient of variation;  a larger dispersion can entail higher economic costs due to distortions, for 
example, between the prices of substitutes, admi nistrative complexity of the tariffs, and more 
opportunity for tariff evasion through product misclassification.  There are 19 different ad valorem  
rates, ranging from 0% to 90%, 20 specific rates, 4 alternate rates, and 9 compound rates.  As a proportion of all tariffs, "domestic tariff peaks" decreased slightly.  The proportion of tariffs 
exceeding 15% also decreased slightly, from 23.4% in 2005 to 22.2% in 2009.  About 60% of tariff 
lines are duty free, compared with 57.8% in 2005 (Chart III.2). 
4.7%9.5%
2.7%6.9%57.8%
8.9%
5.2%4.1%10.4% 
3.6%2.6%6.6%7.9%60.3.%
5.8%
2.5%
01,0002,0003,0004,0005,0006,0007,000
Duty free >0-5 >5-10 >10-15 >15-20 >20-25 >25-30 >30
Not applicable.
Percentages denote the share of total lines.  Calculations exclude specific rates and include the ad valorem  part of 
alternate and compound rates.  Figures for 2005 are based on HS02 nomenclature, and for 2009 on HS07.  Totals do not add to 100% due to the exclusion of specific rates, representing 0.3% and 0.4%,  respectively, for 2005 and 2009.
WTO Secretariat calculations, based on data  provided by the Malaysian authorities.MFN 2005
MFN 2009Number of tariff linesChart III.2
Distribution of MFN tariff rates, 2005 and 2009
Tariff rates (%)
n.a.
Note:
Source : 
30. The pattern of tariff escalation has changed little since 2005, except for non-metallic mineral 
products, for which the average applied tariff fo r fully processed goods is now higher than for 
semi-processed goods (Chart III.3).  Malaysia's tari ff protection is generally lower for raw materials 
and increases depending on the cate gory and value-added content.   
(e) Tariff quotas 
31. Since 1 April 2008, Malaysia has applied tariff-ra te quotas (TRQs) on 18 products to meet the 
requests of domestic small producers.  As a result, these items, whose tariff rates used to range from 0% to 5%, are now subject to in-quota rates ra nging from 0% to 25% and out-of-quota rates ranging 
from 20% to 90%.  The authorities maintain that they had suspended the implementation of TRQs, 
which was part of Malaysia's tariff concessi ons during the Uruguay R ound, until March 2008. WT/TPR/S/225 Trade Policy Review 
Page 30 
 
 
0.02.55.07.510.012.515.017.520.022.525.0
Food,
beverages
and tobaccoTextiles and
leatherWood and
furniturePaper,
printing and
publishing Chemicals Non-metallic
mineral
products Basic metal Fabricated
metal
products and
machineryOtherChart III.3
MFN tariff escalation by 2-digit ISIC industry, 2005 and 2009
0.02.55.07.510.012.515.017.520.022.525.0
Food,
beverages
and tobaccoTextiles and
leatherWood and
furniturePaper,
printing and
publishing Chemicals Non-metallic
mineral
products Basic metal Fabricated
metal
products and
machineryOtherAverage applied rate in manufacturing
(9.6%)
Not applicable.
Calculations exclude specific rates and include the ad valorem part of alternate and compound rates.  
Averages for 2005 are based on HS02 nomenclature, and for 2009 on HS07.  
WTO Secretariat calculations, based on data provided by the Malaysian authorities.n.a.
Note:
Source :Per cent
First stage of processing Fully processed Semi-processedPer cent
Average applied rate in manufacturing
(9.0%)2005n.a.
n.a.n.a.n.a.2009
 Malaysia WT/TPR/S/225 
 Page 31 
 
 
(f) Tariff exemptions, concessions, and drawbacks 
32. Since its previous Review, there have been no changes in Malaysia's scheme of exemptions 
from import duties, which are available subject to certain conditions, for raw materials and 
components used in the manufacture of goods fo r export, and for machinery and equipment not 
available in Malaysia but used directly in the manufacturing process.11  Duty exemption is granted to 
local as well as foreign-owned manufacturing companies.  With regard to  goods of ASEAN origin, 
tariff reduction/elimination (tariff concession)  amendments have b een conducted annually.12   
33. There have been no changes in Malaysia's  duty drawback and refund scheme during the 
review period.  Under Section 93 of the Custom s Act 1967, duty drawbacks of up to 90% of the 
customs duties paid on imports that are re-exported,  are provided subject to certain conditions.  The 
RMC provides concessional tariff rates on a wide rang e of goods in line with Malaysia's commitments 
to ASEAN and bilateral FTA partners.  Data provide d by the authorities indicate that revenue forgone 
for import duties and sales tax in 2007 totalled RM 1.88 billion. 
(g) Tariff preferences   
34. Malaysia has five different sets of preferential ra tes of tariff, for China, Japan, the Republic of 
Korea, Pakistan, and other ASEAN countries.  The simple average rates under all five preferential 
arrangements are lower than the simple average MFN rate, although the averages vary widely among 
the arrangements and among pro duct groups.  Preferential ra tes under the ASEAN CEPT are 
significantly lower than the other rates (Table III.2).  
Table III.2 
Summary analysis of the Malaysian preferential tariff, 2009 
(Per cent)  
  Preferential 
linesa (% of 
all tariff 
lines) Duty-free 
lines (% 
of all 
tariff 
lines) Overall 
average WTO 
agriculture Grains WTO non-
agriculture Leather, 
rubber, 
footwear & 
travel goods Textiles & 
clothing Transport 
equipment 
MFN  60.3 7.4 2.8 14.0 7.9 13.0 12.2 18.1 
CEPTb 38.2 85.3 0.7 0.7 14.0 0.7 0.9 0.1 1.3 
ASEAN-China 32.9 68.7 2.9 0.6 14.0 3.2 4.5 4.4 12.6 
ASEAN-Korea 30.0 81.6 3.2 1.2 14.0 3.4 6.4 1.2 16.3 
MJEPAc 34.7 76.7 3.1 1.5 14.0 3.2 6.2 0.6 10.0 
CEPAd 10.6 63.4 6.7 1.6 14.0 7.3 9.8 11.2 16.3 
a The number of preferential lines includes only lines on whic h the rate is lower than the corresponding MFN applied rate.  
b Common Effective Preferential Tariff. 
c Malaysia-Japan Economic Partnership Agreement. 
d Malaysia-Pakistan Closer Economic Partnership Agreement. 
Note: Calculations of averages exclude in- quota rates and specific rates, and include the ad valorem  part of alternate and compound 
rates. 
Source:  WTO Secretariat calculations, base d on information provided by the Ma laysian authorities and on Malaysian 
Customs online information.  Viewed at :  http://tariff.customs.gov.my/ [08.10.2009].  
                                                      
11 Tariff exemptions and concessions are contained in:  Customs Duties (Exemption) Order 1998;  
Customs Duties (Goods of ASEAN Countries Origin) (Common Effective Preferential Tariff) (Exemption) 
Order 2002, applicable to Cambodia, Lao PDR, Viet Nam, and Myanmar only;  Excise Duties (Exemption) 
Order 1997;  and Sales Tax (Exemption) Order 1980. 
12 The amendments are reflected in the revisions of the Customs Duties (Goods of ASEAN Countries 
Origin) (ASEAN Harmonised Tariff Nomenclature and Common Effective Preferential Tariff) Order 2007.   WT/TPR/S/225 Trade Policy Review 
Page 32 
 
 
(h) Rules of origin 
35. Malaysia has no national law governing rules of origin for imports;  it does not maintain any 
non-preferential rules of origin.  Malaysia maintain s preferential rules of origin in respect of the 
ASEAN CEPT, ASEAN–China FTA, ASEAN–Korea FTA, Malaysia–Japan FTA, and Malaysia–
Pakistan FTA.   
(iii) Import licensing, restrictions, and prohibitions 
36. Data provided by the authorities indicate that about a quarter of Malaysia's tariff lines 
(principally with regard to an imal and vegetable products, wood, machinery, vehicles and transport 
equipment, and arms) are subject to import licensi ng, most of which is non-automatic.  Automatic 
licensing is intended for data collection.  The au thorities maintain that non-automatic licences are 
mainly for sanitary and phytosanitary reasons (fo r those concerning agriculture).  Non-automatic 
licensing is also intended to regulate the flow of imports and to promote selected strategic industries 
(such as passenger and commercial vehicles and moto rcycles) that have been identified to achieve 
certain socio-economic objectives;  imports of CFCs are regulated in accordance with Malaysia's obligations under the Montreal Protocol.
13 
37. According to the authorities, Malaysia rem oved import licensing requirements for 48 tariff 
lines covering machinery and equipment, a nd electrical and electronic products in 2008.14  On 29 
August 2008, it was decided in the 2009 Budget that  import licence requirements on port cranes (such 
as gantry cranes, hydraulic loading cranes, and crawler cranes) and heavy machinery (such as 
bulldozers and road rollers) were to be abolished;  and imports of steel and iron products were to be 
liberalized with a view to overcoming increases in price of these products (Customs (Prohibition of 
Exports) (Amendment) (No. 3) Order 2008, 12 May 2008).  
38. As a part of the National Automotive Policy (NAP), in order to import foreign-built or 
assembled cars, trucks, and motorcycles and distribute them locally, a company must obtain import licences ("approved permits" (APs)) issued by MITI;  the company must submit to MITI an importation plan and must have a franchise agreement to distribute these vehicles locally in order to 
obtain APs.  In October 2009, after reviewing th e NAP, the Government announced that the AP 
system is to be terminated in 2015 (for open APs) , and 2020 (for franchise APs) (Chapter IV(5)(ii)). 
39. Malaysia maintains quantitative restrictions on imports of certain products including firearms 
and ammunition, bullet-proof vests, and shrimp broodstock
15; the current AP system applied to 
imports of motor vehicles can act as a quota restricting the number of cars that can be imported in a 
given year.  The authorities emphasize that th e AP system is used for monitoring purposes. 
40. During the period under Review, Malaysia restri cted or prohibited imports of a number of 
products from certain countries on health and safet y grounds.  The products include poultry products 
and live birds (suspicion of avian flu), beef and an imal products (BSE), milk (foot and mouth disease 
as well as melamine), and live horses (equine flu) (section (4)(iv)).  
                                                      
13 WTO document G/LIC/N/3/MYS/4, 17 October 2008.  
14 Four categories of items remain subject to various levels of import restriction, as stipulated in the 
Customs (Prohibition of Imports) Order 2008;  these are:  (1) items subject to general import prohibition owing 
to religious, security, health, and environmental reasons ;  (2) items requiring import licences mainly for health, 
sanitary, security, environmental protection or intellect ual property reasons;  (3) items requiring temporary 
import restrictions to protect domestic industries;  and (4) items that may be imported only after meeting 
specific criteria. 
15 WTO document G/LIC/N3/MYS/4, 17 October 2008.  Malaysia WT/TPR/S/225 
 Page 33 
 
 
(iv) Contingency measures  
41. The Safeguards Act of 2006 and Safeguards Regulations 2007 entered into force on 
22 November 2007;  under the Act, the government shall impose safeguard measures where a product 
is being imported in such increased quantities and under such conditions as to cause or threaten to 
cause serious prejudice to a domestic industry.  The au thorities consider that the legislation is in line 
with the WTO Agreement on Safeguards, and provid es transparent provisions for the Investigating 
Authority to carry out investigations.  To date, Malaysia has not notified to the WTO any safeguard 
investigations or measures pursuant to the new legislation.   
42. There have been no changes to the Countervailing and Anti-Dumping Duties Act 1993 or the 
Countervailing and Anti-Dumping Duties Regulati ons 1994 since 2006.  Between January 2006 and 
June 2009, Malaysia imposed a variety of anti-dum ping actions against 10 Members;  in the same 
period, 13 Members took anti-dumping actions agains t Malaysian products (Table III.3).  Malaysia 
did not impose any countervailing measures during this period. 
Table III.3 
Summary of anti-dumping actions, 2006-09 (June) 
WTO Member Product Final measure
Action by Malaysia  17 
Australia Corrugating medium paper 0 
Canada Newsprinta 1 
China Bicycle 1 
Chinese Taipei Maleic anhydride;   polyethylene terephthalate (PET);  corrugating medium paper 2 
European Communities Self-copy papera;  corrugating medium paper 1 
Hong Kong, China Bicycle 1 
Indonesia Maleic anhydride;  polyethylene terephthalate (PET);  self-copy paper in rolls;  newsprinta;  
self-copy papera;  corrugating medium paper 5 
Japan Corrugating medium paper 0 
Republic of Korea Newsprinta;  maleic anhydride;  polyethylene te rephtalate (PET); corrugating medium paper 3 
Philippines Newsprinta;  corrugating medium paper 1 
Thailand Polyethylene terephtalate  (PET); corrugating medium paper 1 
United States Newsprinta 1 
Action against Malaysia 30 
Argentina Spokes & nipples for bicycle and motorcycles 1 
Australia Mobile garbage bins 1 
China Acrylic esters;  ethanolamine 2 
Egypt Porcelain and ceramics tableware 1 
European Communities Polyethylene terephtalate, tube and pipe fitting of iron and steel;  polyester staple fibre 2 
India Hot rolled steel productsb;  digital versatile disc-Rb;  plain medium-density fibre boardb;  carbon 
blackb;  partially oriented yarn;  fully oriented ya rn; nylon filament yarn, polyvinyl chloride;  
pre-sensitized positive offset aluminium plates;  CD -R;  cathode ray colour picture tubes; thermal 
sensitive paper 9 
Indonesia Hot rolled plateb; hot rolled coilb; calcium carbide;  uncoate d wood-free prin ting and writing 
paper 2 
Republic of Korea Polyester filament dr awn textured yarn, particle board 2 
Table III.3 (cont'd)WT/TPR/S/225 Trade Policy Review 
Page 34 
 
 
WTO Member Product Final measure
New Zealand Certain bound stationery, di aries, galvanized steel wires 3 
Pakistan Polyester filament yarn;  soap noodles 1 
South Africa Stainless steel sinksb 0 
Turkey Woven fabrics of synthetic filament yarn, vul canized rubber thread and co rd;  textured yarn of 
polyester, polyethylene terepthalate 4 
United States Stainless steel butt welded pipe  fitting, polyethylene retail carrier bags 2 
a Sunset review. 
b Under investigation. 
Source:  Data provided by the Malaysian authorities. 
(v) State trading 
43. Malaysia's only state-trading enterprise, w ithin the meaning of Article XVII:4(a) of 
GATT 1994, remains Padiberas Nasional Berhad (BER NAS).  BERNAS has the sole right to import 
rice until 2011, with an option of a five-year extensi on;  it also performs social obligations on behalf 
of the Government, such as maintaining a rice st ockpile, purchasing paddy from farmers, and acting 
as a buyer of last resort for paddy farmers. 
(vi) Other measures 
44. The authorities state that there has been no significant change in Malaysia's policy on 
countertrade since 2005;  countertrade deals amounted  to RM 3 billion between 2002 and 2007.  The 
authorities indicate that Malaysia does not have pr eshipment inspection requirements, and there have 
been no changes to its temporary import procedures since 2006. 
(3) MEASURES DIRECTLY AFFECTING EXPORTS  
(i) Procedures  
45. There have been no major changes to export procedures in Malaysia since 2006.  All goods 
for export must be declared on Customs Form No. 2.  Palm oil and selected palm products, natural 
rubber, pepper, pineapple, cocoa, and selected timber are subject to export licensing.   
46. Export proceeds must be repatr iated to Malaysia in full as per the sales contract within 
six months from the date of export.  R esidents of Malaysia require permission ( ex ante ) to offset 
export proceeds against other payables due to non-resi dents, or to receive export proceeds later than 
six months from date of export.  Since 2005, resi dents have been allowed to retain any amount of 
foreign currency export receipts maintained  with licensed onshore banks.  Permission ( ex ante ) is 
required for residents to retain export proceeds in  foreign currency accounts in international Islamic 
banks or offshore banks.  
47. Malaysia does not have minimum export price regulations. 
(ii) Export taxes, charges, and levies   
48. The number of lines subject to Malaysia's expor t taxes has remained largely unchanged since 
its previous Review.  In 2009, out of 10,389 tariff lines at the 9-digit level, 515 lines were subject to 
export duties;  most of the rates are ad valorem,  ranging from 5% to 20% (except for nine lines, which Malaysia WT/TPR/S/225 
 Page 35 
 
 
are subject to specific rates).16  Products subject to export taxes in clude timber, live animals, ash and 
residues, precious metals, copper, and ferrous waste and scrap.  According to the authorities, the main 
objective of these taxes is to promote the u se of locally produced commodities in domestic 
downstream industries as well as to conserve the envi ronment.  The authorities are of the view that 
export taxes on timber allow them to better manage sustainable development of Malaysian forest.  
However, such taxes tend to increase the domestic supply of the products concerned, and as a 
consequence, their domestic prices tend to be lowe r than would otherwise be the case;  thus, export 
taxes assist domestic downstream processing of the produc ts concerned.  In 2007 (the latest year for 
which data were made available), Malaysia 's revenue from export duties amounted to 
RM 2,296 billion, up from RM 1,133 billion in 2001. 
(iii) Tariff and tax concessions 
49. Exemptions or drawbacks on import duties are pr ovided for intermediate inputs for exports.  
If these import tariffs on intermediate goods used in the production of exports are not offset they become implicit taxes on exports.
17  Thus, drawbacks are used to reduce or eliminate these implicit 
export taxes, although they tend to be intricate a nd increase the complexity of the border taxation.  
Similarly, rebates of internal taxes (e.g. sales tax)  are used to ensure that exported goods are not 
subject to double taxation (in Ma laysia and importing countries). 
50. Malaysia's system of tariff and tax concessions  for exports has not changed during the review 
period.  Tariff drawbacks and sales tax rebates are granted in respect of imports of raw materials and components used for the manufacture of approved products for export.  Imported goods re-exported 
within 12 months of the day import tariffs were paid  are granted a drawback of up to 100%, subject to 
conditions stipulated in the Customs Act 1967. 
(iv) Free-trade zones and other measures 
51. Malaysia has 16 free industrial zones (FIZs)
18 and 17 free commercial zones19;  these were 
established to facilitate operations of export-oriented companies.  The authorities state that no data are 
compiled on the value of exports and imports from these zones as a percentage of total exports and 
imports.  Any goods, from overseas or within Mala ysia, and services of any description, except those 
prohibited by law, may be brought into, produced or provided in the zones without payment of any 
tariffs, excises, sales or service taxes.  Enterprises lo cated in the zones are eligible for tax exemptions 
on income from promoted activities. 
52. Since 2006, there have been no changes to Ma laysia's temporary admission schemes, such as 
licensed manufacturing warehouses. 
                                                      
16 Most lines are subject to duty rates betwee n 5% and 15%.  Only one item is subject to ad valorem  
duty of 20%.  In 2006, 512 lines out of 10,580 tariff lines (based on the 2002 Harmonized System (HS)) were 
subject to export taxes.  
17 In the absence of drawbacks, it has been estimated (from 2001 data) that Malaysia's tariff was 
equivalent to an average export tax of 3.6% (Tokarick, 2006). 
18 These are located in Sungai Way, Hulu Kelang, Kinta Jelapang II, Perai, Bayan Lepas, Sama Jaya, 
Telok Panglima Garang, Baru Berendam, Tanjung Kling, Johor Port, Pringgit, Damansara, Rantau Panjang, Kuching, Pulau Indah, and Tg. Pelepas. 
19 These are located in Northport,  Southport, Westport, Butterworth, Bayan Lepas, Kuala Lumpur 
International Airport, Rantau Panjang, Pengkalan Kubor, Johor Port, Tanjung Pelepas, Stulang Laut, Plentong, Bukit Kayu Hitam, Kapar, Seberang Perai, Penang, and Pulau Layang-Layang. WT/TPR/S/225 Trade Policy Review 
Page 36 
 
 
(v) Export prohibitions, restrictions, and licensing   
53. The Customs (Prohibition of Exports) Orde r 2008 sets out current export prohibitions, 
restrictions, or licensing requirements.20  Under the Order, prohibited e xports include arms and related 
materials of all types, turtle eggs, and rattan fro m Peninsular Malaysia.  Revisions to the export 
licensing requirements since Malaysia's previous Review include:  introducing export controls on 
toxic and/or hazardous wastes products, in line with the Regulation under the purview of the 
Environmental Quality Department (Custo ms (Prohibition of Exports) Order 2006, 
21 December 2006);  introducing export controls on be ta-agonist used as an ingredient in animal feed 
(Customs (Prohibition of Exports) Order 2007, 31 May 2007);  transfer of the issuing authority for 
export permits for mineral products from the Ministry  of International Trade and Industry (MITI) to 
the Ministry of Natural Resources and Environmen t (Customs (Prohibition of Exports) (Amendment) 
(No. 2) Order 2007, 10 September 2007);  amendmen ts in line with the ch anges in Customs Duties 
Order 2007 (Customs (Prohibition of Exports) Orde r 2008, 31 March 2008);  and transfer of the 
issuing authority for export licences for oil and fats of  palm oils from the MITI to the Malaysia Palm 
Oil Board (Customs (Prohibition of Exports) (A mendment) (No. 2) Order 2008, 29 April 2008). 
54. The authorities are not aware of any export quotas or voluntary export restraints.   
(vi) Export subsidies 
55. The authorities state that Malaysia has no direct export subsidies or tax concessions to 
exporters. 
(vii) Export finance, insurance, and guarantees 
56. Export finance schemes are offered by commerc ial banks and the Export-Import Bank of 
Malaysia (Exim Bank) at commercial rates, subject to credit valuation.  The Exim Bank also continues to provide various schemes in cluding the Export Credit Refinancing Scheme
21;  and offers 
insurance against non-payment by buyers arising from commercial and political risks.22  Under 
Malaysia's Palm Oil Credit and Payments Arra ngement (POCPA) scheme for palm oil and its 
products, government to government MOUs and centr al bank to central bank agreements set out the 
following terms:  long-term contract between supp lier and buyer, repayment period up to two years, 
and interest based on three-month LIBOR.   
(viii) Export promotion 
57. The Malaysian External Trade Development Co rporation (MATRADE), an agency under the 
MITI, continues to focus on facilitating the export promotion activities of the local business sector 
through trade fairs, trade missions, and business-matching programmes.  Manufacturing subsectors of 
particular interest currently include:  electrical and electronics;  chemicals and chemical products;  
processed food;  rubber-based products;  wood-based pr oducts;  palm-oil-based products;  furniture;  
pharmaceuticals;  and herbal products.  Services subsect ors of interest include education, healthcare, 
construction, professional services, ICT, and franchise operations.   
                                                      
20 Goods subject to export licensing  include animals and animal product s, fish, dairy products, rubber, 
palm oil products, pineapples, vegetables, rice, cocoa,  minerals and ores, cement clinkers, Portland cement, 
metal wastes, some chemicals, cinematographic films, r oofing tiles, timber, plywood veneer chips, waste paper, 
textiles, military clothing and equipment, br icks, tin ingot, sugar, and iron and steel. 
21 See EXIM Bank online information.  Viewed a t:  http://www.exim.com.my /ecr.asp [06.08.2009]. 
22 The former Malaysian Export Credit Insurance Berhad (MECIB), which had provided export credit 
insurance, was merged with the Exim Bank on 30 December 2005. Malaysia WT/TPR/S/225 
 Page 37 
 
 
(4) MEASURES AFFECTING PRODUCTION AND TRADE  
(i) Legal framework for businesses  
58. The Companies Act 1965 was amended in 2007 to, inter alia,  facilitate the electronic filing of 
documents;  an electronic lodgement  (e-Lodgement) service was introduced to allow the incorporation 
of a company to be conducted online.23  Apart from this amendment,  there has been no significant 
change since 2006 (in the Companies Act 1965) in the registration requirements for companies, domestic and foreign, seeking to establish in Malaysia. 
(ii) Taxation and tax incentives 
59. Total tax revenue in Malaysia amounted to about 15% of GDP in 2008.  Direct taxes 
accounted for 72.8% and indirect taxes 27.2% (compared with 66.4% and 33.6%, respectively, in 
2005) (Table III.4).  Revenue from petroleum income tax is one of the major  contributors, accounting 
for about 21% of total tax revenue in 2008.  Import tariffs accounted for 2.3%  of total tax revenue, 
while export taxes accounted for 2.5% (compared with  4.2% and 2.6%, respectively, in 2005).  The 
authorities state that no estimates are compiled on total tax revenue forgone as a result of tax 
incentives. 
Table III.4 
Structure of direct and indirect tax revenue, 2005-08  
    2005 2006 2007 2008 
Total tax revenue (US$ million) 21,281.2  23,616.6  27,684.7  33,844.1  
  (Per cent of total)  
Direct taxes 66.4 71.1 72.9 72.8 
 Companies income tax 32.7 30.6 33.8 33.4 
 Petroleum income tax 18.1 23.9 21.5 21.4 
 Individuals income tax 10.7 11.8 12.3 13.3 
 Stamp duties 3.1 2.9 3.6 3.1 
 Other 1.8 2.0 1.8 1.5 
Indirect taxes 33.6 28.9 27.1 27.2 
 Exports duties 2.6 2.7 2.4 2.5 
 Import duties 4.2 3.1 2.5 2.3 
 Excise duties 10.7 9.9 9.4 9.5 
 Sales tax 9.6 7.5 7.0 7.4 
 Service tax 3.2 3.1 3.2 3.0 
 Other 3.3 2.6 2.5 2.6 
Source : Data from the Accountant Genera l's Department of Malaysia, in  Bank Negara Malaysia (2009), Monthly Statistical 
Bulletin, June. 
60. Since 2006, there has been no change to the retail sales tax, which is levied at rates of 5% to 
15% and applies equally to domestically produced go ods and imports.  The authorities are planning to 
introduce a broad-based VAT-type tax (goods and service tax (GST)).  Corporate tax has been reduced by one percentage point per year from 2007;  the current rate is 25% .  In addition, in 2008, 
                                                     
 
23 See SSM online information for details.  Viewed at:  http://www.ssm.com.my/en/services_ 
eLodgement.php [07.08.2009]. WT/TPR/S/225 Trade Policy Review 
Page 38 
 
 
the corporate tax system was restructured to a "s ingle-tier" system, under which tax on profits of 
companies is final (i.e. dividends distribu ted to shareholders are exempt from tax).24   
61. Direct tax incentives grant partial or total relie f from income tax for a specified period, while 
indirect tax incentives are in the form of exemp tions from import duty, sales tax, and excise duty.  
Changes in Malaysia's tax incentives since 2006 include:  provision of double deduction on 
remuneration expenses incurred by employers that employ certain "retrenched" workers (as a part of the Second Stimulus Package, announced in Marc h 2009);  accelerated capital allowance to all 
businesses on expenses incurred on plant and machinery between 10 March 2009 and 
31 December 2010;  and accelerated capital allowance on expenses incurred on renovation and 
refurbishment of business premises be tween 10 March 2009 and 31 December 2010.
25  Malaysia also 
provides tax incentives for the development of five designated regions26;  each of these has 
established its own authorities to approve incentives.27  Between 30 August 2008 and 
31 December 2010, import duties and sales taxes will not  be levied on certain electrical and electronic 
equipment imported by approved importers, and a sales tax exemption is accorded on the purchase of 
certain electrical and electronic consumer goods (e.g. refrigerator, air conditioner, lightings, fan, and 
television) manufactured domestically, approved by th e Energy Commission.  It was not clear to the 
Secretariat whether Malaysia still maintains exci se tax rebates accorded to domestic automobile 
manufacturers (Chapter IV(5)(ii)). 
(iii) Standards and other technical requirements   
62. The Department of Standards Malaysia (Sta ndards Malaysia) continues to function as 
Malaysia's national standardization and accreditati on body.  SIRIM Berhad, a wholly state-owned  
company, remains the sole national standards de velopment agency under the provisions of the 
Standards of Malaysia Act.  The Malaysian Standards and Accreditati on Council is the advisory body, 
established under the Act to advise the Minister of  Science, Technology and Innovation on matters 
relating to standards and accreditati on.  Malaysia participates in the activities of the International 
Organization for Standardization (ISO) and the International Electrotechnical Commission (IEC).28   
63. Malaysian standards are voluntary unless referred to in specific technical regulations.  At end 
2008, about 3.2% (173 out of 5,444) of Malaysian standards were compulsory.29  The authorities state 
                                                      
24 Previously, dividend income was taxed at the rate s applicable to each shar eholder.  The dividend 
received by a shareholder was net of co rporate tax;  if the shareholder's a pplicable income tax rate was lower 
than the corporate tax rate, he/she was able to claim a tax credit or refund for the difference.  Similar provisions 
applied to a shareholder that was a company. 
25 See WTO (2006) for other tax incentives. 
26 Currently there are five such de signated regions:  Iskandar Development Region (IDR), Northern 
Corridor Economic Region (NCER), East Coast Economic Region (ECER), Sarawak Corridor of Renewable 
Energy (SCORE), and Sabah Development Corridor (SDC). 
27 For details see:  http://www.irda.com.my (Iskanda r Malaysia);  http://www.ncer.com.my (Northern 
Corridor Implementation Authority (N CIA));  http://www.ecerdc .com (The East Coast Economic Region);  
http://www.sarawakscor e.com.my (Sarawak Corridor of Renewa ble Energy);  and http://www.sdc.gov.my 
(Sabah Development Corridor) [06.08.2009]. 
28 Malaysia participates in the Council, Technical Management Board, and various technical 
committees and sub-committees of the ISO and variou s technical committees and sub-committees of the IEC 
System for Conformity Testing and Certification of Electrical and Electronic Components, and Explosive 
Atmosphere Schemes (IECEX Schemes). 
29 Goods subject to technical regulations include pa lm oil, certain vegetables and flowers, certain 
chemicals and materials, materials related to building and civil engineering, elect rotechnical engineering,  
mechanical engineering, information technology, petroleum and gas, road vehicles, goods related to fire safety and prevention, and iron and steel.  In November 2008, technical regulations were imposed on iron and steel, Malaysia WT/TPR/S/225 
 Page 39 
 
 
that a number of foreign standards and international standards are referred to in Malaysia's technical 
regulations;  the exact number of such standard s is not available.  The National Standards and 
Strategy Action Plan, published in 2004, continu es to serve as a guideline to enhance Malaysia's 
standardization activities until 2020.30  
(a) Development of standards 
64. The authorities state that a basis for Malays ian national standards is the adoption of 
international standards.  Criteria for adoption of standards are determined by the relevant "standard 
development committees";  the views of interested parties, including industry, government agencies, 
and consumers are considered.  Foreign interests ar e considered in the adoption of new or revised 
standards through the "public comment" procedures on any draft standards made publicly available on 
the websites of Standards Malaysia and SIRIM Be rhad.  Certain tax deductions are accorded for 
expenditure incurred by private companies when pa rticipating in international standardization 
activities.31 
65. Some 58.1% of Malaysian standards were ali gned with international standards in 2008, up 
from 51% in 2005 (Table III.5).  This increase ma y reflect the authorities' stance that, when 
developing or revising standards, adoption of international standards is the primary option.  Malaysia 
has been actively involved in the de velopment of international standa rds through its participation in 
bodies such as the ISO and IEC. 
Table III.5 
Malaysian standards aligned to int ernational standards, 2005 and 2008  
  2005  2008 (to November) 
   Aligned MS   Aligned MS 
  Total MS IDT MOD  Total MS IDT MOD 
1 Food & agriculture 478 81 3  571 121 6 
2 Chemicals 505 198 25  708 331 50 
3 Organizational management .. .. ..  71 31 1 
4 Civil engineering & construction 217 23 4  263 61 4 
5 Power generation, transmission and 
distribution of electrical energy .. .. ..  770 590 28 
6 Mechanical engineering 198 480 1  294 127 5 
7 Information technology 522 480 1  643 591 3 
8 Petroleum & gas 136 49 2  205 105 2 
9 Halal  3 0 0  4 0 0 
10 Plastics 279 134 12  365 180 13 
11 Packaging 71 40 0  96 55 0 
12 Road vehicles 86 18 7  173 88 12 
13 Fire safety & fire protection 65 14 1  86 28 2 
14 Rubber 138 75 11  194 104 19 
15 Iron & steel 73 29 8  103 39 12 
16 Textiles 197 0 0  255 57 0 
Table III.5 (cont'd) 
                                                                                                                                                                     
covering 57 tariff lines, with a view to ensuring sa fety and to prevent "deceptive practices", when import 
licensing requirements on thes e products were eliminated. 
30 Standards Malaysia online information.  Viewed at:  http://www.standardsmalaysia.gov.my/v2/ 
index.php?option=com_content&task=view&id=93&Itemid=209 [04.08.2009]. 
31 Standards Malaysia online information.  Viewed at:  http://www.standardsmalaysia.gov.my/v2/ 
index.php?option=com_content&task=view&id=79&Itemid=103 [06.08.2009]. WT/TPR/S/225 Trade Policy Review 
Page 40 
 
 
  2005  2008 (to November) 
   Aligned MS   Aligned MS 
  Total MS IDT MOD  Total MS IDT MOD 
17 Medical devices 0 0 0  166 156 1 
18 Electrical equipment & accessories .. .. ..  93 28 0 
19 Food & food product .. .. ..  49 15 2 
20 Tourism, exhibition & hospitality services  .. .. ..  6 6 0 
21 Occupational health & safety 77 72 0  149 127 4 
22 Quality management & quality assurance 98 94 2  122 114 2 
23 Environment management 19 15 0  58 40 0 
.. Not available. 
Note: IDT = Identical;  MOD = Modified. 
Source:   Data provided by the Depa rtment of Standards Malaysia. 
(b) Conformity assessment 
66. There have been no changes in Malaysia's system of conformity assessment since its previous 
Review.  Standards Malaysia is the sole authorit y in Malaysia responsible for the accreditation of 
organizations involved in conform ity assessment on behalf of the Government.  The accreditation of 
laboratories is carried out under the Laboratory A ccreditation Scheme of Malaysia (SAMM).  At 
end 2008, a total of 405 laboratories had been accred ited, based on the international standard ISO/IEC 
17025:2005, and five based on ISO 15189:2007.  
(c) Halal certification 
67. Malaysia intends to play a leading role in the development of halal certification;  there have 
been no changes in halal-related policies during the review period.  All meat, processed meat 
products, poultry, eggs and egg products, domestically produced or imports, must receive halal 
certification from the Department of Islamic Deve lopment Malaysia (JAKIM) to be distributed in 
Malaysia.  The certificate is issued on the join t recommendation of the Malaysian Department of 
Veterinary Services (DVS) and JAKIM following an on-site inspection.   
68. The slaughtering of animals and production of liv estock-based products (other than swine) for 
export to Malaysia must be conducted according to  halal specifications.  The DVS, together with 
other relevant agencies, such as JAKIM and the Ministry of Health, inspects slaughterhouses and 
processing plants overseas periodically, to ensure th at they meet Malaysia's halal requirements.  
Inspection is usually once a year or once in two year s, but varies depending on the risk involved in the 
particular country.  With regard to inspection of slaughterhouses outside Malaysia, JAKIM accredits 
the Islamic organization in the exporting country/ economy.  Once accredited by JAKIM, the Islamic 
organization monitors the halal process in the slaughterhouse and produces halal certificates for 
export to Malaysia.  Malaysia had no mutual rec ognition arrangements with foreign standardization 
bodies on standardization and inspection for halal certification. 
(d) Overview of international agreements and arrangements 
69. Malaysia participates in voluntary mutual rec ognition arrangements under:  the Asia Pacific 
Laboratory Accreditation Cooperation and Intern ational Laboratory Accreditation Cooperation 
(APLAC/ILAC) MRA for testing and calibration;  and Pacific Accreditation Cooperation and the 
International Accreditation Forum Multi-Latera l Agreement (PAC/IAF MLA) for the quality 
management system (QMS) and the environmental management system (EMS) programme.  It also Malaysia WT/TPR/S/225 
 Page 41 
 
 
participates in the ASEAN Electrical and Electronic MRA as well as ASEAN MRA on 
Pharmaceutical Inspection.   
(iv) Sanitary and phytosanitary regulations 
70. The regulatory framework under which SPS measure s are implemented h as remained largely 
unchanged since Malaysia's previous Review;  the relevant laws and regula tions include the Plant 
Quarantine Act 1976, the Plant Quarantine Regulations 1981, the Animal Act 1953 (Revised 2006)32, 
the Fisheries Act 1985, the Food Act 1983, and Food Regulations 1985. 
71. Under the Food Act 1983, two new regulations were adopted in 2009, to help Malaysian 
exports to comply with EU requirements on aquaculture-sourced products:  the Food Hygiene 
Regulations 2009, which stipulates hygiene require ments for food premises, food handlers, and 
equipments during preparation, storage and transpor tation of food, and the Food (Issuance of health 
Certificate for Export of fish and fish Product to  the European Union) Regulations 2009, which 
establishes requirements for fish exports from Mala ysia to the European Communities.  The Food 
Regulations 1985 were also amended in 2009 to require ice processing factories to be licensed by the 
Ministry of Health.33  Under the Fisheries Act 1985, Fisheries (Quality control of Fish for Export to 
the European Union) Regulations were introduced in 2009.   
72. The Ministry of Agriculture and Agro-based Industry (MOA) is responsible for matters 
relating to plants, livestock, and fisheries;  its Department of Agriculture (DOA), Department of 
Veterinary Services (DVS), and Department of Fish eries (DOF) are responsible for matters relating to 
plants, livestock products, and fisheries, respectively.   The Ministry of Health (MOH) is responsible 
for food safety matters.  On 1 August 2008, the Malaysian Quarantine and Inspection Services 
(MAQIS) was established as a one-stop centre for qua rantine and inspection regarding imports and 
exports of agricultural products.  The objectives of the MAQIS include:  to act as a single body to conduct all inspection and quarantine matters at a ll national borders;  to facilitate exports of 
agricultural products, and to improve the delivery of inspection and quarantine services.   
73. During the period under review, Malaysia made eleven SPS notifications related to seven SPS 
regulations.
34   
74. During the period under review, Malaysia rest ricted imports of livestock products due to 
diseases reported in the respective exporting countries (Table III.6).  
                                                      
32 The previous Animal Ordinance 1953 was revised in 2006 to become the Animal Act 1953 
(Revised 2006). 
33 Food Regulations (Amendment) 2009.   
34 These notifications are:  G/SPS/N/MYS/16/Add.1, 17 March 2006;  G/SPS/N/MYS/19, 3 April 
2008;  G/SPS/N/MYS/19/Add.1, 9 June  2008;  G/SPS/N/MYS/19/Add.2, 25  August 2009;  G/SPS/N/MYS/20, 
6 July 2009;  G/SPS/N/MYS/ 20/Add.1, 14 September 2009;  G/SPS/N /MYS/20/Corr.1, 31  August 2009;  
G/SPS/N/MYS/21, 25 August 2009;  G/S PS/N/MYS/22, 25 August  2009;  G/SPS/N/MYS/23, 25 August 2009; 
and G/SPS/N/MYS/24, 13 October 2009.    WT/TPR/S/225 Trade Policy Review 
Page 42 
 
 
Table III.6 
Import restrictions on agricultural products, 2005-08 
Year Countries/economies affected Diseases and 
substances Products affected 
Cambodia;  China;  Hong Kong, China;   Indonesia;  Japan;  Lao PDR; 
Thailand;  Turkey;  Viet Nam HPAI Poultry products,  live birds 
EC;  United States BSE Beef, animal products 2005 
India   FMD Milk 
Cambodia;  Indonesia;  Japan;  Lao PDR;  Viet Nam HPAI Poultry products,  live birds 
EC;  Japan;  United States BSE Beef , animal products 2006 
India  FMD Milk 
Cambodia;  India;  Indonesia;  Japan;   Lao PDR;  Thailand;  Viet Nam  HPAI Poultry products,  live birds 
EC;  Japan BSE Beef, animal products 
India  FMD Milk 2007 
Australia;  Japan Equine influenza Live horses 
Thailand HPAI Live birds 
Cambodia;  Hong Kong, China; India;  Indonesia;  Japan;  Lao PDR;  
Viet Nam  HPAI Poultry products, live birds 
EC;  Japan BSE Beef, animal products 
India;  Iran;  Syria  FMD Milk and milk products  
Japan Equine influenza Live horses 2008 
China Melamine Milk products  
Source:  Data provided by the Malaysian authorities.  
(v) Government procurement 
75. Malaysia's government procurement continues to be used as an instrument to support national 
objectives, such as encouraging greater participation of the bumiputera  in the economy, transfer of 
technology to local industries, reducing the outflow  of foreign exchange, creating opportunities for 
local service-oriented companies, and enhancing ex port capabilities.  The margin of preference that 
bumiputera  supplies receive has not been changed during the review period.35  Malaysia is not a party 
to the WTO Agreement on Government Procurement;  the authorities are of the view that Malaysia has yet to attain the level of economic developm ent that would enable it to benefit from this 
Agreement.   In 2008, Malaysia's government procuremen t amounted to about 11.9% of GDP (11.4% 
in 2005) (Table III.7).   
Table III.7 
Government procurement in Malaysia, 2005-08 
(RM million) 
 2005 2006 2007 2008 
Federal government supplies and serv ices expenditure 17,984 20,923 23,622 25,900 
Federal government development expenditure 30,534 35,807 40,564 46,258 
State government development expenditure 4,347 4,895 6,136 7,595 
Local government development expenditure 2,097 1,548 1,556 1,985 
Statutory bodies development expenditure 4,513 6,485 6,235 6,068 
Total 59,475 69,658 78,113 87,806 
Source:   The Malaysian authorities' estimates , based on the Ministry of Finance, Economic Report 2008/2009 , Annex tables 
4.4, 4.6, 4.10, 4.11, and 4.12.  
                                                      
35 For supplies and services contracts between RM 100, 000 and RM 15 million, bumiputera  suppliers 
receive a margin of preference between 2.5% and 10%;  the margin is inversely proportional to value.  
Furthermore, preferential treatment is given to bumiputera  manufacturers for locally produced goods;  the 
margin is up to 10% for contracts valued below RM 10 million and up to 3% for contracts valued above RM 10 million.  No preferences are provid ed for purchases exceeding RM 15 million. Malaysia WT/TPR/S/225 
 Page 43 
 
 
76. The Financial Procedure Act 1957, remains Malays ia's main legal instrument for financial 
matters including government procurement.  The Mi nistry of Finance has main responsibility for 
government procurement.  All individuals, companies or  corporate bodies intending to participate in 
government procurement of works, supplies and ser vices are required to be registered with the 
Ministry of Finance.36 
77. Supplies, goods, services, and works tenders below specified thresholds can be considered by 
the procurement boards in each federal government ministry.37  Tenders in excess of these values 
must be referred to the Ministry of Finance for fina l decision.  On 31 July 2008, in order to expedite 
procurement processes and accelerate decision-making,  by delegating more power to agencies, the 
thresholds for procurement boards were raised to RM 50 million for supplies, goods, and services 
tenders (from RM 30 million) and RM 100 million fo r works (such as construction or engineering 
services) (from RM 50 million). 
78. Open tendering is mandatory for procurement of supplies and services above RM 30 million, 
and works above RM 50 million.38  Open tenders must be adverti sed in local dailies, websites of 
procuring agencies and also in the MyGovernment  portal.  The government agency must make 
available a desk copy of the tender document for pros pective bidders to view.  Ministries and agencies 
are allowed to purchase supplies and services up to RM 50,000 directly from any known suppliers of 
goods or services that are deemed to be consisten tly supplying goods or services at acceptable quality 
and reasonable price.  Suppliers do not need to be registered in relation to such purchases.  
(vi) Privatization and government-linked companies   
79. The authorities state that most privatizations of  public corporations took place in the 1980s 
and 1990s.  Since 2005, 12 enterprises have been privati zed (Table AIII.2).  Rather than privatization, 
the Government appears to be more focused on im proving the productivity of state-owned companies 
(or "government-linked companies" (GLCs)), which continue to play an important role in the 
economy.  Currently, Malaysia has 34 GLCs39;  since 2006, some have been subject to the GLC 
Transformation Program, which ai ms to make GLCs as competitiv e as non-GLC competitors in the 
Malaysian market.  The March 2009 mid-term progress review of the programme indicated that the 
performance of 19 large GLCs improved in terms of earnings and shareholder returns, although some 
apparently underperformed rela tive to top regional competitors.40   
                                                      
36 The Contractor Services Centre and Construction Industry Development Board are the registration 
authorities for the procurement of works. 
37 While the Ministry of Finance is responsible for the formulation of rules and procedures on 
government procurement at the central  level, in practice, the Ministry has delegated powers to respective 
agencies to do their own procurem ent with a view to enhancing transparency and improving delivery of 
services;  each Ministry has its own procurement board, which has the authority to approve supplies and 
services up to the stated thresholds.   
38 Two methods of tendering (i.e. open and restricted) are used in Malaysia's government procurement.  
All open tenders are advertised in local newspapers.  Restricted tenders are employed to address specific 
problems, such as security, or due to a limited number of registered companies. 
39 Stakes in the 34 are held by Khazanah. 
40 The 19 GLCs are:  Affin Holdings Berhad, BIMB Holdings Berhad, Boustead Holdings Berhad, 
Bumiputra-Commerce Holdings Berhad, Chemical Company of Malaysia Berhad, Malayan Banking Berhad, Malaysian Airline System Berhad, Malaysia Airports Holdings Berhad, Malaysian Building Society Berhad, 
Malaysian Resources Corporation Berhad, Pos Malaysia & Services Holdings Berhad, Proton Holdings Berhad, 
Sime Darby Berhad, Telekom Malaysia Berhad, TM International Berhad, Tenaga Nasional Berhad, TH Plantations Berhad, UEM World Berhad, and UMW Holdings Berhad. WT/TPR/S/225 Trade Policy Review 
Page 44 
 
 
80. Procurement policies for GLCs are similar to those of Ministries and other government 
bodies.  GLCs are encouraged to procure from lo cal sources with a view to supporting local and 
national economic development.41   
(vii) Competition policy and regulatory issues  
81. Malaysia does not yet have a comprehensive competition law, but the authorities recognize 
that competition policy is an essential part of modern policy infrastructure.  The Ministry of Domestic 
Trade, Cooperatives and Consumerism (MDT CC) is responsible for formulating a  competition policy 
for Malaysia.42  Legislation on anti-competitive measures h as been applied in energy as well as in 
communications and multimedia.43  The authorities state that Malaysia  is currently in the final process 
of drafting the Fair Trade Practices Bill (FTPB) and Fair Trade Commission Bill (FTCB), in accordance with an objectiv e outlined in The Eighth Malaysia Plan  (2001-05), which identified a need 
for a competition policy and law.  The MDTCC h as been holding public consultations with 
government agencies, industry and trade associ ations, consumer groups, and NGOs since 2007 to 
obtain feedback and inputs on issues pertaining to the bills.
44  It is not clear whether GLCs will be 
covered by the FTPB and FTCB. 
82. Some bilateral/regional free-trade agreem ents, such as the Japan-Malaysia Economic 
Partnership Agreement, signed in December 2005,  and the ASEAN-Australia New Zealand Free 
Trade Agreement, signed in February 2009, include provisions on competition.  At the regional level, 
Malaysia is a signatory to the declaration on  the ASEAN Economic Community (AEC) Blueprint, 
signed in 2007, with the aim of introducing comp rehensive competition laws  in all ASEAN member 
countries by 2015, on a best endeavour basis, a nd to establishing a network of authorities among 
member countries for discussion and coordination on co mpetition policies.  Malaysia also participates 
in the ASEAN Experts Group on Competition (AEGC) , formed in 2007, which aims to develop 
capacity and a forum for discussion on competition policies in the ASEAN region.   
83. Price controls are used on a number of products .  Under the Price Control Act 1946, coarse 
grain, white refined sugar, and fine grain white re fined sugar have been declared by the MDTCC as 
goods subject to price control.  Goods subject to administrative price controls include:  general purpose wheat flour, cooking oil (pure and blended palm  oil), white bread, petrol, diesel, and liquefied 
petroleum gas.  Price controls on steel bar and billet, ordinary Portland cement, and chicken were 
eliminated in 2008.  The price of rice is controlled by law and is administered by the Ministry of 
Agriculture under the Rice (Grade and Price Control) Order 1992. 
                                                     
 
41 The "Red Book", published in April 2006, contai ns procurement guidelines and best practices.  
GLCs are also required to follow "pro curement best practices", including cost minimization, disclosure, building 
long-term relationships with suppliers, and helping to develop local suppliers. 
42 On 17 June 2009, the former Ministry of Domestic Trade and Consumer Affairs was renamed the 
Ministry of Domestic Trade, Co operatives and Consumerism.   
43 The Malaysian Communications and Multimedia Commission (MCMC) is responsible for 
implementing the Communications and Multimedia Act 1998;  the Act contains a general prohibition of any 
conduct that has the purpose of "substantially lessening competition" in a communication market 
(Sections 133-144).  The Act also prohibits collusive agre ements to fix rates, share market, or boycott suppliers 
or competitors.  Thus far, MCMC has published the"Gu idelines on Substantial Lessening of Competition" and 
"Guidelines on Dominant Position in a Communication Market".  In the energy sector, the role of the Energy 
Commission, as defined by Energy Commission Act 2001, is to promote and safeguard competition and fair and 
efficient market conduct;  and in the absence of a competitive market, to prevent the misuse of monopoly or market power in respect of the generation, production, transmission, distribution, and supply of electricity and 
the supply of gas through pipelines.   
44 Some working documents outlining the main objectives of the bills and their substantive prohibitions 
were presented during the consultations;  these docume nts were not made available to the general public. Malaysia WT/TPR/S/225 
 Page 45 
 
 
(viii) Corporate governance 
84. Malaysia has made a further move towards a more disclosure-based regulatory regime since 
its previous Review.  The Government's initiativ es include:  revision of  the Malaysian Code on 
Corporate Governance, first issued in 2000 (the re vised Code entered into force on 1 October 2007);  
and an amendment to the Companies Act 1965.  GLCs are apparently expected to abide by the Code, 
as well as GLC-specific guidelines for best practices issued by the Putrajaya Committee on GLC High 
Performance (section (vi)).  
85. The revision of the Code on Corporate Govern ance was intended to strengthen the roles and 
responsibilities of the boards of directors and audit committees, and ensure that they discharge their 
duties effectively.45  Main changes included:  a comm ittee ("nominating committee") must be 
established in a company to nominate the right candidate to the board of directors based on candidates' merit
46;  in appointing independent non-executive directors47, the nominating committee 
must also evaluate the candidates' ability to disch arge the responsibilities or functions expected of 
them.  Amendments were also made to the listing requirements of Bursa Malaysia Securities Berhad.  
The key amendments included:  requiring all audit committee members to be non-executive directors;  
mandating the internal audit function in listed companies;  requiring annual reports of listed 
companies to include information on the internal audit function;  requiring the audit committee to 
review adequacy of competency of  the internal audit function.   
86. The Companies (Amendment) Act 2007, whic h amended the Companies Act 1965, entered 
into force on 15 August 2007.  With regard to corporate governance, the amendment stipulates, 
inter alia,  that a director of a company "shall at all times exercise his powers for a proper purpose and 
in good faith in the best interest of the comp any", and "shall exercise reasonable care, skill and 
diligence with the knowledge, skill and experience of  a director having the same responsibilities".  
The amendment also stipulates certain requirement s for a director when making business judgement", 
and certain protection to "whistle blowers". 
(ix) Intellectual property rights 
(a) Regulatory environment  
87. The Intellectual Property Corporation of Malaysia (MyIPO) is the principal agency 
responsible for IPR policy development and admini stration.  Changes to Malaysia's laws and 
regulations on intellectual property since its previ ous Review include an amendment to the Patents 
Act 1983, which entered into force on 16 August  2006.  The amendment was intended to assure 
consistency with Malaysia's accession to the Patent Cooperation Treaty (PCT).48  Other main IPR-
related laws and regulations ha ve remained largely unchanged.49 
                                                      
45 Malaysian Code on Corporate Governance (Revised  2007).  Viewed at:  http://www.sc.com.my/eng/ 
html/cg/cg2007.pdf [06.07.2009]. 
46 This includes skills, knowledge, expertise and experience, professionalism, and integrity.   
47 An independent director is a director that is "independent of management and free from any business 
or other relationship that could interfere with the exercise of independent judgement or the ability to act in the best interest of an applicant or a listed issuer". 
48 The authorities maintain that Malaysia's IPR laws have been in conformance with the international 
standards and the TRIPS Agreement since 2002.  
49 These include the Trade Mark Ac t 1976 and Trade Marks Regulations 1977, the Copyright Act 1987, 
the Industrial Design Act 1996 and the Industrial Designs Regulations 1999, the Layout Designs of Integrated 
Circuits Act 2999, and the Geographical Indications Act 2000.  Unauthorized use and disclosure of trade secrets continue to be protected under common law. WT/TPR/S/225 Trade Policy Review 
Page 46 
 
 
88. There has been no change to Malaysia's com pulsory licensing provisions, which are applied 
to patents, layout designs of integrated circuits, and copyrights and related rights.  No compulsory 
licence or rights of government have been gran ted since 2005.  One compulsory licence expired 
during the review period.50   
89. Parallel imports are allowed into Malaysia under the Patents Act 1983.  The potential for 
parallel imports diminishes sole distributors' excl usive rights to distribute patented products in 
Malaysia.  However, they may take action agains t the contracting parties under common law regime 
for loss of revenue.  There are no provisions on para llel imports that relate to copyrights and trade 
marks in any laws and regulations.   
90. The authorities regard the National Intellectual Property Policy (NIPP), issued on 
27 April 2007, as a guideline in enacting IPR laws and regulations and in implementing IP-related 
activities of government agencies, research institu tions, academic institutes, NGOs, and the private 
sector.  In accordance with the NIPP, the authoriti es aim to reduce examination time for patents and 
trade marks.  "First office action" is expected to be conducted for patents within 37 months (currently 
48 months), and for trade marks within  7 months (currently 10 months). 
91. Malaysia is reviewing its intellectual property legislation in stages.  Industrial design 
legislation is at the final stage of internal revi ew, and is to be published for public consultation.  
Legislation on patents, trade mark, and copyright is at the stage of internal discussion by the Law 
Review Committee.  While Malaysia does no t provide protection for data submitted by 
pharmaceutical companies in support of drug registration, the Government intends to  implement 
test-data protection in Malaysia;  the exact mechan ism for doing this has not been decided yet.   
92. Malaysia's authorities recognize the mutual importance of ensuring effective competition 
policy and adequate IPR protection.  In their vi ew, IPR protection enhances economic efficiency and 
promotes competition as it strengthens the incentiv e for initial research and development, spurs 
incremental innovation, facilitates diffusion, and gene rates product market competition.  On the other 
hand, monopoly derived from the protection of IP Rs is not necessarily prohibited by competition 
laws;  whether such efficiency-enhancing an d competition-promoting effects outweigh any 
anti-competitive effects by restrictions contained in  IPR agreements depends on the degree of market 
power of the IPR-holder.  
93. The Patent Cooperation Treaty (PCT) has been in force in Malaysia since 16 August 2006, 
following Malaysia's accession.  Malaysia beca me party to the Nice Agreement 1957 and Vienna 
Agreement 1985 (with a view to harmonizing trade mark registration procedures in accordance with 
international standards for classification of goods  and services, as well as figurative elements) on 
28 September 2007.  
94. Malaysia participates in the ASEAN Worki ng Group on Intellectual Property Cooperation 
(AWGIPC).  It is signatory to the ASEAN Framework Agreement on Intellectual Property 
Cooperation.  The AWGIPC has agreed to replace  the ASEAN Regional Trade Mark Filing System 
with the Madrid Protocol for the International Regi stration of Marks by 2015.  Malaysia cooperates, 
inter alia , with the World Intellectual Property Organi zation, ASEAN IP Offices, IP Australia, the 
European Patent Office (EPO), Japan Patent O ffice (JPO), Korean Intellectual Property Office 
(KIPO), the UK Patent Office (UKPO), the United States Patent and Trademark Offices (USPTO), 
and other intellectual property offices. 
                                                      
50 This concerns a case where the Government used the "rights of Government" provision to exploit 
patented HIV/AIDS medicine on 1 November 2003 for a period of two years.  This expired in November 2005. Malaysia WT/TPR/S/225 
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(b) Enforcement 
95. Malaysia took further steps to strengthen enforc ement of intellectual rights, particularly in 
copyright and product counterfe iting, during the period under re view.  These efforts include:  
increased raids and inspections related to copyright  infringement (Table III.8), and the establishment 
on 17 July 2007 of the Intellectual Property (IP) Court.  The IP Court comprises 15 session courts 
located in all states.  In addition, IP courts have  also been established within high courts;  one in 
Kuala Lumpur is already in operation and five in Selangor, Johor, Perak, Sa bah, and Sarawak are in 
the process of being established.  There have be en no changes to penalties associated with IPR 
infringement in the Copyright Act 1987 during the review period.51  Customs officers have an 
ex-officio  duty under the Act to detain or suspend th e release of goods that are deemed to be 
infringing IPRs (e.g. counterfeits) on the basis of prima facie evidence. 
Table III.8 
Raids and inspections related to copyright infringement, 2005-07 
Premises raided/inspected 2005 2006 2007 
Night markets 19,265 15,512 51,523 
Eateries 4,421 3,764 4,627 
Traders on five footways 3,411 4,769 5,066 
Lobby stalls at shopping complex 3,494 4,826 3,612 
Sale/rental optical disc shops 5,156 6,003 3,878 
Optical disc manufacturers 383 118 49 
Stores/distribution centres 133 476 408 
Computer shops 395 1,097 865 
Others 1,411 1,601 926 
Total 38,069 38,166 70,863 
Seizure of copyright infringing goods  under Copyright Act, and counterfeit 
goods under Trade Description Act, 2005-2007 (RM million)  
Copyright infringement 128.2  214.5  59.0  
Counterfeit goods 12.2  42.7  56.2  
Source:  Data provided by the Malaysian authorities. 
                                                      
51 It was not clear to the Secretariat whether there have been any changes to penalties under other 
IPR-related laws and regulations.