I. Overview of Malaysia
Malaysia is one of the most open economies in the world with a trade to GDP ratio averaging over 130% since 2010. Openness to trade and investment has been instrumental in employment creation and income growth, with about 40% of jobs in Malaysia linked to export activities.
Malaysia’s near-term economic outlook will be more dependent than usual on government measures to sustain private sector activity as the shock of COVID-19 reduces export-led growth, and as a depleted fiscal space limits public investment-led expansion. Over the longer term, as Malaysia converges with high-income economies, incremental growth will depend less on factor accumulation and more on raising productivity to sustain higher potential growth.
II. Trade Agreements
Malaysia has always been a trading nation. Strategically located along the Straits of Malacca, it sits on a major shipping channel that connects the Indian Ocean to the west and the Pacific Ocean to the east. Malaysia recognizes the importance of international trade and relations to the nation’s growth and development. This is reflected in its gross exports of goods and services.
Given Malaysia’s reliance on international trade, Malaysia has adopted liberal trade policies and puts a high emphasis on regional and bilateral trade agreements. Malaysia joined the General Agreement on Trade and Tariff (GATT) in 1957, and was therefore a founding member of the World Trade Organization (WTO), which replaced the GATT.
Currently, Malaysia has seven bilateral Free Trade Agreements (FTAs) with the following countries: Australia, Chile, India, Japan, New Zealand, Pakistan, and Turkey.
Through ASEAN, Malaysia has regional FTAs with: China, Japan, Korea, India, Australia and New Zealand, and also participates in the ASEAN Trade in Goods Agreement (ATIGA).
Other concluded trade agreements include: Trade Preferential System-Organization of Islamic Conference (TPS-OIC), and Developing Eight (D-8) Preferential Tariff Agreements (PTA).
1. Prohibition/Restriction of Imports
The following goods are absolutely prohibited from importation:
Reproduction of any currency note, bank note, or coin which are currently been issued in any country.
Indecent printings, paintings, photographs, books, cards, lithographic, engravings, films, video tapes, laser discs, color slides, computer disc and any other media.
Any device which intended to be prejudicial to the interest of Malaysia or unsuited with peace.
All genuses of Piranha fish.
Cocoa pods, rambutans, pulasan, longan, and nam nam fruits from Philipines and Indonesia.
Intoxicating liquors containing more than 3.46 milligrams per liter in any lead or in any compound of copper.
Daggers and flick knives.
Broadcast receivers capable of receiving radio communication within the ranges (68 - 87) MHz and (108 - 174) MHz
Cloth bearing the imprint or duplicate of any verses of the Quran.
Pen, pencil, and other articles resembling syringes.
Lightning arresters containing radioactive material.
The importations of goods specified below are prohibited except under an import licence or permit from relevant authorities:
Egg in the shells.
Any meat, bones, hide, skin, hoofs, horns, offal or any part of the animals and Poultry.
Live animals-primates including ape, monkey, lemur, galago, potto, and others.
Explosives and Fireworks
Imitation arms, toy gun / pistols.
Imitation hand grenades.
Arms and ammunition other than personal arms ammunition imported by bona fide traveler.
Bullet proof vests, steel helmets and other articles of clothing as protection against attack.
Soil and pests including live insects, rats, snails, and cultures of plant disease causing organisms.
Safety helmets (except as worn by motorcyclists or motorcycle pillion riders).
Video machines excluding game watches and video games for use with television receiver.
Rice and padi including rice products.
Equipment to be connected to a public telecommunication network.
Radio communication being used for telecommunication in the frequency lower than 3000 GHz.
Saccharin and its salt.
Parabola antenna for outdoor use.
Pests and organisms which are capable of being injurious to plants.
Animal oils and fats.
Plants include parts and plant products.
Household and agricultural pesticides.
Electric domestic equipment that use 50 volt or 120 volt Dc or more
Toxic and/or hazardous wastes.
Corals, alive or dead.
Apparatus/equipment for the brewing of beer in the home.
The punishment for drug trafficking is death by hanging.
Import and export of illicit drugs (eg: morphine, heroine, candu, marijuana, etc.) are strictly prohibited.
Prescribed drugs can only be imported into or exported from the country by virtue of a licence issued by the Ministry of Health, Malaysia.
2. Prohibition/Restriction of Exports
The following goods are absolutely prohibited from exportation:
Rattan from Peninsula of Malaysia.
The following are some of the goods which require an export licence/permit from relevant authorities:
Any animal or bird, other than a domestic animal or domestic fowl, whether alive or dead or any part thereof.
Live animals from bovine species.
Meat of bovine animals.
Plants including orchids.
Vegetables, fresh, chilled or frozen in excess 3kg per consignment.
Palm kernels and palm seeds.
Military clothing and equipment.
Arms and ammunition.
Antiquities as defined or stated in any written law in Malaysia.
Sugar and rice
Coral, alive or dead.
Collections of zoological, botanical, mineralogical, anatomical, historical, archaeological, or ethnographical with numismatic interest.
IV. Notes of doing business
1. Choose your trading partner carefully and adopt letter of credit to pay
Check a company’s background before doing business with it. When the business refers to products of origin, like trade in mineral and gravel, legal licenses of exploitation, transportation and export. If necessary, you can contact local chamber of commerce to obtain related information. You should attempt to adopt letter of credit to pay.
2. The company should strive for high-quality products rather than shoddy products
Reference: 1. Chinese Ministry of Commerce Department of Outward Investment and Economic Cooperation
2. World Bank Group
3. The International Trade Administration, U.S. Department of Commerce
4. Royal Malaysian Customs Department