Malaysia – Trade Barriers

Includes the barriers (tariff and non-tariff) that U.S. companies face when exporting to this country.

Malaysia’s ease of trading across borders remains highly ranked in international comparisons.  However, is it not a totally free and open market. Malaysia’s import barriers are aimed at protecting the domestic market and strategic sectors as well as maintaining cultural and religious norms.
Technical barriers such as halal certification for the importation of meat and poultry are regulated through licensing and sanitary controls.  All imported beef, lamb, and poultry products must originate from facilities that have been approved by Malaysian authorities as halal or acceptable for consumption by Muslims.

Pork and pork products may be imported into Malaysia only if Malaysia’s Department of Veterinary Services (DVS) issues a permit authorizing its importation.  Each consignment of pork and pork products must be accompanied by a valid import permit issued by the Malaysian Quarantine and Inspection Services, Malaysia (MAQIS).  The permits are granted on a case-by-case basis and are sometimes refused without explanation.

In 2011, Malaysia implemented a food product standard MS1500:2009 which sets out general guidelines on halal food production, preparation and storage, which many exporters consider it much stricter than the multilaterally-agreed Codex Alimentarius halal standard.  This new standard requires slaughtering plants to maintain dedicated halal facilities and ensure segregated transportation for halal and non-halal products. Malaysia also requires audits of all establishments that seek to export meat and poultry products to Malaysia, an issue on which the United States has raised concerns.

In January 2012, the Malaysian Department of Standards implemented MS2424:2012 General Guidelines on Halal Pharmaceuticals, a voluntary certification system. The guidelines enabled manufacturers of pharmaceutical products to apply for halal certification and established basic requirements for manufacturing and handling.

Malaysia is not party to the WTO Government Procurement Agreement, and as a result, foreign companies do not have the same opportunity as some local companies to compete for contracts, and in most cases are required to take on a local partner before their bids will be considered. In domestic tenders, preferences are provided to Bumiputra (Malay) suppliers over other domestic suppliers. In most procurement, foreign companies must take on a local partner before their tenders will be considered. Procurement often goes through middlemen rather than being conducted directly by the government.  The procurement can also be negotiated rather than tendered. International tenders generally are invited only where domestic goods and services are not available.

The services sector constitutes 51 percent of the national economy and has been a key driver of economic and job growth in Malaysia in recent years. Since 2009, Malaysia has liberalized 45 services sub-sectors., Malaysia allows 100 percent foreign equity participation in private hospital services, medical specialist clinics, department and specialty stores, incineration services, accounting and taxation services, courier services, private universities, vocational schools, dental specialist services, skills training centers, international schools, vocational schools for special needs. In November 2014, the Lower House of the Parliament passed amendments to laws governing architectural services, quantity surveying services, and engineering services, which eased restrictions on foreigners working in these professions in Malaysia.  The amended legislation on architectural services came into force in June 2015.

Malaysia has an export licensing system. In some sectors, Malaysia maintains tax programs that appear to provide subsidies for exports. In other cases, the goal is to restrict exports of specific commodities. For products such as textiles, export licenses are used to ensure compliance with bilateral export restraint agreements. For other products, such as rubber, timber, palm oil, and tin exports, special permission from government agencies is required and taxes are assessed on these exports to encourage domestic processing. Although still maintaining its second position as a global supplier of palm oil and palm oil products, Malaysia is slowly being challenged by other new exporters such as Colombia, Italy, UAE and Denmark, posting a decline of 21.4 percent in its export of palm oil as compared to 2016.  The total global production of palm oil and related product for 2017 was 69.9 million metric tons.  Malaysia exported USD $9.7 billion worth of palm oil and palm oil products in 2017 or capturing 29 percent of the global market.

In January 2018, the government suspended the 5 percent export tax for three months due to falling Crude Palm Oil (CPO) prices to prevent stockpiling and the decline in both price and exports.   A calculated palm oil reference price of RM2,250.00 (US$580) per ton was used as a threshold and any price above this price will incur a tax.  It was also a political move to boost exports of CPO to keep small-holder (FELDA) farmers happy.

For more information and help with trade barriers please contact:
International Trade Administration
Enforcement and Compliance
http://trade.gov/enforcement/
or Report a Foreign Trade Barrier

 

Source: https://www.export.gov/article?id=Malaysia-Trade-Barriers (Updated: 7/19/2018)

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