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a)    Manufacturing Sectors
Foreign investments are encouraged in Malaysia in the manufacturing sector. Conditions on foreign equity, among other conditions and requirements, are spelt out in the Manufacturing Licence issue by the Ministry of International Trade and Industry(MITI). An application for the Manufacturing Licence must be submitted to the Malaysian Industrial Development Authority (MIDA). Companies with less than RM2.5 million shareholders’ funds and which employ less than 75 full time employees are exempted from this licensing requirement.

The government has fully liberalized equity holdings in all manufacturing projects. Foreign investors can now hold 100% equity in all investment in new projects and investments in expansion or diversification projects by existing companies. This is regardless of the level of export and without any product/activity being excluded.

However, equity and export conditions imposed on companies prior to this new policy will be maintained. These will be some flexibility given and companies can request for removal of these conditions depending on the merit of each case. Manufacturing companies established after 31 July 1998 which are exempted from licensing are not subject to equity conditions.

b)    Other sectors
The following are some of the general equity conditions laid down by the Foreign Investment Committee (FIC) in the Guidelines For The Acquisition of Interests, Mergers and Take-Overs by Local and Foreign Interests, which took effect from 21 May 2003:

•    The only equity condition that must be complied with is Bumiputra equity of at least 30%. The remaining equity can be held by either foreign or local interests, or jointly by foreign and local interests.
•    For companies which carry on activities that are of national interest such as the supply of water and electricity, telecommunication and broadcasting, defence and security, foreign ownership of equity is restricted to 30%.

•    Companies which have attained Bumiputra shareholding of 30% but less than 51% must maintain the minimum level of 30% at all times. Similarly, companies that have attained 51% or more Bumiputra equity-ownership, must maintain at least 51% Bumiputra shareholding at all times.

•    Compliance with equity conditions may be waived for companies incurring lossess and undergoing debt restructuring, subject to review of the equity structure by the FIC after 3 years (from the date of FIC’s approval letter).


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