NON-TARIFF MEASURES IN MALAYSIA

MALAYSIA

Based on information collected up to February 2001

1. TARIFF MEASURES

Structure of the tariff schedule

Malaysia applies a nine-digit tariff nomenclature based on the Harmonized System

following a substantial revision of its HS nomenclature in 1996, and minor revisions
as of 1 January 1997.

Tariff publications

Current information on customs-related matters is available from the Royal

Customs and Excise Department Malaysia, Bock 11, Government Office Complex,
Jalan Dutu, 50596 Kuala Lumpur.

Tariff rates

12 MFN treatment is offered to all countries including those that are not WTO
members. The tariff schedule contains ad valorem rates, specific rates, mixed
rates, and alternative rates. Ad valorem rates are the most common and vary
from zero to 300% according to the categories of goods. About 50 per cent of
tariff lines have zero duty. Tariffs exceeding 15% account for more than one
quarter of all tariffs. The level of tariff protection is generally lower on raw
materials and increases for those with value-added content or which undergo
further processing, i.e. leaf tobacco, cigarette products, alcoholic beverages,
and some processed and high-valued food products. In order to protect the local
automobile industry, tariffs for most vehicles range from 42% to 80% for CKD units
and from 140% to 300% for those CBU.
14 Chicken imports are regulated by tariff quotas. In-quota tariff rates are from
50% to 70%, depending on the specific product.
16 The Customs Duties (Exemption) Order 1988 provides for various
persons/organizations to be exempted from payment of customs duties on
specific goods if certain conditions are met.

Exemption from import duties is available for raw materials and components used
for the manufacture of goods whose importation is duty free.

Machinery, equipment, components and materials imported for research and

development purposes are eligible for exemption from import duties.

Exemptions are allowed for machinery and equipment used directly in the
 manufacturing process as well as for components and materials that are used in
the manufacture of goods for export.

A partial exemption is granted on request for import duties in excess of 3% on

raw materials and components imported for the manufacture of consumer goods
for the domestic markets, provided that these goods are not produced locally or
substitutable for locally produced goods.

Malaysia has abolished the import duties on certain consumer goods including
ready-made clothing, handbags, briefcases, executive-cases and shoes to
promote the country as a shopping destination.
19.1 Malaysia is a member of the Global System of Trade Preferences (GSTP) and has
submitted an offer covering tariff reduction on 15 tariff lines.
19.2 The Association of South-East Asean Nations (ASEAN) decided in 1992 to establish
an ASEAN Free-Trade Area (AFTA) by the year 2008, later brought forward to
2003 for the six original founding members of ASEAN, Brunei Darussalam,
Indonesia, Malaysia, the Philippines, Singapore, and Thailand. Vietnam joined in
1995, Laos and Myanmar in 1997, and Cambodia in April 1999. In December 1998,
the ASEAN members decided to accelerate the completion of the ASEAN Free-
Trade Area. In this regard, the six original founding members would advance
their tariff reductions to 0-5% from 2003 to 2002. In May 2000, Malaysia received
approval from its ASEAN partners for an extension of its commitments under
AFTA to reduce tariffs in the automobile sector and selected agricultural
products until 2005. Vietnam would implement its tariff reductions to 0-5% by
2003, and Laos and Myanmar by 2005.

ASEAN member states decided, in December 1998, to expand access to the 1996
Basic Agreement on the ASEAN Industrial Cooperation (AICO) Scheme, which
promotes joint manufacturing industrial activities between ASEAN-based
companies. AICO provides tariff preferences on inputs sourced in the region.

Malaysia is a participant in the East Pacific Economic Cooperation (APEC) forum,

formed in 1989. The objective of the agreement is to implement free trade
among the member countries by the year 2020, with advanced industrialized
countries realizing the goal by the year 2010. Individual action plans for each
member country were established to outline a path to the goal. On 10 November
2000, APEC leaders agreed to EVSL (early voluntary sectorial liberalization) in 15
sectors, that is liberalization before the agreed goals of 2010 or 2020,
respectively.

2. PARA-TARIFF MEASURES

Internal taxes levied on imports

23.1 In conformity with the Sales Tax (Rate of Tax) Order 1997, a sales tax of 10% is
levied on all goods except cigarettes, liquor and alcoholic drinks subject to a rate
of 15%, and fruits, certain foodstuffs, and building materials assessed at a rate of
5%. Goods exempted from sales tax are listed under Schedule A of the Sales Tax
(Exemption) Order 1980.

3. PRICE CONTROL MEASURES

Antidumping measures

34.2 Antidumping duties in force at the end of the year 2000 apply to corrugating
medium paper in rolls (from Australia, the European Communities, Indonesia, and
Korea), self-copy paper in rolls and sheets (from the European Communities,
Indonesia, and Japan), PVC floor covering in rolls (from Korea and Thailand), and
plaster/gypsum board (from Thailand).

4. FINANCE MEASURES

45 A requirement to settle all imports in foreign currency was introduced on 1

September 1998.
49 Proceeds from exports must be repatriated according to the payment schedule
specified in the commercial contract, but no longer than six months after the
date of exportation. Export proceeds must be received only in foreign currency.

5. AUTOMATIC LICENSING MEASURES

Automatic licence

51 Importation of selected industrial products is subject to automatic import

licensing administered by Ministry of International Trade and Industry.

Import monitoring

52 The automatic licensing requirements on imports of selected heavy machinery

was introduced in October 1997 as a temporary monitoring mechanism in
accordance with Malaysia's trade, development and financial needs.

Sensitive product categories may be imported if an automatic import licence has

 been issued by the relevant authority involved in the administration of security.
This surveillance measure applies to such imports as safety helmets, all single
and multi-colour copying machines, apparatus or equipment for the brewing of
beer in homes, chassis and bodies of motor cycles and passenger cars, road
tractors for semi trailers, apparatus and equipment to be connected to a public
telecommunication network, films and tapes for magnetic recorders, automatic
cassette and cartridge loaders, high speed duplicators, cement, wheat flour, and
liquid milk.

6. QUANTITY CONTROL MEASURES

Non-automatic licensing

Licensing under the authority of the

Royal Customs and Excise Department Malaysia,
Block 11, Government Office Complex, Jalan Dutu,
50596 Kuala Lumpur.

Under the Customs (Prohibition of Imports) Order 1998 P.U. (A) 210/98,
quantitative restrictions are imposed on about 17 per cent of Malaysia's tariff lines
for protection of local industries and reasons of security and environmental
grounds.

61.2 Under the authority of the Ministry of International Trade and Industry, import
licences for CKD and CBU motor vehicles are allocated only to motor vehicle
assemblers and franchise holders.

Imports of firearms and ammunition are administered by the Royal Malaysian

Police. Import licences are granted to licensed arm dealers.

Under the Poisons Act 1952 (Revised 1989) and the Sale of Drugs Act 1952
(Revised 1989), all substances listed in the Poison List and medical products
containing poison require licences prior to importation. The Drug Control
Authority, Ministry of Health, issues licences only to registered pharmacists.
61.6 The Ministry of International Trade and Industry administers imports of general
goods. Import licences aimed at according protection of a temporary nature to
local manufacturers are required for natural barium sulphate, activated clay and
bleached earth, steel bars including wire rods, steel billets, plastic and paper
insulated wire and cables, and batik sarong.

With effect from 29 April 1999, importation of cold rolled coil and hot rolled flat
sheet products require an import licence from the Ministry of International Trade
 and Industry for monitoring reasons.

Imports of rice milling machinery require an import licence from the Ministry of
Agriculture.

Importers of oil palm products including oil palm fruit and oil palm planting
materials must obtain a licence from the Palm Oil Registration and Licensing
Authority.

Applications for import licences to import saw logs, round logs and half squared
logs are processed by the Malaysian Timber Industry Board prior to the final
approval by the Malaysian Customs Department.
61.7 Effective 10 February 2000, approval is required to import 19 chemicals covered
under the 1988 Convention Against Illicit Traffic in Narcotics, Drugs, and
Psychotropic Substances. Applications for import licences to import
pharmaceuticals must be made to the Pharmaceutical Division, Ministry of
Health.

In conformity with the Fish Marketing Regulation 1973, fish and fish products may
be imported subject to an import licence from the Fisheries Department,
Ministry of Agriculture.

Unregistered pesticides may be imported for research and educational purposes

with an import permit issued by the Pesticides Board, Department of Agriculture.

The Department of Veterinary Services, Ministry of Agriculture, is the

enforcement authority of licensing of all animal and animal products imported
into the country. In addition, licences from the Department of Wildlife
Protection and National Parks are required for the importation of wild animals
and corals.

Under the Plant Quarantine Regulations 1981, import permits from the
Department of Agriculture are required for plant and planting materials such as
growing media, organic fertilizers, soil, living or dead organism, plant for
consumption or processing, and plant products.

Licences to import liquor, tobacco and denatured spirit may be obtained from
the Royal Customs and Excise Department.

Imports of CFC are regulated in accordance with the Montreal Protocol and
require an import licence from the Ministry of International Trade and Industry.

Any import of radioactive materials, nuclear materials, prescribed substances

and irradiating apparatus requires an approval from the Atomic Energy Licensing
 Board. Under the Atomic Energy Licensing Act 1984, the importation is regulated
as a protective measure and for monitoring reasons.

As a party to Basle Convention, Malaysia enforces prior approval requirements for

imports of toxic and hazardous wastes. Prior approvals are obtained from the
Director-General of the Department of Environment to ensure environmentally
sound management of hazardous waste and to protect the Malaysian environment
from illegal trafficking.

Applications for prior licences or permits to import explosives, fireworks, any

device capable of producing the sound of a siren, and bulletproof vests must be
made to the Royal Malaysian Police.

The Telecommunication Department, Ministry of Energy, is conferred the power

to issue import permits for all types of telecommunication and
radiocommunication equipment.

All goods from Israel, Serbia and Montenegro require an import licence from the
Ministry of International Trade and Industry.

Quotas

62.1 Limits exist on imports of few products. With the purpose of protecting local
producers, round cabbages and unroasted coffee beans are subject to quotas
with import permits granted to local qualified importers and coffee
manufacturers by the Federal Marketing Authority. The importation of raw sugar
is subject to quotas, with import licences being granted to sugar millers and
refiners. The Ministry of Primary Industry issues import licences for
unmanufactured tobacco under import quota.

Prohibition

63.1 Absolute prohibitions are introduced on grounds of public morality, public order,
public safety, and protection of the health and life of persons and animals.
Publications which are incompatible with public moral and products, which bear
images offending religious faith, are also prohibited.
63.7 Importation of unprocessed food and planting materials from tropical America
and Central Africa is prohibited under the Plant Quarantine Act.

The Department of Veterinary Services, Ministry of Agriculture, may temporarily

prohibit the importation of certain animal products or products of animal origin
 intended for human or animal consumption for consumers' health protection
reasons.

Export restraint arrangements

66.4 Export licences for textiles and clothing products to countries that apply import
quotas under the WTO Agreement on Textiles and Clothing are issued up to the
limit allowed to the importing country.

7. MONOPOLISTIC MEASURES

Single channel for imports

71.1 In consideration of the agreement to perform the management of the national

rice stockpile, the Padiberas Nasional Berhad (BERNAS) has been given the
exclusive right to import rice into Malaysia for a period of 15 years.

8. TECHNICAL MEASURES

Standards and technical regulations are the responsibility of

Standards and Industrial Research Institute of Malaysia,
(SIRIM),
Persiaran Dato Menteri,
Section 2, P.O. Box 7035,
40911 Shah Alam, Selangor.

81.1 The procedures for the development of standards are established in the
Standards of Malaysia Act 1996. In addition to issues covered by this act, product
standards are the basis for newly adopted technical regulations other than
sanitary and phytosanitary measures applied to agricultural products.

Authorized food additives are specified in the Malaysian Food Regulations 1985.

Under the ASEAN Consultative Committee on Standards and Quality (ACCSQ)

programme, member countries have agreed to align standards for some electrical
and electronic domestic appliances, and rubber products within an agreed time-
frame.

Within APEC, Malaysia is developing an action plan to align its standards with
international standards in selected priority areas (electrical and electronic
 appliances, food labelling, plastic and rubber products).

Malaysian standard specifications are obligatory to ensure the safety or the

quality of the products concerned, i.e. protective helmets for vehicle users, and
Portland cement.

All imported beef and poultry products must originate from facilities which have
been approved by Malaysian authorities as "halal", or acceptable for consumption
by Muslims.

Registration of pesticides is mandatory under the Pesticides Act 1974.

Under the Malaysian Sale of Drugs Act 1952 (Revised 1989), medical products are
required to be registered by the Drugs Control Authority.

Food products containing the active ingredient chlordane will not be registered
when their registration period expires.

The Department of Electricity & Supply under the Ministry of Energy,

Telecommunication and Post is responsible for the issuance of a certificate of
approval for the import of electrical equipment specified in the 4th list of
Customs (Prohibition of Imports) Order 1998.

Oil palm fruit and oil palm planting material require a quarantine certificate
from the Department of Agriculture, Ministry of Agriculture.

Specific veterinary certifications, sanitary and phytosanitary requirements apply

to the importation of milk and milk products.
81.2/3 Electrical equipment shall be marked or labelled as described in the Electricity
Regulation 1994.
81.3 Under the Food Act (1983) and Food Regulation (1985), every package containing
food for sale should include the designation and weight of the product, as well as
information on the manufacturer (name and address, country of origin), and
name of the importer. The label must also indicate the presence of beef, pork,
edible fat, oil, alcohol, food additives, vitamins or certain minerals. The
information has to be in Bahasa Malaysia or English.

On every container of cigarettes must be printed "Warning by Government of

Malaysia smoking is hazardous to health".

Prepacked drugs must be labelled in English or Bahasa Malaysia indicating the

substances and its components.

Food labels must indicate the use of additives and shelf life.
 81.3/4 Packaging and labelling requirements are governed by the Food Act (1983) and
the Food Regulation (1985) as well as the Price Control (Labelling by
Manufacturers, Importers, Producers and Wholesalers) Order 1990.
81.5 Round logs and similar products are required to be inspected by the Forestry
Department.

Imports of chicken parts are regulated through sanitary controls.

81.9 Palm oil shall not be carried in ships tanks previously carrying cargoes listed in
the banned list as and when specified by the authority.
Source: www.aseansec.org
NOTE: Please refer to the following system for the meanings of the numeric codes in the above
list.

UNCTAD CODING SYSTEM OF TRADE CONTROL MEASURES

1000 TARIFF MEASURES

1100 STATUTORY CUSTOMS DUTIES

1200 MFN DUTIES
1300 GATT CEILING DUTIES
1400 TARIFF QUOTA DUTIES
1410 Low duties
1420 High duties

1500 SEASONAL DUTIES

1510 Low duties
1520 High duties

1600 TEMPORARY REDUCED DUTIES

1700 TEMPORARY INCREASED DUTIES
1710 Retaliatory duties
1720 Urgency and safeguard duties

1900 PREFERENTIAL DUTIES UNDER TRADE AGREEMENTS

1910 Interregional agreements
1920 Regional and subregional agreements
1930 Bilateral agreements

2000 PARA-TARIFF MEASURES

2100 CUSTOMS SURCHARGES

2200 ADDITIONAL TAXES AND CHARGES
2210 Tax on foreign exchange transactions
2220 Stamp tax
2230 Import licence fee
2240 Consular invoice fee
2250 Statistical tax
2260 Tax on transport facilities
2270 Taxes and charges for sensitive product categories
2290 Additional charges n.e.s.

2300 INTERNAL TAXES AND CHARGES LEVIED ON IMPORTS

2310 General sales taxes
2320 Excise taxes
2370 Taxes and charges for sensitive product categories
2390 Internal taxes and charges levied on imports n.e.s.

2400 DECREED CUSTOMS VALUATION

2900 PARA-TARIFF MEASURES N.E.S.
3000 PRICE CONTROL MEASURES

3100 ADMINISTRATIVE PRICING

3110 Minimum import prices
3190 Administrative pricing n.e.s.

3200 VOLUNTARY EXPORT PRICE RESTRAINT

3300 VARIABLE CHARGES
3310 Variable levies
3320 Variable components
3330 Compensatory elements
3340 Flexible import fees
3390 Variable charges n.e.s

3400 ANTIDUMPING MEASURES

3410 Antidumping investigations
3420 Antidumping duties
3430 Price undertakings

3500 COUNTERVAILING MEASURES

3510 Countervailing investigations
3520 Countervailing duties
3530 Price undertakings

3900 PRICE CONTROL MEASURES N.E.S.

4000 FINANCE MEASURES

4100 ADVANCE PAYMENT REQUIREMENTS

4110 Advance import deposit
4120 Cash margin requirement
4130 Advance payment of customs duties
4170 Refundable deposits for sensitive product categories
4190 Advance payment requirements n.e.s.

4200 MULTIPLE EXCHANGE RATES

4300 RESTRICTIVE OFFICIAL FOREIGN EXCHANGE ALLOCATION
4310 Prohibition of foreign exchange allocation
4320 Bank authorization
4390 Restrictive official foreign exchange allocation n.e.s.

4500 REGULATIONS CONCERNING TERMS OF PAYMENT FOR MPORTS

4600 TRANSFER DELAYS, QUEUING
4900 FINANCE MEASURES N.E.S.

5000 AUTOMATIC LICENSING MEASURES

5100 AUTOMATIC LICENCE

5200 IMPORT MONITORING
5210 Retrospective surveillance
5220 Prior surveillance
 5270 Prior surveillance for sensitive product categories

5700 SURRENDER REQUIREMENT

5900 5900 AUTOMATIC LICENSING MEASURES N.E.S.

6000 QUANTITY CONTROL MEASURES

6100 NON-AUTOMATIC LICENSING

6110 Licence with no specific ex-ante criteria
6120 Licence for selected purchasers
6130 Licence for specified use
6131 Linked with export trade
6132 For purposes other than exports
6140 Licence linked with local production
6141 Purchase of local goods
6142 Local content requirement
6143 Barter or counter trade
6150 Licence linked with non-official foreign exchange
6151 External foreign exchange
6152 Importers' own foreign exchange
6160 Licence combined with or replaced by special import authorization
6170 Prior authorization for sensitive product categories
6180 Licence for political reasons
6190 Non-automatic licensing n.e.s.

6200 QUOTAS
6210 Global quotas
6211 Unallocated
6212 Allocated to exporting countries
6220 Bilateral quotas
6230 Seasonal quotas
6240 Quotas linked with export performance
6250 Quotas linked with purchase of local goods
6270 Quotas for sensitive product categories
6280 Quotas for political reasons
6290 Quotas n.e.s.

6300 PROHIBITIONS
6310 Total prohibition
6320 Suspension of issuance of licences
6330 Seasonal prohibition
6340 Temporary prohibition
6350 Import diversification
6370 Prohibition for sensitive product categories
6380 Prohibition for political reasons (embargo)
6390 Prohibitions n.e.s.

6600 EXPORT RESTRAINT ARRANGEMENTS

6610 Voluntary export restraint arrangements
6620 Orderly marketing arrangements
6630 Multifibre arrangement (MFA)
 6631 Quota agreement
6632 Consultation agreement
6633 Administrative co-operation agreement
6640 Export restraint arrangements on textiles outside MFA
6641 Quota agreement
6642 Consultation agreement
6643 Administrative co-operation agreement
6690 Export restraint arrangements n.e.s.

6700 ENTERPRISE-SPECIFIC RESTRICTIONS

6710 Selective approval of importers
6720 Enterprise-specific quota
6790 Enterprise-specific restrictions n.e.s.

6900 QUANTITY CONTROL MEASURES N.E.S.

7000 MONOPOLISTIC MEASURES

7100 SINGLE CHANNEL FOR IMPORTS

7110 State trading administration
7120 Sole importing agency
7170 Single channel for sensitive product categories

7200 COMPULSORY NATIONAL SERVICES

7210 Compulsory national insurance
7220 Compulsory national transport

7900 MONOPOLISTIC MEASURES N.E.S.

8000 TECHNICAL MEASURES

8100 TECHNICAL REGULATIONS

8110 Product characteristics requirements
8120 Marking requirements
8130 Labelling requirements
8140 Packaging requirements
8150 Testing, inspection and quarantine requirements
8160 Information requirements
8170 Requirement relatrive to transit
8180 Requirement to pass through specified customs
8190 Technical regulations n.e.s.

8200 PRE-SHIPMENT INSPECTION

8300 SPECIAL CUSTOMS FORMALITIES
8400 RETURN OBLIGATION
8900 TECHNICAL MEASURES N.E.S.
 It should be noted that at present the Coding System covers only import measures and
that measures regarding exports have not yet been considered. The descriptive notes of
import regimes apply a shortened version of this Coding System by eliminating zeroes and
introducing a period after the first two digits of the code number.

The measures for sensitive product categories, with codes ending in 7*, are further
subdivided according to specific purposes if appropriate: (1) to protect human health (71); (2)
to protect animal health and life (72); (3) to protect plant health (73); (4) to protect
environment (74); (5) to protect wildlife (75); (6) to control drug abuse (76); (7) to ensure
human safety (77); (8) to ensure national security (78); and (9) for purposes n.e.s. (79).

The technical regulations are subdivided according to specific purposes, likewise as the
measures for sensitive product categories (See previous footnote); 8111, 8121, etc. for
protection of human health; 8112, 8122, etc. for protection of animal health and life, etc.