Licensed Manufacturing Warehouse (LMW) in Malaysia: The Operator's Guide
What a Licensed Manufacturing Warehouse is, who qualifies, how the duty and tax relief works, and the obligations Customs attaches to the licence.
GetCommercialProperty Editorial · 9 May 2026 · 7 min read
A Licensed Manufacturing Warehouse, almost always shortened to LMW, is a facility available to an export-oriented manufacturer in Malaysia. An LMW is a factory whose premises have been licensed by the Royal Malaysian Customs Department (JKDM) under Section 65A of the Customs Act 1967.
This guide explains what the facility is, who can use it, how the relief works, and what Customs expects in return.
What an LMW is
When your factory is granted LMW status, the premises become a licensed area for export-oriented manufacturing. Raw materials, components and certain machinery imported for that activity come in with import duty suspended and sales tax not levied. Source: JKDM: Licensed Manufacturing Warehouse introduction; JKDM: Lampiran C, conditions of LMW under Section 65A.
Who qualifies
LMW status is aimed at manufacturers whose production is predominantly for export. Recurring licence conditions include:
- Manufacturing as defined under the Customs Act 1967.
- A stated share of finished product, by value, is to be exported.
- Premises monitored 24 hours a day, secure, and equipped with security measures.
- Daily records of raw materials, production and finished goods, plus monthly and annual statements to Customs.
Source: JKDM: Licensed Manufacturing Warehouse introduction; JKDM: Lampiran C, conditions of LMW under Section 65A.
Confirm your activity and eligibility with Customs.
How the duty and tax treatment works
The commercial heart of the LMW is duty and tax relief on imported inputs. In practice this means:
On the way in. Raw materials, components and certain machinery imported for the licensed manufacturing activity come in with import duty suspended and sales tax not levied, subject to the conditions of the licence. Source: JKDM: Lampiran C, conditions of LMW under Section 65A.
Your working capital stays free of duty paid on inputs you will export anyway.
During production. Customs requires records of materials used, finished goods, and waste. Source: JKDM: Lampiran C, conditions of LMW under Section 65A.
On the way out. Goods sold in the domestic market are subject to the prevailing duties and taxes. No goods may be transferred for local consumption until those duties and taxes have been paid. Source: JKDM: Lampiran C, conditions of LMW under Section 65A.
Because tax rules and the treatment of specific goods change over time, treat the headline as the principle and verify the current detail for your tariff codes with JKDM.
The obligations that come with the licence
The relief stays only while the operator meets the licence conditions. Expect to:
- Keep detailed records. Daily records of raw materials, production and finished goods, with monthly and annual statements to Customs.
- Maintain the premises as a controlled area. Premises must be secure and monitored, and layout changes need Customs approval.
- Make records available for Customs inspection.
- Stay within licence conditions. Changes to floor plan, building structure or equipment need written approval. Relocation and additions of finished goods need approval.
Source: JKDM: Lampiran C, conditions of LMW under Section 65A; JKDM: Responsibilities of an LMW licensee.
A compliance failure can lead to revocation of the licence or a compound under the Customs Act 1967. Source: JKDM: Lampiran C, conditions of LMW under Section 65A.
Setting one up: the right order
Settle your site, then apply to JKDM for the premises to be licensed as an LMW, because the LMW is a customs facility licensed under Section 65A. Source: JKDM: Licensed Manufacturing Warehouse introduction.
Do not commit to a building before you are confident Customs will license it for your activity.
How to use this
If you are sourcing a plant that will run as an LMW, start from a site Customs can realistically bond, then work back to the lease. Our Factory and Manufacturing hub maps the industrial corridors where export manufacturing concentrates, and the Shah Alam guide covers industrial stock in that submarket. If you also need duty-suspended storage for goods you are not manufacturing, our companion guide on bonded warehouses explains the alternative. To pressure-test the economics of a site, the Commercial Rental Yield Calculator is a fast starting point.
For more guides in this series, see our Insights library.
This page is general information. It is not customs, legal or tax advice; confirm your eligibility with JKDM or get professional advice before you act.