Before the West ever set foot here, a tax administration system had actually existed, that is during the heyday of the Melaka and Johor-Riau Sultanate.

In the era of the Melaka Sultanate, maritime and harbour laws existed along with matters pertaining to a tax structure involving the foreign and local merchants. During that period the tax collector and all tax-related matters were the responsibility of the Chief of the Exchequer:

" ... the Chief of the Exchequer. (He) controlled all the revenue and Customs Officers and looked after the palace building and equipment".
(R.J.W. Wilkinson "The Melaka Sultanate". JMBRAS VOL. XIII-Pt.2, 1935, p.31).

The portfolio in charge of tax collection was the Harbour Master. He was entrusted by the king with the power to enforce rules and Harbour Laws.


With the establishment of the Straits Settlements (which consisted of Singapore, Penang, Melaka, Labuan and Dinding in Perak) in 1826, tax administration were supervised by a Governor and a Council directly answerable to the Governor General in Calcutta, India who was in turn  controlled by the Board of Governors of the East India Company.

Even though the Straits Settlements had been established, a few tax structure and practices applied by the Malay chieftains were retained, for example the Tax Farming system. In this system, a lessee with the highest bid had the authority to collect tax. The lessee was given a license and was subject to specific rules. This facilitated the process of obtaining Excise Duty revenues.

To prevent smuggling, particularly opium, from 1861 onwards the number of police personnel were reinforced and new recruits swelled the ranks.

Even though a Customs and Excise Department had yet to exist, all customs activities were operated by a body called the Government Monopolies. This body was authorised to grant import license and process and sell certain goods such as opium, tobacco, arrack, cigarettes and matches.

At that time, excise duty were imposed on such goods as rice-wine (samsu), toddy and locally made opium whilst customs tax was imposed on opium imported from China, tobacco, cigarettes, liquor and fire crackers.

Government Monopolies, the body that controlled these customs and excise activities existed until 1937 whereby in that year the Straits Settlement Customs and Excise Department was officially launched as H.M. Customs and Excise. Following that, a Revenue Collection Branch and a Preventive Branch were set up to oversee customs and excise activities until 1937.

A station called the Coast Post was set up to place Customs Officers (at that time called Revenue Officers) who will collect tax and monitor commercial / trading activities. The Customs Department collaborated with the Harbour Master, Post Master and Immigration Department to ensure a smooth day to day operations.

In 1938 ship raiding were introduced to curb smuggling activities.

H.M. Customs and Excise continued until 1948  up to the extant of the Malayan Union era whereby the Federation of Malaya Customs and Excise Department were then established, comprised of the entire Malay Peninsula (except Singapore).


Before British intervention in the Malay States and before the Resident System was introduced, there existed a tax administration in Pahang, Perak, Selangor and Negeri Sembilan managed by the Malay chieftains. At that time, the Malay States were divided into several provinces or districts with a chieftain authorised to collect tax over the people. Among the taxes imposed were:

Rubber                   $1.00    per pikul
Animal skin             $12.50   per pikul
Tin                         $4.00    per bahara
Rice                       $16.00  per koyan
Tobacco                   $2.00    per pikul
Opium                     $4.00    per pikul
Oil                          10%      each type
(C.R.J. Wilkinson, Paper on Malay Subjects, O.U.P., London, 1971, p.13)

The British had taken over tax collection from the local chieftains with the introduction of the Resident system from 1870 to 1880s. Before the formation of State Councils in the states governed by the Resident System, tax collection relied on the discretion of each Resident who is also the Sultan’s Advisor. The State Council subsequently would determine all matters related to Customs tax in the states. Among the functions of the Council were:

" ... Connection with the Government of the country influential natives and others with whom the Government may consult, regarding proposals for taxation, appointments, concessions, the institution or abolition of laws and other matters ...;"

Among the new taxes were:

Tin mines lease system with an export tax of $15.00 per bahara and 1/10 for other metals.
Farming revenue -2.5% tax.
Tax on imported opium.
Systematic tax administration activities in the Malay States led to the establishment of the Customs Department. Customs stations were situated at river estuaries and state borders and were in charge of collecting duties on agricultural products, mining, alcoholic beverages, opium and gambier. The management system of the Customs Department varied from state to state.

The management of the department and tax collection were carried out by the clerks in the District Office and State Treasury Office; therefore the Customs Department did not fully manage customs and excise duty. For example in Telok Anson, Taiping and Kuala Lumpur, tax were collected by the Government Treasurer, whilst at the ports, river estuaries as well as the borders of Perak, Selangor and Negeri Sembilan, tax collection were done by Customs Clerks who were directly responsible to the District Officers in those areas. In Selangor import tax on opium were collected by the Chinese People Affairs Protection Officers.

Customs Union in the Malay States had not existed then. This led to complication in enforcing tariff on goods and differing tax rate in the different states. As a consequence there was a need to form a federation between the Malay States and this basically had been approved by the British Foreign Secretary and Straits Settlements Governor.

With the formation of the Federated Malay States, there were efforts to integrate Customs matters between states. As an outcome, in 1904, a new legislation called the Goods Revenue Enactment Number II was enacted, with the purpose of controlling all Import tax revenue on alcoholic beverages. Under this legislation, the retailer was given a special license to import alcoholic beverages with a fixed rent payment.

On the 1st of January 1907, a new post of Inspector of Trade and Customs was created. On the same date, a legislation called The Customs Regulations Enactment was introduced with the approval of all four States Legislative Board. In 1908 the title of Inspector of Trade and Customs had been changed to Commissioner of Trade and Customs.

With the existence of this enactment, import and export tax schedules became uniform in the Federated Malay States. A complete integration occurred in 1920 with the establishment of one uniform Customs enactment for the Federated Malay States.

With this integration, Customs stations at the borders were abolished and no tax was imposed if the goods brought from a state to another were from the union. To collect export duty on goods that were brought out by trains, tax collecting stations were established in Singapore in 1918, Prai (1919) and Melaka (1922). The stations were also tasked with collecting duties on imported goods.

The establishment of the Customs Union in the Federated Malay States had harmonised all Customs regulations between the states. In fact, all Customs offices under the Trade Commissioner and Customs Department were responsible directly to the Chief Secretary of the Federated Malay States.

In 1938, the title Commissioner of Trade and Customs was changed to Comptroller of Customs.


In 1931 during the Federated Malay States Rulers Conference or Durbar in Sri Menanti, Negeri Sembilan, the British High Commissioner, Sir Cecil Clementi proposed an expansion of the union. The proposition was based on the annual increase of import tax.

Until the year 1932, Customs Tariff had already encompassed a majority of goods and preferential duty had to be created for goods coming from the British empire. The heavy reliance on import duty as a source of revenue for the Federated Malay States led Sir Cecil to opine:

"Like the rest of the British Empire, the Malay States had  become increasingly dependent on Customs import duties as their main source of revenue, and it was on this score that he strongly recommended the creation of a customs union embracing the whole of the Malay peninsula if trade is not to be intolerably cramped, and the interdependence of one territory upon another in matter of commerce ".(C.R. Emerson, Malaysia a study in Direct and Indirect Role, Out 1979, p.190).

Henceforth he suggested an establishment of a Customs Union for the whole of the Malay Peninsula. This was so that the tariff growth in the Federated Malay States would not disturb the smooth trade transactions in the states.

However, the Customs Union for the Malay Peninsula could only be established in 1946, that is with the formation of the Malayan Union in April, 1946, and the department was given the name Customs and Excise of Malayan Union. Nevertheless, with the dissolution of the Malayan Union in 1948, this department was reorganised. The Customs Department then did not  only comprise of those under the Federated Malay States but it also included those under the administration of the Non-Federated Malay States and the Straits Settlements.


In 1948, with the formation of the Federation of Malaya, the Customs and Excise Department were established for the whole of the Malay Peninsula. Under the Customs Ordinance 1952, this department was put under the control of the High Commissioner for Malaya and headed by a Comptroller of Customs as can be found since 1938. This lasted until the country achieved its independence in 1957.

Section 138, Customs Ordinance, 1952 gave the Federation Council power to issue all rules and regulations on Customs affairs. The Customs main area at that time was the whole of the Peninsular of Malaya excluding Penang (to maintain its free port status).

As a result from the formation of the Customs Union in the Malay States in 1948, there was a dire need to boost staff performance to fulfill the needs of the country which was on her way to independence. In 1956 a training center was formed in Bukit Baru, Melaka.

When the Federation of Malaya achieved its independence on 31st August 1957, the organisational  structure of the Customs and Excise Department was reshuffled again to fulfill the needs of an independent Malaya. Customs and Excise Department administration was assigned under the Finance Ministry led by a Customs and Excise Comptroller who was responsible to the Finance Minister.

The department was divided into three zones based on three main trading centers. For the Northern Zone the base was in Penang and covered Kedah, Perlis and Perak. The Central Zone was based in Kuala Lumpur and its area encompassed Terengganu, Kelantan and Negeri Sembilan. Lastly, the Southern Zone was comprised of the remaining states of Johor, Pahang, Melaka and the Customs station in Singapore. Each Zone was led by a Senior Assistant Comptroller of Customs.


On 16th September 1963, the structure of the Customs and Excise Department administration was reshuffled again with the inclusion of Sabah, Sarawak and Singapore into the Federation of Malaysia. The Customs department was divided into three main territories, that is the Peninsular of Malaysia (at that time known as West Malaysia), Sabah and Sarawak, where each territory were led by a Regional Comptroller of Customs and Excise.

On Tuesday, 29th October 1963, in the Dewan Tunku Abdul Rahman, Jalan Ampang, Kuala Lumpur, an auspicious event unfurled as the Customs and Excise Department was conferred the title Diraja / Royal by HRH Seri Paduka Baginda Di Pertuan Agong. This was an honor from the Government for the Department’s untold contribution to the country. It was a momentous occasion in the history of the Royal Customs and Excise of Malaysia.

Amendment to the Customs Ordinance 1952, enforced on 1st October 1964, had annulled the posts of Revenue Officer and Junior Customs Officer, and in its stead new posts were introduced called Customs Officer, Senior Customs Officer and Chief Customs Officer. Beside that, this amendment also created the posts of Assistant Superintendent of Customs and Superintendent of Customs.

1964 also saw an all local selection of Customs Officers upon service completion of the last two English officials.

Even though the Peninsula of Malaysia, Sabah and Sarawak were contained in the Federation of Malaysia, each state still worked under separate Customs Ordinances and Duty Orders. These affected the movement of goods from one territory to the other thus creating a bumpy journey through the different bureaucracies. Following these difficulties the Comptrollers from the three territories met in mid 1967.

A result of the meeting was the enactment of the Customs Act No. 62, 1967 that gave the whole of Malaysia a single Customs law. Consequently, the Indirect Tax Committee of the Treasury actively prepared a collective tariff for the three zones.

In 1972, the Royal Customs and Excise Malaysia were involved in a restructuring exercise following a report by an expert from the International Monetary Fund (IMF). On 1st August 1972, the title for the head of Customs Department was changed to Director General of Customs and Excise; and two new posts were created, that is the Deputy Director General of Customs (Implementation) and Deputy Director General of Customs (Management).  From that date onwards, the position of Regional Comptroller of Customs and Excise (West Malaysia) was abolished and replaced with one Regional Customs Director each for the three areas, North, Central and South which were previously led by a Senior  Assistant Customs Director.

In 1972, a revenue legislation called the Sales Tax Act 1972 was declared in the Government Gazette as Malaysia Law Act 64 and implemented on 29th February 1972. This tax, known as Sales Tax, was imposed on all imported and local products, except those exempted under Sales Tax (Exemption) Order 1972, or were produced by manufacturers exempted from being licensed under Sale Tax (Licence Exemption) Order 1972.

Accordingly in 1975, the Government introduced yet another law called the Service Tax Act 1975. This enabled the Department to collect service tax from business premises that provided services and goods which were taxed under the Second Schedule, Service Tax Regulations, 1975.

The enforcement of the Motor Vehicle Levy Act taking effect on the 1st January 1984 also contributed towards increasing the department’s revenue collection. With the enforcement, all motor vehicles ferrying certain goods either leaving or entering the country, notwithstanding laden or empty, (unless those exempted) will be levied.

Until the year 1977, even though Malaysia had existed for 14 years, there were still a few minor legislations in the three Customs controlled territories which operated separately. Research was done so that only one legislation is used in the regions of the Malay Peninsula, Sabah and Sarawak. The movement was called the Harmonisation Movement. The first benefit reaped was that movement of goods from one territory to another will no longer be considered as import or export; and goods will only be taxed once, that is when the goods were imported or exported for the first time from Malaysia. This means business transactions between territories can proceed unhindered.

On 19th December 1977, Penang was declared as a Main Customs Area. With that, Penang’s free port status was withdrawn. The year also saw the Department embracing the International Unit System or SI, converting everything into metric by the 1st January 1978 through the Customs Duty Order1978.

The Customs Department had another restructuring exercise in 1979. Whilst continuing to be helmed by the Director General of Customs, he was now assisted by three Deputy Director Generals who would be responsible for the Implementation, Prevention as well as Management and Policy programmes. Organisational structure at the headquarters level was arranged based on regional activity whereby each activity was headed by a Director of Customs. The activities were the Prevention Division, Customs, Internal Tax, Research, Planning and Training, Revenue Collection as well as General Administration and Finance. The same applied at state level where each state in the Federation of Malaysia were led by a Director of Customs. In addition, the department also had a station in Singapore administered by a Federation Customs Tax Collector.

In 1983 history was made when, for the first time ever, the Royal Malaysian Customs and Excise Department celebrated World Customs Day. The date 26th January was chosen to coincide with the 30th anniversary of the Customs Cooperation Council ( now known as the World Customs Organization or WCO for short). The first Customs Day celebration was inaugurated by the Honourable Minister of Finance on the compound of the Royal Customs and Excise Malaysia Training College (now Royal Malaysian Customs Academy).

1987 saw Langkawi declared detached from the Main Customs Area and made the second free port in Malaysia after Labuan. Free port status was conferred on the island beginning 1st January 1987 to encourage tourism in Langkawi (which had not been developed accordingly) wherewith it would increase the standard of living of the local people.

The system of classifying goods in Malaysia saw the dawn of a new era beginning 1st January 1988. Thus began the history of applying a new nomenclature system called The Harmonised Commodity Description and Coding System, or Harmonised System. The purpose of the Harmonised System was to create a standard and universal nomenclature system, in line with developments in modern technology and advancements in international trade.

In the fast paced world of the domestic and foreign trade development, the department’s role is always at a threat. To equip the Department with the required work force in facing this challenge, an upsurge in knowledge level, skills and ability of the work force is crucial. Among the main steps towards achieving this is by developing the Royal Malaysian Customs College that had been established since August 1956 (formerly known as the Federal Customs Training Center, Federal Customs Training School and Royal Customs Training College).

After several years of going through the research and planning process, in 1989 the college was expanded. Now it is known as the Royal Malaysian Customs Academy (Akademi Kastam Diraja Malaysia or AKMAL, meaning ‘perfect’).

Beginning 1st January 1990 another event was chalked in the Customs annals. Perlis was created a new Customs administration. Previously, the Perlis Customs came under the auspices of the State Customs Director of Kedah/ Perlis with Alor Setar, Kedah as the headquarters. With the establishment of the new Customs administration, all activities and Customs affairs could be ran more smoothly in the state of Perlis.

In 1995, the Royal Malaysian Customs and Excise Department once again reorganised its structure. At the top level management, the status quo was retained whereby the Director General of Customs, aided by his three deputies, spearheaded the Implementation, Prevention and Management Programme. A new programme was introduced called the Corporate Planning and Development Programme. However this programme could only be found at the Headquarters level. In tandem with that, Customs activities in the Headquarters were arranged thus:

(i)   Customs, Internal Tax and Technique Service- under the Implementation Programme.

(ii) Preventive - under the Preventive Programme.

(iii)Personnel and Administrative, Finance and Procurement, Management Information System and         Revenue Accounting - under the Management Programme.

(iv)Corporate Planning and AKMA - under the Corporate Planning and Development Programme.

Each of these activities is led by a Director of Customs. The post of State Director of Customs in the states remained. The same goes for the Federal Customs Tax Collector in Singapore and Customs Advisory Minister in Brussels, Belgium. Beside that, to create a greater impact for the Department, the Public Relations Unit, Internal Audit Unit and Legal Affairs are assigned directly under the Director General of Customs.

On 23rd October 1998, the Right Honourable Prime Minister who was also the Minister of Finance I, in his speech for the Budget of 1999 in the Dewan Rakyat, announced a levy on windfall profit imposed beginning 1st January 1999 to help the government secure added revenue. Windfall profit is a surplus profit whereby a higher selling price occurred as a consequence of the Ringgit depreciation riding on the backlash of the economic crisis that hit the country since the middle of 1997. The first commodity to be slapped by this levy is crude palm oil where levy is imposed when the price exceeds RM2 000 per tonne.


The Twentieth century has ended and with the dawn of the Twenty-first century, Malaysia had announced the year 2020 as the definitive year – the year to declare that this country had attained the status of a developed country. Verily, the Royal Malaysian Customs carries a big responsibility in realising Vision 2020.

As the main revenue collector, the Customs Department not only must continue to contribute but it also has to increase revenue collection annually. These are done with a delicate balancing act so as not to jeopardise the performance of the industrial sector. In fact, the department has to ensure that whilst its control on the related industries is minimal but effective, it is also there to lend a helping hand and push and prod the industries to develop and prosper. At the same time, preventive work, especially in stopping the entry of negative elements that can threaten the country’s security or those that brought moral decay, must be executed continuously.

Thus, the upcoming years promise a million and one event that will be a part of history. May all the events be of benefit one way or another as we tread the path to glory.