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​1. ​LMW company is licensed under Section 65A of the Customs Act 1967. The Application for licensing must be submitted to the State Director of Customs / Zone Operation Director where the factory is located using JKDM Form No. 1 together with Appendix A and other supporting documents. The application checklist as per Appendix A4.​
​2. ​​​LMW is not subject to be licensed under Section 12, of the Sales Tax Act 2018 as under this Act, LMW is known as a Special Area. For the purposes of this Act, Malaysia excludes LMW and LMW company is not subject to register as a Registered Manufacturer under this Act.​
​3. ​The company carrying out manufacturing activities of excise dutiable goods is not allowed to be licensed as LMW. It should be licensed under Section 20 of the Excise Act 1976.
​4. Requirements on factory and premise;​
​ ​4.1 The building must be permanent, sturdy and secure, guarded by security guards and installed with a security alarm system.
​ ​4.2 The building should be fenced to a specific height deemed appropriate and safe by the State Director of Customs / Zone Operation Director.
​ ​4.3 Non-fenced buildings (e.g.; shophouses, premises on the 2nd floor) equipped with safety features such as iron grilled can also be considered. Additional conditions may be imposed.
​ ​4.4 ​​ ​A specific area should be made available for;
​​ ​a.​ Manufacturing activities.​​
​​ ​b. Storage of raw material.​
​​ ​c. Storage of finished goods.​
​​ ​d. Storage of manufacturing waste.​
​ ​4.5 Any changes or amendments to the premises must obtain prior approval from the State Director of Customs / Zone Operation Director.
​5. ​​Approval in Principle ​ ​
​ ​5.1 ​​ ​The approval can be considered provided that;
​​ ​a. ​the company board of director has passed the security screening; and 
​​ ​b. ​application for factory site development has been made to the Local Authority.
​ ​5.2 LMW is allowed to import machinery / equipment and raw materials / components before the license is issued subject to the conditions as follows;​
​​ ​a. To obtain the approval from the State Director of Customs / Zone Operation  Director​
​​ ​b. The importation is covered by bank guarantee (total amount of bank guarantee is based on the actual value of the customs duty / sales tax involved).​
​ ​5.3 Trial run on the manufacturing activities is allowed on a reasonable quantity (raw materials) provided that there is no physical release or sale on finished goods except by means of disposal allowed by the State Director of Customs / Zone Operation Director.
​6.​​​ ​ ​LMW License
​​6.1License fee is RM2,400.00 per annum. License will be issued in JKDM Form No.3 and will take effect starting from the first day of a month.​​ ​
​​6.2Application for license renewal must be submitted to the State Director of Customs / Zone Operation Director at least one month before the expiry date of the license by using the renewal application form as per Appendix B. The checklist for renewal as per Appendix A5.​ ​
​​6.3LMW licence is not awarded to company that only carry out subcontract activities.​ ​
​​6.4 LMW is not allowed to permit any other company or entity to operate within the licensed area including any storing activities of goods that is not owned by the LMW.​ ​
​​6.5 Surety;​ ​
​​​a.​LMW that manufactures critical goods:​
Have to provide a bank guarantee 10% of the total customs duties and sales tax on raw materials and finished goods in one month.
​​​b.​LMW that manufactures other than critical goods:​​​
Have to provide a general bond or bank guarantee (based on the State Director of Customs / Zone Operation Director decision). The amount of general bonds or bank guarantees is determined by the State Director of Customs / Zone Operation Director.
​​6.6LMW license conditions are as per Appendix C.​​ ​
​​6.7The expansion or addition of premises within the same state (same customs controlling station) is allowed by amending the existing LMW license upon approval from the State Director of Customs / Zone Operation Director.​ ​
​​6.8For expansion or addition of premises in different states, new LMW license is required. The application should be submitted to the State Director of Customs / Zone Operation Director where the premise is located.
​​6.9Transferring of LMW plant from one state to another is permitted subject to approval from the State Director of Customs / Zone Operation Director issuing the license.​​ ​
​7.Revocation of license.​​ ​ ​
​​7.1LMW license can be revoked in the following cases:​ ​
​​​a.​The company applies for revocation.
​​​b.​The company has terminated the manufacturing activities.
​​​c.​The company does not carry out manufacturing activities.
​​​d.​The company is dissolved.
​​​e.​LMW license is not renewed within 3 months from the expiration date of the license.
​​​f.​Change in company's registration number.
​​​g.​Transferring of factory to another state 
​​​h.​Upon instructions of the Director General of Customs because the company has violated provisions of the acts and regulations.
​​7.2For LMW companies whose license has been revoked, RMCD has the right to claim any arrears of customs duties and sales tax (if applicable) and the company is responsible to pay the full amount of claim.​​ ​