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Since the previous review in 2014, there has not been any significant change to the legislative and institutional framework governing investment. Both domestic and foreign investment in Malaysia continues to be regulated under the Promotion of Investment Act (PIA) 1986, and the Industrial Co-ordination Act (ICA) 1975. The PIA sets out rules on corporate income tax relief for the establishment and development in Malaysia of certain economic activities, as well as for the promotion of exports. The ICA aims at maintaining orderly development and growth in Malaysia's manufacturing sector, and requires manufacturing companies of a certain size to be licensed. [25]

[25] In accordance with the ICA, person(s) engaging in any manufacturing activity with shareholders' funds of RM2.5 million and above or employing 75 or more full-time paid employees must obtain a manufacturing licence. Manufacturing licences are issued automatically within seven days unless they relate to sensitive industries/activities: security, safety, health, environmental and religious considerations; projects proposed to be located in Sabah or Sarawak; or projects requiring approval under the Petroleum Development Act. Responses to manufacturing licence applications in these sensitive areas should be provided within four weeks.

(...) Focus in the services sector is in the areas of principal hubs , logistics, and the ecosystem surrounding e-commerce, green technology, renewable energy, and waste management.

Table 3.4 Import prohibition and licensing schedules
Schedule Description
(...)
Third schedule
(...) Part III Conditional prohibition, except in the manner provided for, for goods controlled under the International Trade in Endangered Species Act 2008
(...)

Malaysia prohibits imports of a number of products, on religious, security, health, and environmental protection and safety grounds. It prohibits the importation of logs, wood in the rough, wood roughly squared or half squared but not further manufactured, and baulks, from Indonesia. Another 14 major product categories are absolutely prohibited from importation from all countries. These include: some broadcast receivers; comb or comb chunk (the authorities stated that the pest risk analysis conducted on this product revealed high risks of infestation pests with adverse effects); lightening arresters containing radioactive material; liquid-filled type electric heating bags, cushions, pillows, pouches or pads using alternating current (AC) or AC and direct current (AC/DC); new pneumatic snow tyres and new retreaded snow tyres for all types of vehicles; poisonous chemicals and minerals; certain animal feed; sodium arsenite; and substances covered under the Montreal Protocol.

Table 3.5 Import licensing
Description of product Automatic licensing Ministry/Department/Statutory Body issuing licence
(...)
Hydrochlorofluorocarbons (HCFCs) covered under the Montreal protocol, Annex C- Group 1 Yes Department of Environment
(...)

Part I of the third schedule lists products prohibited from import except in the manner provided for in this schedule. These products are mainly subject to licensing requirements on SPS grounds. The products are animals and animal products, plant and plant products, as well as agricultural products such as pasta, rice, flour, vegetables, coffee, soil including earth, food products, solid waste, logs and wood in the rough from all countries (except Indonesia), wood and articles of wood, radioactive materials and irradiating apparatus, baby feeding bottles, ceramic tableware and kitchenware, tobacco and manufactured tobacco, alcohol, stones, and water.

At the federal level, relevant legislation refers to: Malaysian Quarantine and Inspection Services Act 2011, Plant Quarantine Regulations 1981, Wildlife Conservation Act 2010, Atomic Energy Licensing Act 1984, Radiation Protection (Licensing) Regulations 1986, and Atomic Energy Licensing (Exemption) (Low Activity Radioactive Material) Order 2002, among others. For importation into Sabah and Sarawak, import permits are issued by the relevant authorities, and inspections and approvals granted by relevant authorities there.

This schedule also lists a number of products, the importation of which requires licences issued by various agencies for different reasons:
(...)
b. toxic and hazardous waste; their importation requires approval from the Director General of Environmental Quality;
(...)
e. substances covered under the Rotterdam Convention are imported with a letter of consent issued by the Department of Environment.

In addition, the importation of second-hand materials, such as used pneumatic tyres and used retreaded pneumatic tyres of rubber, requires a letter of approval from SIRIM Berhad. Used household electronics including televisions, washing machines, cloth dryers, refrigerators, air conditioners, and personal computers, must be accompanied by a letter of approval from Environmental Quality, and must be inspected by a competent authority or certification body or any other relevant agency.

Part III of the third schedule applies to goods in transit controlled under the International Trade in Endangered Species Act 2008. They include: any terrestrial animal; any marine animal; any terrestrial plant excluding timber species; and any timber species, as specified in the appendices of the International Trade in Endangered Species Act 2008. Goods in transit must be accompanied by a valid export or re-export permit/licence/certificate, or a written permission in accordance with the CITES, issued by the competent authority of the country of export or re-export. Where required by the country of import, these goods must obtain a valid import permit/licence/certificate or a written permission, in accordance with the CITES, issued by the competent authority of the country of destination.