IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
← back to the state act
Inception date: 06 Jan 2010 | Removal date: open ended
Still in force

FDI: Entry and ownership rule

The Malaysian ministry of Domestic Trade, Co-Operatives and Consumerism(MDTCC) has issued new guidelines, effective from January 6, 2010, that render all proposals for foreign involvement in distributive trade subject to MDTCC approval. Moreover, the guidelines contain numerous provisions that favour local shareholders, employees and competitors. For instance, distributive trade companies with foreign equity must:

  • appoint Bumiputera (i.e. ethnic Malay) directors,
  • hire personnel in a way that reflects the racial composition of the Malaysian population,
  • allocate at least 30% of shelf space for products manufactured by Bumiputera-owned SMEs,
  • use local companies for legal and other professional services insofar as they are available in Malaysia.

In addition, hypermarkets (defined as distribution stores with a sales floor area of 5,000 square meters or more) must be held by Bumiputera for at least 30% of equity. Plans for additional branches of hypermarkets must be submitted to MDTCC two years in advance, subject to approval based on an economic need test. Foreign companies are barred altogether from operating various kinds of small stores such as small supermarkets (smaller than 3,000 square meters), convenience stores, news kiosks and medical stores.

AFFECTED COUNTRIES

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