Complete Guide to Building a Factory in Malaysia: Policies, Costs, and Processes Explained (Updated 2026)

Why Choose Malaysia for Manufacturing?

Malaysia, one of Southeast Asia's most investment-attractive countries, has become a top choice for Chinese companies building overseas factories due to the following advantages:

Policy Advantages：

• Foreign-friendly policies allowing 100% foreign-owned enterprises
• MIDA (Malaysian Investment Development Authority) offers one-stop services.
• Manufacturing companies are eligible for a 5-10 year tax incentive.
• Sign a double tax avoidance agreement with China

Cost Advantage：

• Lower land costs
• Moderate labor costs and ample supply of skilled workers
• Well-developed infrastructure and convenient logistics
• Stable water and electricity supply at reasonable prices.

Geographic Advantage：

• Strategic location at the Strait of Malacca with convenient sea transport
• Located near Singapore, ideal for expanding into global markets
• Same time zone as China for easy communication
• High Chinese population and strong cultural adaptability

Analysis of Malaysia's Factory Establishment Policies

Foreign Investment Policy

Foreign Ownership Limit：

• Manufacturing: 100% foreign-owned
• Service Industry: 30–100% depending on the sector
• Real Estate: Must meet certain conditions

MIDA Investment License：

1. Submit Investment Application
2. MIDA Approval (Approx. 2-4 Weeks)
3. Obtain in-principle approval
4. Handle company registration and land procedures

Tax incentive policies

Manufacturing tax incentives：

• Emerging Industrial Status (PS): 5-10 Corporate Income Tax Reduction
• Investment Tax Allowance (ITA): 60-100% Qualified Investment Tax Credit
• Reinvestment Allowance (RA): 70% statutory income deduction

Import tariff benefits：

• Tax exemption on imported production equipment
• Import incentives for raw materials
• Export products are tax-exempt

Detailed Breakdown of Manufacturing Costs in Malaysia

Land Cost

Industrial Land Price(By Region):

Region	Price Range (MYR/sq ft)	Price Range (CNY/sqm)
Surrounding Kuala Lumpur	80-150	170-320
Penang	60-120	130-260
Johor	40-80	90-170
Selangor	50-100	110-215
Other States	20-50	45-110

Lease Options：

• Standard Factory: 3-8 MYR/sq. ft./month
• Custom-built factory: Long-term lease available (negotiable)

Steel structure factory building cost

Cost Breakdown(Using China team):

Projects	Unit Price (CNY/㎡)	Percentage
Steel Structural Materials	380-450	45-50%
labor cost	100-140	12-15%
Basic Engineering	180-250	20-25%
Installation fee	100-140	12-15%
Total	760-980	100%

Estimate by Area：

• 5000 sqm factory: approx. 380-490 thousand yuan
• 10000 sqm factory: approx. 760-980 thousand yuan
• 15000 sqm factory: approx. 1140-1470 thousand yuan

Other Costs

Registration Fee：

• Company Registration: Approximately 3000-5000 MYR
• Work Visa: Approximately 2000-5000 MYR per person
• Building permit: Approximately 5000-10000 MYR

Operating Costs：

• Utilities: Approximately 0.3-0.5 MYR/kWh
• Labor wages: Skilled workers 80-120 MYR/day
• Property Management: 0.2–0.5 MYR/sq. ft./month

Malaysia Factory Setup Process

Step 1: Preliminary Research (1-2 months)

1. Market research: Understand target markets and customer needs
2. Site Selection: Inspect industrial parks and land
3. Policy Inquiry: Learn about investment policies and incentives
4. Cost Assessment: Preliminary investment budget estimate

Step 2: Company Registration (2-4 weeks)

1. Company Name VerificationSubmit application to SSM
2. Submit registration documents: Articles of Incorporation, shareholder information, etc.
3. Claim Business License: Obtain Company Registration Certificate
4. Open an account: Open a corporate bank account

Step 3: Investment License (4-8 weeks)

1. Submit MIDA Application: Prepare Investment Application
2. MIDA Approval: Waiting for approval result
3. Get Approval Letter: Obtain investment approval
4. Apply for a work visaApply for visas for foreign employees

Step 4: Land Procedures (4-8 weeks)

1. Land Survey: Confirm land status
2. Sign Sales Contract: Pay Deposit
3. Process transfer of ownershipComplete land registration
4. Apply for Building Permit: Submit design proposal

Step 5: Construction Design (3-6 months)

1. Solution Design: Confirm factory design proposal
2. Construction Drawing Design: Complete detailed construction drawings
3. Construction Tendering: Select Construction Contractor
4. ConstructionConstruct according to the drawings
5. Completion Acceptance: Complete acceptance procedures

Step 6: Launch and Operations

1. Device Installation: Install production equipment
2. Recruitment: Hire Local Employees
3. Trial Production: Conduct trial production test
4. Go Live: Start formal production

Recommended Industrial Parks in Malaysia

Surrounding Kuala Lumpur

Features: Capital Economic Circle with well-developed infrastructureIndustries: Electronics, Machinery, and ServicesRepresent the park：

• Klang Free Trade Zone
• Shah Alam Industrial Park
• Putrajaya Science Park

Penang

Features: Electronics industry cluster with abundant skilled laborIndustries: Electronics, Semiconductors, Precision ManufacturingRepresent the park：

• Bayan Lepas Industrial Park
• Shah Alam Industrial Park
• Butterworth Industrial Park

Johor

Features: Close to Singapore with lower costsIndustries: Manufacturing, LogisticsRepresent the park：

• Iskandar Malaysia
• Kuantan Industrial Park
• Tanjung Pelepas Port

Conclusion

Malaysia is a top destination for manufacturing in Southeast Asia, offering favorable policies, moderate costs, and robust infrastructure. Choosing the right partner can significantly reduce construction costs and risks.

Liantai ConstructionSpecializing in Malaysian steel structure factory construction for 10+ years, we have provided professional factory building services to over 50 companies:

• Free initial assessment and cost analysis
• Professional EPC General Contracting Services
• Built by our China team, saving 30-40% in costs
• Familiarize yourself with local policies and assist with processing procedures

Contact Us NowGet your exclusive Malaysia factory setup plan!