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Department of Industrial Development & Research

7th & 8th Floor, Block C, Wisma Tun Fuad Stephens
88300 Kota Kinabalu, Sabah, Malaysia
Tel: 6-088-214866, 215035, Fax: 6-088-257814, 216698

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Last Update: 27 Jan 2020

Frequently Asked Questions (FAQs)

1. What is a Manufacturing License (ML)?

Under Industrial Co-ordination Act 1975, manufacturing companies with shareholder fund of RM2.5 million and above and employing 75 or more are required to obtain a Manufacturing License (ML) [in Sabah called `Federal Manufacturing License' (FML)] from the Ministry of International Trade and Industry, Malaysia (MITI).

2. What is a State Government Approval (SGA)?

In Sabah, manufacturers with shareholders fund of less than RM2.5 million and engaging less than 75 employees are required to obtain the State Government Approval (SGA).

(Note: This approval is a prerequisite before trading licences can be issued to manufacturing companies by Local Authorities.)

3. What is Handsholding?

Handsholding is facilitation services rendered to manufacturing companies / investors / entrepreneurs (SMEs) who need assistance in the implementation of projects, investment promotions and acquisition of knowledge through special courses.

4. What must a foreign company do to start an investment project or business in Sabah/Malaysia?

All foreign companies are required to incorporate a local company or register their branches in Sabah. Companies must register with the Companies Commission of Malaysia (SSM) ( before starting an investment project. Other licences required will be determined by local authorities in related sectors.

5. What are the main incentives for the manufacturing sector?

There are 2 major tax incentives for the manufacturing sector:-

  • Pioneer Status (PS)
    Income tax exemption of 70% - 100% of statutory income for 5 to 10 years. Unabsorbed capital allowances and accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer status of the company.

  • Investment Tax Allowance (ITA)
    An allowance of 60% - 100% on qualifying capital expenditure (factory, plant, machinery or other equipment used for the approved project) incurred within 5 to 10 years from the date the first qualifying capital expenditure is incurred.

(Applications for these incentives must be submitted to the Malaysian Investment Development Authority (MIDA), which has branches in Sabah.)

6. What are the equity requirements for new projects?

Effective from 17 June 2003, foreign investors can now hold 100% equity for all investments in new projects, as well as expansion or diversification projects by existing companies in the manufacturing sectors, irrespective of the level of exports.

7. What types of investment information are available in DIDR?

The Investment Promotion Division in DIDR provides:-

1. Sabah: Your Choice Investment Destination
2. Sabah Basic Facts and Information
3. Handbook on permits and licences issued by Government bodies in Sabah

8. What are DIDR programs to assist SMIs in the promotion of Sabah products for export market?

The Investment Promotion section organizes programs such as participation of SMIs in domestic as well as international expositions to promote products produced by Sabah SMIs for export market. Besides these, the department also organizes specific courses which enhance knowledge on the various ways to participate in the export market.

9. What is PDF format/document?

To read/open the PDF format/document, you need an Adobe Reader software which is downloadable from:


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