In Malaysia, Manufacturing Bonded Warehouse is known as Licensed Manufacturing Warehouse (LMW) established under the provision of section 65/65A of the Customs Act 1967.

LMW is a type of bonded warehouse where the manufacturing process is allowed to be carried out to produce finished goods for export. Manufacturing operation therein is subject to minimal customs procedures. It is primarily intended to cater for export oriented industries.

Customs duty exemption is given to all raw materials and components used directly in the manufacturing process of approved produce from the initial stage of manufacturing until the finished product is finally packed ready for export. This includes packing materials and casings.

An LMW Company needs to renew this license every two years. During renewal, an LMW Company needs to submit a list of raw material and specify the projected quantity to be used for the year. These materials are grouped (categorized) using Tariff Codes provided by the Malaysian Customs department.

In order to enjoy this tax-exempt benefit, the year-to-date purchases for the approved items must not exceed the approved limit quantity. However, an LMW Company can apply to increase this limit during the underlying period. Hence, an LMW Company needs to keep track of the year-to-date purchases so that it does not exceed the approved limit.

LMW System Features

• Imports sales, purchasing and production data to generate the LMW reports.
• Tracks license usage and balances against approved license limit.
• Reports in periodic fashion.
• Separately stores LMW information without customizing existing ERP system, such as Tariff Codes.
• Generates Royal Malaysian Customs Required Reports such as M1, M2, K and KX.
• Generates listing of items without tariff code. 
• Integrates to any ERP systems