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Guidelines of Manufacturing License and Incentive (Pioneer Status or Investment Tax Allowance)

Manufacturing License

Under Industrial Coordination Act, 1975, requires a person(s) engaging in any manufacturing activity with share holder's funds of RM2.5 million and above or employing 75 or more full-time paid employees to obtain a Manufacturing License.

For those companies that are not full - fill the criteria, they can apply the Exemption of Manufacturing License for same benefit as Manufacturing License.


The Promotion of Investment Acts, 1986 provides for the companies proposing to manufacture promoted products or engage in promoted activities to apply for Pioneer Status or Investment Tax Allowance. The incentive also will be given to the selected services sector.


  • Posses a Manufacturing License (For Manufacturer Only) or Letter of Exemption from Manufacturing License

  • Malaysian equity ownership at least 60%

  • Malaysian owned companies that are already in production not more than one year from date of application received.

  • Participated in a promoted product activity

  • Posses a acceptable ratio Value Added (VA), Managerial, Technical and Supervisor (MTS),R&D Expanditure and Science and Technology (S&T).

Pioneer Status

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

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.


A company approved with a Pioneer Status certificate can enjoy income tax exemption between 70% - 100% of statutory income for 5 to 10 years, whereas for Investment Tax Allowance, a company can get allowances between 60% - 100% on qualifying capital expenditure incurred within a period of 5 to 10 years.

For projects with longer gestation period and high capital expenditure, it would be more beneficial to opt for Investment Tax Allowance. Companies should study the options before applying either for Pioneer Status or Investment Tax Allowance.

Please check you List of Promoted Activity and Products here.

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