Licensed Manufacturing Warehouse (LMW)
A Licensed Manufacturing Warehouse (LMW) is a Malaysian customs facility that allows an export-oriented manufacturer to import raw materials, components and machinery with import duty and sales tax suspended, and to manufacture goods primarily for export, under Customs licence and control. It is a key incentive supporting Malaysia's large export-manufacturing sector (electronics, etc.).
Because the finished products are mainly exported, burdening the imported inputs with duty and SST would make manufacturers uncompetitive; the LMW regime relieves that duty/tax as long as the goods are exported (duty becomes payable on any portion sold into the domestic market). LMW status comes with obligations — Customs-controlled premises, record-keeping, export commitments and periodic reporting. It plays a similar role to free zones, bonded manufacturing and inward-processing regimes elsewhere. For export manufacturers in Malaysia, operating as an LMW is central to cost-competitiveness, and understanding its duty-suspension mechanics and compliance is important to structuring Malaysian manufacturing operations. It is a cornerstone of Malaysia's export-industry incentives.
Export manufacturers can't compete if their imported inputs carry full duty and tax — the LMW regime suspends that as long as the output is exported, which is why it underpins Malaysia's big electronics and export sectors. Understanding its duty-suspension mechanics and Customs obligations is key to structuring cost-competitive manufacturing in Malaysia.
What does an LMW allow?
Importing raw materials, components and machinery with duty and sales tax suspended, to manufacture goods mainly for export under Customs control.
What if LMW output is sold locally?
Duty and tax become payable on any portion sold into the domestic market rather than exported.