In Malaysia, a 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 manufacturing unit (factory) granted to any person for warehousing and manufacturing approved products on the same premise. 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.
To comply with the Royal Malaysian Customs Department (RMCD) requirements, an LMW status company has to submit monthly and yearly return reports, i.e., M1, M2, and M4.
An LMW licensed company is given a limit by tariff codes to import duty free raw materials, machinery or spare parts. Thus, it is important for them to track and manage the duty exempted imports against this limit.