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Establishment restrictions

MALAYSIA

Reported in 2017

Chapter Intellectual Property Rights  |  Sub-chapter Copyright
Copyright inadequately enforced
According to the International Intellectual Property Alliance (IIPA), mobile device piracy is a problem in Malaysia. Mobile phones, tablets, flash drives and other mobile devices can either be pre-loaded with illegal content before being sold to customers or customers can directly download infringing content.
Coverage Software for mobile devices
Establishment restrictions

MALAYSIA

Since 2012

Chapter Intellectual Property Rights  |  Sub-chapter Copyright
Copyright Act of 2012
Fair dealing as a copyright exception exists for purposes of research, private study, criticism, review or the reporting of news or current events. In determining whether an act constitutes a fair dealing, the factors to be considered include:
- the purpose and character of the dealing, including whether such dealing is of a commercial nature or is for non-profit educational purposes;
- the nature of the copyright work;
- the amount and substantiality of the portion used in relation to the copyright work as a whole; and
- the effect of the dealing upon the potential market for or value of the copyright work.
Coverage Horizontal
Establishment restrictions

MALAYSIA


Chapter Intellectual Property Rights  |  Sub-chapter Patents
Restrictions to application
There is no discrimination towards foreign applicants. However, there are restrictions for national applicants wishing to apply for patents internationally. They must file in Malaysia initially before becoming eligible to apply for patents in other countries, two months subsequent the date of filing, assuming they are not notified by the Malaysian Patent Office.
Coverage National applicants
Establishment restrictions

MALAYSIA

Reported in 2015

Chapter Investment  |  Sub-chapter Other restrictive practices related to foreign investment
Licence requirement
According to the Malaysian Communications and Multimedia Commission (MCM) guidelines, there is a licence requirement for Network Facilities Provider (NFP), Network Services Provider (NSP), Content Applications Service Provider, Applications Service Provider (ASP).
Coverage Network Facilities Provider (NFP), Network Services Provider (NSP), Content Applications Service Provider, Applications Service Provider (ASP)
Establishment restrictions

MALAYSIA

Reported in 2015

Chapter Investment  |  Sub-chapter Screening of investment and acquisitions
Review and approval of investment
Limits on foreign ownership remain in place in the telecommunications sector. Furthermore, foreign investments in services, whether in fully liberalized or controlled sub-sectors, are subject to review and approval by ministries and agencies with jurisdiction over the relevant sectors. A key function of this review and approval process is to determine whether proposed investments meet the government's qualifications for the various incentives in place to promote economic development goals.
Coverage Telecommunications sector
Establishment restrictions

MALAYSIA

Reported in January 2014

Chapter Investment  |  Sub-chapter Restrictions on board of directors and managers
Restriction on managers
There is no specific nationality or residency requirement for the managers, but foreign managers can only be appointed if either:
- there is a shortage of suitably trained Malaysian managers;
- they fill key posts that are necessary to protect their own interests as investors.
Coverage Horizontal
Establishment restrictions

MALAYSIA

n/a

Chapter Investment  |  Sub-chapter Restrictions on board of directors and managers
Residency Requirement
A company shall have at least two directors which should have their principal residence in Malaysia.
Coverage Horizontal
Establishment restrictions

MALAYSIA

Reported in 2015

Chapter Investment  |  Sub-chapter Restrictions on ownership
Maximum foreign equity share
In Malaysia, there is a cap of 70% for foreign participation in network facilities providers and network service provider licenses.
Coverage Telecommunication sector
Fiscal Restrictions

MALAYSIA

Reported in 2015

Chapter Public Procurement  |  Sub-chapter Preferential purchase schemes covering digital products and services
WTO Government Procurement Agreement
Malaysia is not a signatory to the WTO Agreement on Government Procurement, only an observer.
Coverage Horizontal
Source
  • USTR, 2015 National Trade Estimate Report on Foreign Trade Barriers: https://ustr.gov/sites/default/files/2015%20NTE%20Combined.pdf
Fiscal Restrictions

MALAYSIA

Reported in April 2010 and 2015

Chapter Public Procurement  |  Sub-chapter Preferential purchase schemes covering digital products and services
Restriction to foreign participation
Despite recent transparency improvements, important restrictions regarding government procurement procedures still persist. For example, in international tendering, domestic (bumiputera) suppliers benefit from a preferential treatment, consisting in a price bonus.
For supplies and services contracts between RM 100,000 (USD 23,500) and RM 15 million (USD 3,5 million), the margin of preference is between 2.5% and 10% and is inversely proportional to the value. For local manufacturers producing goods locally, the margin is up to 10% for contracts valued below RM 10 million (USD 2,3 million) and up to 3% for contracts valued above RM 10 million. No preferences are provided for purchases exceeding RM 15 million.

Furthermore, all individuals, companies or corporate bodies intending to participate in government procurement of works, supplies and services are required to be approved by and registered with the Ministry of Finance. Procurement also often goes through middlemen rather than directly with the governmental entity or is negotiated rather than tendered.
Coverage Horizontal
Sources
  • USTR, 2015 National Trade Estimate Report on Foreign Trade Barriers: https://ustr.gov/sites/default/files/2015%20NTE%20Combined.pdf
  • European Commission arket Access Database: http://madb.europa.eu/madb/barriers_details.htm?isSps=false&barrier_id=11404
Fiscal Restrictions

MALAYSIA

Reported in April 2010, 2015 and 2017

Chapter Public Procurement  |  Sub-chapter Preferential purchase schemes covering digital products and services
Exclusion of foreign participation
Despite recent improvements in the transparency of the government procurement regime, important restrictions regarding government procurement procedures still persist. In particular, international tendering is only allowed when goods and services are not available locally.
Coverage Horizontal
Sources
Fiscal Restrictions

MALAYSIA

Reported in July 2018

Chapter Taxation & Subsidies  |  Sub-chapter Discriminatory tax regime on online services
Proposed amendment to Malaysian GST
In September 2017, the Royal Malaysian Customs Department revealed a plan to amend Malaysia's GST to tax foreign providers of digital services. It was reported that Malaysia may reintroduce the Sales and Services Tax (SST) – previously set at a 10% rate – in September 2018, but it remains to be seen whether digital supplies from non-resident companies will be within the scope of the new regime.
Coverage Foreign digital services
Fiscal Restrictions

MALAYSIA

ITA signatory? I II

Chapter Tariffs and Trade Defence  |  Sub-chapter Applied tariffs on digital goods
Average MFN rate
1.8%
Weighted average MFN rate
0.65%
Maximum tariff rate
30%
Coverage rate of zero-tariffs
80.49%

Coverage: Digital goods
Sources

Trading restrictions

KOREA

Since 2011

Chapter Online sales and transactions  |  Sub-chapter Online sales
Pharmaceutical Affairs Law
Korean law requires that medicines may only be sold in physical pharmacy locations. Moreover, ads for prescription-only medicines are prohibited on the Internet.
Coverage Online pharmacies
Trading restrictions

KOREA