How to Import From Malaysia

How to Import From Malaysia
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How to Import From Malaysia: Full Guide for SMBs

Navigating the complexities of importing goods from Malaysia to the United States and Canada can be particularly challenging. They often deal with challenges such as finding trustworthy suppliers, understanding regulatory and customs procedures, bridging language gaps, and orchestrating the intricacies of global logistics and shipping. Despite these challenges, accessing Malaysia’s dynamic market and its broad spectrum of products serves as an incentive to overcome these obstacles. 

In this extensive guide, we will explore the intricacies that you, as an SMB, encounter when importing from Malaysia. Our goal is to provide you with the vital knowledge needed to navigate this process successfully. In addition, we will focus on the ways in which an experienced freight forwarder can help you overcome these challenges, ensuring a more streamlined approach to your global trade activities.

Setting Up and Understanding Your Import Strategy is the First Step

The process of importing from Malaysia requires a deep understanding of the primary players in the process. Their combined contributions are pivotal in ensuring the smooth transition of goods, complying with regulations, and efficiently facilitating the import process. 

The key players when importing from Malaysia are:

  • Importer/Buyer: This represents your role. An SMB seeking to import goods from Malaysia to broaden its product portfolio.
  • Exporter/Supplier in Malaysia: The primary entity or firm responsible for producing or offering the goods for sale. Their role is paramount in guaranteeing product quality and organizing the required export paperwork.
  • Malaysian Customs: This body supervises exports from Malaysia, ensuring compliance with all domestic rules and regulations.
  • Customs in the USA or Canada: Their role is to confirm that all products entering their jurisdiction comply with local legislations, regulations, and quality standards while applying any relevant duties or tariffs.
  • Digital Freight Forwarder: This is where Ship4wd steps in. We function as the bridge between you and the exporter (seller), helping coordinate shipping, tackling logistics, and handling customs clearance to help ensure a smooth and efficient shipping process.

For an SMB, it is crucial to communicate and collaborate with these key players to ensure that shipping operations are managed efficiently. By outsourcing your import process from Malaysia to a trusted freight forwarder, you can concentrate on managing and growing your business.

Understanding the Malaysian Market

Within Southeast Asia, Malaysia stands as a beacon of dynamic trade and investment. With its multicultural essence and strategic positioning along the vital Strait of Malacca, it’s a key player in global commerce.

As the world’s 36th largest economy by GDP in 2023, Malaysia’s diverse market consists of services, industries, and agriculture. Historically, it is a major producer of tin, rubber, and palm oil. Nowadays, Malaysia’s global exports are dominated by its electrical and electronics sector, constituting 36 percent of its exports. Additionally, chemicals make up 7.1 percent, closely followed by petroleum products and liquefied natural gas. The country also capitalizes on its agricultural strength, with palm oil contributing 5.1 percent to its export landscape.

In 2022, the trade relationship between the United States and Malaysia flourished, with the combined trade value amounting to $78.3 billion. The US exported goods worth $18.2 billion to Malaysia, marking a significant increase from the previous year. Concurrently, the US imported goods valued at $54.2 billion from Malaysia, an increase of 109% from the year 2012.

Malaysia has several bilateral and regional trade agreements. It’s a member of the Regional Comprehensive Economic Partnership (RCEP), which constitutes nearly 29 percent of world trade. Additionally, after Malaysia signed the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP) in 2022, the country significantly increased its market access to other countries like Canada, Mexico, and Peru.

With strategic trade agreements and its varied economic sectors, Malaysia offers many opportunities for global businesses and investors.

Make Sure Your Supplier Complies with Malaysia’s Export Regulations and Compliance

When planning imports from Malaysia to the United States or Canada, it is usually the responsibility of your Malaysian supplier to obtain export licenses and handle export procedures.

As an importer or buyer, your primary responsibility at this point is to agree on the suitable incoterm, clarifying the specific duties of each participating entity.

Below is a brief summary of the compliance and regulations that your Malaysian business partners must adhere to.

Customs Declaration

When your Malaysian counterpart exports products from Malaysia, they are required to submit a comprehensive customs declaration. This declaration should encompass the following aspects:

  • Consignor and Consignee: Details of the exporter (seller) in Malaysia and the importer (buyer) in the destination country.
  • Description of Goods: A precise and detailed description of the items being transported, including their material composition, if relevant.
  • Value of Goods: The overall price or worth of the goods being imported, generally used for determining customs duties and taxes.
  • Country of Origin: This pertains to Malaysia, the place where the goods were manufactured or produced.
  • Tariff Classification: Harmonized System (HS) codes that categorize the goods for customs duty reasons.
  • Purpose of Shipment: Denoting whether the items are for retail, as prototypes, or for individual use, among other categories.
  • Shipping Details: Data about the transportation method, such as the ship or flight number and the entry port or airport.

Although the precise details needed can differ based on the product type and specific regulations of the importing nation, these points represent standard components frequently present in a customs declaration when importing from Malaysia.

Export License (Malaysian Supplier)

Importing goods from Malaysia necessitates compliance with specific regulations, along with the acquisition of essential licenses and permits. Here’s an overview of local licenses and permits typically needed for importing goods from Malaysia:

For your Malaysian associate to send items from Malaysia to you, they must adhere to certain guidelines and secure the relevant licenses:

  • Business License: All businesses in Malaysia, irrespective of whether they are involved in import or export activities, need to be registered and have a valid business license to operate legally.
  • Exporter’s Registration/Permit: In Malaysia, businesses intending to export goods are generally required to register with the Royal Malaysian Customs Department.
  • Specific Export Licenses: While a generic “export license” isn’t the norm, Malaysia does have licensing requirements for the export of certain controlled items. These items can range from specific agricultural products to chemicals, strategic items, and more. So, if a business plans to export such controlled items, it would need to obtain a specific license for that.

Once the required licenses and permits are in place, a Malaysian seller should be cognizant of the tax implications tied to importing. Here’s a snapshot of what they might face:

  • Sales and Services Tax (SST) on Exports: In Malaysia, the Sales and Services Tax (SST) replaced the previous Goods and Services Tax (GST) system in 2018. Under the SST regime, goods exported are typically zero-rated, meaning they aren’t subject to Sales Tax. However, while the exported goods themselves are not taxed, certain services associated with the export process may still incur charges. 

Negotiating Contracts and Incoterms with the Malaysian Seller

When importing goods from Malaysia, it’s very important for SMBs to be aware of Incoterms such as Free On Board (FOB), Free Carrier (FCA), and ExWorks (EXW).

Incoterms, an abbreviation for International Commercial Terms, are a set of standardized rules defined by the International Chamber of Commerce (ICC). These terms outline the duties and obligations of both buyers and sellers regarding the shipment and delivery of goods under sales contracts. These terms specify facets of your agreement, such as who bears transportation costs, the exact point when the risk shifts from the seller to the buyer, and even who arranges for insurance.

For instance, under the FOB (Free On Board) arrangement, the Malaysian seller is responsible for the goods up until they are loaded onto the shipping vessel. On the other hand, the EXW (Ex Works) term means the buyer takes on responsibility as soon as the goods leave the Malaysian seller’s facility. The FCA (Free Carrier) term, however, indicates that the Malaysian seller is tasked with delivering the goods to a mode of transportation chosen by the buyer. Grasping the nuances of these terms is crucial for seamless transactions.

For those delving into international commerce, it’s vital to familiarize oneself with specific Incoterms:

  • EXW (Ex Works).
  • FCA (Free Carrier).
  • CPT (Carriage Paid To).
  • CIP (Carriage and Insurance Paid To).
  • DAP (Delivered At Place).
  • DPU (Delivered At Place Unloaded).
  • DDP (Delivered Duty Paid).
  • FAS (Free Alongside Ship).
  • FOB (Free On Board).
  • CFR (Cost and Freight).
  • CIF (Cost, Insurance, and Freight).

For a deeper insight into Incoterms, click here.

Although these Incoterms are universally acknowledged, it’s vital to distinctly state the chosen Incoterm in the sales agreement when importing goods from Malaysia or any other nation. Both involved parties should possess a clear understanding of their obligations under the chosen term to prevent potential conflicts and misinterpretations.

Choosing Your Shipping Options and Handling Logistics

Managing the complexities of importing products from Malaysia for small and medium-sized businesses requires careful evaluation of shipping options and skillful handling of logistics to guarantee a smooth operation. Your decision will depend on elements like your financial plan, the size and weight of your goods, and how soon you need them delivered.

While air freight is a viable option for transporting goods from Malaysia, ocean freight often takes precedence, especially for businesses transporting substantial quantities or those without any urgent delivery deadlines. 

There are two main types of shipping: Full Container Load (FCL) and Less than Container Load (LCL). FCL is ideal for bulk shipments, allowing businesses to use an entire container exclusively for their goods. In contrast, LCL consolidates your items with goods from other shipments in a shared container.

There are various delivery strategies to consider, including port-to-door, port-to-port, and door-to-door. Working with an experienced freight forwarder to handle end-to-end logistics can simplify the process, eliminating the need to coordinate with multiple service providers.

Equally important is ensuring your goods are protected with cargo insurance, offering a safeguard against potential losses or damages during transit.

Lastly, paying careful attention to essential shipping paperwork, especially documents like the Bill of Lading, is crucial for a successful import operation.

How Freight Forwarders Streamline Your Shipping Operations

Leveraging freight forwarders can significantly simplify your shipping operations, especially when navigating the intricacies of international trade.

  • Exploration: Freight forwarders offer a wide range of shipping solutions along with additional services, including FCL and LCL, customs clearance, special financing solutions for SMBs, and secure payment methods. Their established relationships with carriers and various service providers give them a distinctive advantage, allowing them to negotiate and manage costs more effectively than small and medium-sized businesses that operate independently.
  • Execution: Freight forwarders are responsible for logistics, overseeing the complete shipping process to ensure the safe delivery of your goods from Malaysia.
  • Insurance & Advanced Tracking: Many of these experts also offer cargo insurance to secure your items during their journey. Moreover, they provide advanced tracking capabilities, allowing you to monitor your shipment and get notifications when unexpected events occur.

Import Regulations and Customs Duties When Importing Goods from Malaysia 

Adhering to import regulations and familiarizing oneself with customs duties is crucial when importing goods from Malaysia. For SMBs, abiding by these guidelines is fundamental to guarantee a smooth importation operation. Vital elements to keep in mind when importing from Malaysia to the US and Canada encompass:

Compliance Considerations When Importing to the USA and Canada

For Both Countries:
  • Quotas and Restrictions: When importing items from Malaysia to the USA and Canada, be aware that certain products might be subject to import restrictions or quotas. For detailed information on affected goods, refer to the US Customs and Border Protection website for US-specific guidelines and the Canada Border Services Agency website for Canadian directives.
  • Tariff Classification: Every product imported into the USA and Canada must be appropriately classified using the Harmonized System (HS) code. This classification dictates the relevant duty rate and any potential import restrictions.
  • Duty Calculation and Payment: Familiarity with the methodology behind customs duty calculations and the requisite payment procedures is vital for those importing into the US and Canada.
  • Product Standards and Regulations: It’s imperative to ensure that goods imported into the US or Canada meet the respective safety, quality, environmental, and labeling standards of each country.
For the United States:
  • US Customs Bond: For commercial imports into the USA, the US Customs and Border Protection (CBP) requires a customs bond. This bond acts as a financial guarantee, ensuring that the importer will comply with all pertinent regulations and laws. It also guarantees that import duties and relevant taxes will be paid.

For Canada:

  • Canadian Customs Bond: For certain imports into Canada, importers must secure what’s commonly referred to as a customs bond or form D120, as mandated by the Canada Border Services Agency (CBSA). This bond serves as a financial guarantee, ensuring that the importer will comply with Canadian regulations, including payment of import taxes, duties, and any other obligations.
  • Business Number (BN): To facilitate commercial imports into Canada, whether as a business or an individual, obtaining a Business Number (BN) specific to an import/export account is essential. The Canada Revenue Agency (CRA) issues this number.
  • Compliance with the Canadian Import Control List (ICL): If items fall under the ICL, importers might be required to obtain specific permits or licenses to legally bring them into Canada.

Documents and Other Considerations When Importing to the USA and Canada

Importing to USA and Canada:

  • Bill of Lading (BOL): This is a transport document issued by the carrier to the shipper, verifying that the goods have been received for shipment and are en route. It acts as proof of the shipping contract and serves as a receipt for the dispatched goods.
  • Commercial Invoice (CI): This document outlines the transaction between the importer and exporter. It lists the product descriptions, prices, quantities, delivery terms, information about both parties, as well as payment conditions. Customs authorities in the USA and Canada rely on the CI for duty calculations and customs valuation.
  • Packing List (PL): This document provides a detailed list of the shipment’s contents, specifying weight, dimensions, and the number of packages. It assists customs officials in inspecting and verifying incoming shipments.
  • Certificates of Origin (CoO): This document confirms the country where the goods were produced. It’s crucial in determining duty rates and verifying eligibility under specific trade agreements between Malaysia, the USA, and Canada.

Importing to the USA:

  • Importer Security Filing (ISF): Often termed as “10+2“, the ISF needs to be electronically submitted to the US Customs and Border Protection (CBP) before the shipment of cargo from Malaysia. This measure is in place to enhance security protocols for imports into the USA.
  • ACE Import Manifest Documentation: Overseen by the US Customs and Border Protection (CBP), this digital system requires carriers, importers, and freight forwarders to electronically send their manifest data to the CBP before the cargo reaches American shores. This framework facilitates early risk assessment and expedites the customs clearance process.

Importing to Canada:

  • Canada Customs Invoice (CCI): For shipments to Canada valued at CAD 2500 or above, a copy of the Canada Customs Invoice is essential. This document provides comprehensive information about the goods being imported from Malaysia, including details about the seller, the buyer, and other pertinent data.
  • Import Declaration: This document is filled out by the importer and delineates the items being imported into Canada. The Canada Border Services Agency utilizes this form to oversee and manage the import process.
  • ACI eManifest: An electronic submission system mandated by the Canada Border Services Agency (CBSA), requiring pre-arrival cargo details from parties involved in freight movement. This system enables Canadian authorities to assess inbound shipment risks and expedite customs clearance.

How a Freight Forwarder Can Streamline Import Regulations and Customs Duties Process

When it comes to navigating the intricate world of import regulations and customs duties involved in importing from Malaysia to the United States or Canada, an experienced freight forwarder is often one of the most effective resources available to SMBs. Their deep-rooted expertise in importing from Malaysia ensures that businesses adhere to all necessary requirements, thus avoiding potential penalties or inconvenient delays. Their expertise in the management of customs duties, along with other regulatory requirements, allows them to focus on their core activities without getting overwhelmed by the nuances of international trade.

Ship4wd is Your Trusted Partner for Importing Goods from Malaysia

As your digital freight forwarder, we specialize in importing a diverse range of products from Malaysia, backed by a consistent history of success. Whether you’re importing to the US, Canada, or virtually anywhere, you can count on us for instant shipping quotes. 

Our platform also offers additional services, including cargo insurance, customs clearance, door-to-door shipping, advanced tracking, FCL and LCL, and unique financing solutions designed to support import operations. 

In addition, as our customer, you’ll have access to 24/7 professional customer support, ready to address any queries about your shipments or our platform. 

With Ship4wd, SMBs can simplify the process of importing goods from Malaysia. Contact Ship4wd today and let us help you with your shipping needs, allowing you to focus on what you do best – running your business.

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