Guide to Purchase Factory in Malaysia

Malaysia is the best choice for foreign investment in ASEAN since 1980. World-class infrastructure and an attractive investment policy have made Malaysia one of the destinations for investment. Apart from that, the availability of freehold factories with competitive selling prices is also one of the factors that attract foreign investors to invest in Malaysia.

There are a few things that need to understand when foreign investors wish to purchase a factory in Malaysia. First, carry out a due diligent check on the Express Conditions and land tenure of ownership. Express Conditions stated in the land title document must be able to meet your needs. For example, if you wish to set up a plastic moulding factory, a medium industry factory is a minimum requirement by the environmental department and local government. Land tenure of ownership (freehold or leasehold) will have to be informed when dealing with the seller or refer to the land title document.

Second, check the power supply given by the service provider. Usually, a small factory will have a supply of 150 Amperes, a medium factory 400 Amperes, big factory 1000 Amperes or more. The buyer should be informed by the developer power supply given. Upgrading of power supply takes a long time because it involves submission to TNB to get approval, construction of TNB sub-station, handover of TNB sub-station, cable laying and energising of TNB sub-station. Vacant land available for the new TNB sub-station could be another issue to be solved.

Third, check the floor loading capacity designed by the structural engineer. Usually, the design floor load for light industry factories ranging from 500 kg/m2 – 1,000 kg/m2, medium industry factories ranging from 1,000 kg/m2 – 1,500 kg/m2, and heavy industry factories ranging from 1,500 kg/m2 – 3,000 kg/m2. For ready-built factories, the floor load capacity is fixed and requests for higher capacity will not be entertained. For custom build factory, you may request for higher floor load capacity from the developer that suits your needs.

Fourth, for some production plants that require to use of natural gas, the selection of a factory located in an industrial area that is ready with natural gas infrastructure is important. Usually, the ready-built factory does not have a gas pipeline. If a gas station and pipeline are needed for production, the factory owner may apply for the supply from Gas Malaysia and the supply is subject to availability.

In conclusion, foreign investors should understand their requirements before purchasing a factory in Malaysia. Ready-built factories usually come with standard specifications that may not suit your needs. Alteration and additional work could be carried out if necessary. Build-to-suit factory may be considered to get the developer to custom-build a factory that follows your requirements.