An Overview over the medical device industry of Malaysia
Malaysia is a leading manufacturer of medical devices in the ASEAN region. The industry sector is considered by the government as an area with high growth potential. It is substituted substantially giving investors incentives to produce in Malaysia.
Thus, making it a preferred offshore manufacturing site for multinational companies which benefit from Malaysia’s well-established med-tech supply chain, complemented by other manufacturing industries. Most well-known players in the industry are for example Abbott, Toshiba Medical Systems, Menicon, Semperit and Braun.
Looking at actual numbers: Referring to the Malaysian Investment Development Authority (MIDA)’s Investment Performance Report 2021 the medical device industry had a total of 38 new approved projects with a total investment of RM 7.7 billion last year. Compared to 2020 the invested amount increased by RM1.6 billion. 15 projects (39.5%) with investments of RM2.2 billion were for the manufacturing of medical devices other than medical gloves and face masks. These projects were mainly for high-end and high-value-added products.
One of the approved projects was the RM650 million investment of Menicon, Japan’s largest contact lens manufacturer. The company chose to start production in Malaysia to benefit from the country’s developed infrastructure, the supply of skilled workforce and substantial government support and incentives.
According to Wallstreet: Online, a very recent project completed this year was realised by the publicly listed Semperit Group, investing in six additional and highly modern production lines. The Austrian company producing medical gloves invested €21 million in the construction of the dipping lines which recently opened in April 2022.
- High-tech medical device manufacturers are eligible to be considered for full income tax exemption on their statutory income for five years.
- As part of PENJANA (National Economic Recovery Plan), Malaysia is offering a special Relocation Incentive until December 2022 for new medical device investments
- The PENJANA Relocation Incentive, which provides a special tax rate of zero % for investments of above RM300 million for new companies, and the Investment Tax Allowance of 100 % for existing companies, have been extended to the end of 2022
Applications for manufacturing licences are to be submitted to the Malaysian Investment Development Authority (MIDA), an agency under MITI in charge of the promotion and coordination of industrial development in Malaysia.
Under the Industrial Co-ordination Act, 1975 (ICA) manufacturing companies have to apply for a manufacturing licence if:
- Shareholders’ funds are RM2.5 million and above
- or engaging 75 or more full-time paid employees
See the GUIDELINE ON APPLICATION FOR MANUFACTURING LICENCE for further information and eligibility criteria. The Malaysian Medical Device Authority (MDA) is in charge of enforcing medical device regulations and medical device registration.