(RDC – 21.9.2007)
GUIDELINES FOR APPLICATION FOR STATUS AND/OR INCENTIVE
FOR SETTING UP A REGIONAL DISTRIBUTION CENTRE
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1. Definition
A regional distribution centre (RDC) is a collection and consolidation centre for finished
goods, components and spare parts produced by its own group of companies for its
own brand to be distributed to dealers, importers or its subsidiaries or other unrelated
companies within or outside the country. Among the activities involved are bulk
breaking, repackaging and labeling.
2. Eligibility Criteria for RDC Status
To be eligible, the company must fulfill the following criteria:
 Local incorporation under the Companies Act 1965
 A minimum paid-up capital of RM0.5 million
 A minimum total business spending (operating expenditure) of RM1.5 million per
year
 Incremental usage of Malaysian ports and airports
 A minimum annual sales turnover of RM50 million by the third year of operation
 Location in free zones (free industrial zones or free commercial zones) or licensed
warehouses (public and private) or licensed manufacturing warehouses
As a general rule, sales by an approved RDC to the domestic market are limited to not
more than 20% of its annual sales value.
A RDC is also allowed to source goods from outside Malaysia for shipment to overseas
destinations via drop shipment for up to 30% of its annual sales turnover.
3. Facilities Accorded to RDC
An approved RDC status company is accorded the following facilities:
- 100% equity holding by the promoter
- Expatriate posts based on the requirements of the RDC
- Open one or more foreign currency accounts with onshore licensed banks
in Malaysia to retain export proceeds in foreign currency with no limits imposed
on the overnight balances
- Enter into forward foreign exchange contracts with onshore licensed banks to
hedge exchange risks based on the projected volume of trade
- Customs duty exemption for raw materials, components or finished products
brought into free industrial zones, licensed manufacturing warehouses, free
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commercial zones and bonded warehouses for repackaging, cargo consolidation
and integration before distribution to its final consumers.
4. Incentives
An approved RDC status company is also eligible for the following tax incentives:
-
Full tax exemption on its statutory income for 10 years
Dividends paid from the exempt income are exempted from tax in the hands of its
shareholder
However, to qualify for the above incentives, an approved RDC status company
must also fulfill the following additional criteria:
-
-
Annual sales turnover of at least RM100 million, of which the annual value of
export sales achieve RM80 million and the value of direct export sales achieve
RM50 million in respect of the qualifying activities in the basis period for a year of
assessment.
At least 80% of the RDC products must be exported, including 30% via drop
shipment.
Sales to the domestic market are limited to 20% of its sales turnover.
Sales to free zones (FZs) and licensed manufacturing warehouses (LMWs) are
considered as domestic sales.
All income tax exemptions are subject to Income Tax (Exemptions) (No. 41)
Order 2005.
Effective from the year of assessment 2008, expatriates working for IPC are taxed
only on that portion of employment income attributable to the number of days they
are in the country.
5. Procedure for Application:

The application should be submitted in three (3) copies of IPC/RDC-1 Forms to:
Director-General
Malaysian Industrial Development Authority
Manufacturing Services Division
1st Floor, Plaza Sentral
Jalan Stesen Sentral 5
Kuala Lumpur Sentral
50470 Kuala Lumpur
P.O. Box 10618
50720 Kuala Lumpur
MALAYSIA
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
The following documents (where applicable) should be submitted together
with the application:
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o
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Certificate of Incorporation
Form 24 (return of Allotment of Shares)
Form 49 (Particulars of Directors)
Latest Annual Report of the company
Other relevant information that can support company’s application such as
company profile as appendix in the application form

Details on the expatriate posts applied for should be submitted using the
format attached as the appendix in the application form.

For project in Sabah and Sarawak, three (3) copies of the form should also be
submitted to the relevant MIDA office as follows:

Sabah
Sarawak
Director
MIDA Sabah Office
Lot D9.4 & 9.5
9th Floor, Block D, Bangunan KWSP
Karamunsing
88100 Kota Kinabalu
Sabah, Malaysia
Director
MIDA Sarawak Office
Room 404, 4th Fl.
Bangunan Bank Negara Malaysia
No 147, Jalan Satok
PO Box 716
93714 Kuching
Sarawak, Malaysia
For enquiries and clarification, please refer to:MIDA’s website
Tel
Fax
E-mail
:
:
:
:
www.mida.gov.my
(603)2267-3633
(603)2273-4216
services@mida.gov.my
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