Distribution Services

Distribution services include wholesalers, retailers, franchise practitioners, direct sellers and  suppliers, who channel their goods in the domestic market, and commission agents or other representatives including those of international trading companies.

The sector has also been identified as one of the potential growth areas for the development of SMEs.

The Ministry of Domestic Trade, Consumerism and Cooperatives (MDTCC) has formulated the Distributive Trade Master Plan which includes strategies that will develop the distribution services.

The WTO classification for this sector covers :

  • Commission agents' services                              

  • Wholesale trade services                                 

  • Retailing services

  • Franchising

  • Others                                                                                

What a service provider needs to know

If you are a service provider of this sector, you may be interested in the following :

  • The relevant  Acts;

  • The Regulatory agency/agencies;

  • The liberalisation initiatives and specific service sector commitments that Malaysia has entered into.

The Acts

  • Companies Act 1965

  • Convention on the Settlement of Investment Disputes Act 1966

  • Trade Marks Act 1976

  • Promotion of Investment Act 1986

  • Direct Selling Act 1993

  • Merchant Shipping (Oil Pollution) Act 1994

  • Franchise Act 1998

  • Direct Sales (Scheme and conduct) Regulations 2001

  • Guidelines on Foreign Participation in the Distributive Trade Services (2010)

The Regulatory Agency/Agencies & Related Associations

  • Ministry of Domestics Trade, Co-operatives and Consumerism (MDTCC);

  • Companies Commission of Malaysia (CCM);

  • Perbadanan Nasional Berhad (PNS);

  • Malaysian Franchise Association (MFA);

  • Malaysian Direct Distribution Association (MDDA);

  • Direct Selling Association of Malaysia (DSAM);

  • Malaysian Retailers Association (MRA);

  • Malaysian Retailer-Chains Association (MRCA); and

  • Federation of Sundry Goods Merchants' Asso¬≠ciation.

Liberalisation Initiatives

Generally, 100% foreign equity is allowed in most activities such as departmental stores, superstores, specialty stores and franchise. For hypermarkets, up to 70% foreign equity is allowed. However all these activities are subject to domestic regulations.

All proposals for distribution services activities have to  obtain the approval of MDTCC. These include proposals for:

  • acquisition of interest;

  • mergers and/or takeovers by foreign participation;

  • opening of new branches/ outlets/ chain stores;

  • relocation of branches/ outlets/ chain stores;

  • expansion of existing branches/outlets/ chain stores;

  • buying over / taking over of outlets of other operators; and

  • purchase and sale of properties to operate distribution services activities prior to obtaining the approval / licence from local authorities and other agencies to operate distributive trade activities.

Specific service commitments

Malaysia has made commitments to allow foreign equity of up to 70 per cent in wholesale and retail and 30 per cent in franchising services under Malaysia-Pakistan FTA.

Under AFAS, commitments have been made to allow foreign equity of up to 51 per cent for

  • commission agents dealing in textile, clothing and footwear;

  • wholesale and retail; and

  • franchising services.