FREE ZONES ACT 1990

LAWS OF MALAYSIA ONLINE VERSION OF UPDATED TEXT OF REPRINT Act 438 FREE ZONES ACT 1990 As at 15 December 2025 This text is ONLY AN UPDATED TEXT of the Free Zones Act 1990 by the Attorney General’s Chambers. Unless and until reprinted pursuant to the powers of the Commissioner of Law Revision under subsection 14(1) of the Revision of Laws Act 1968 [Act 1], this text is NOT AN AUTHENTIC TEXT. 2 FREE ZONES ACT 1990 Date of Royal Assent … … … 23 April 1990 Date of publication in the Gazette … … … 10 May 1990 Latest amendment made by P.U. (B) 451/2025 which came into operation on … … … 15 December 2025 PREVIOUS REPRINTS First Reprint ... Second Reprint ... ... ... ... ... 2001 ... ... ... ... 2006 3 LAWS OF MALAYSIA Act 438 FREE ZONES ACT 1990 ARRANGEMENT OF SECTIONS PART I PRELIMINARY Section 1. Short title and commencement 2. Interpretation 3. Declaration of free zones and appointment of Authority PART II ACTIVITIES PERMITTED WITHIN A FREE ZONE 4. Goods in a free zone 5. Dealing with or disposal of goods in a free zone 6. Exclusion of goods from free status 6A. Retail trade in free zone 7. Goods deemed to be exported from, or imported into, Malaysia 8. Goods manufactured in a free industrial zone 8A. Declaration to give full and true account 8 B. Goods unaccounted for 9. Penalty 10. Activity 10A. Record of activity 4 Laws of Malaysia ACT 438 Section 11. Goods permitted into a free industrial zone 12. Goods permitted into a free commercial zone PART III SPECIFIC FUNCTIONS OF AUTHORITY 13. Authority to provide facilities 14. Authority may permit erection of private buildings, etc. 15. Entry and residence in a free zone 16. Exclusion of certain goods, etc. 17. Annual reports and accounts PART IV OFFENCES, PENALTIES, SEARCH, SEIZURE, ARREST AND PROVISIONS AS TO TRIALS AND PROCEEDINGS 17A. Powers of enforcement, investigation and inspection 17B. Additional powers 18. Persons bound to give information 19. Penalty for offences not otherwise provided for 20. Attempts and abetments 20A. Access to shop or warehouse, or other building, place or premises 21. Issue of search warrant 22. When search may be made without warrant 23. Officers of customs may stop and search conveyances 23A. Access to recorded information or computerized data 24. Power to open packages and examine goods 25. Search of persons entering or leaving a free zone 26. Seizure of goods subject of an offence 27. Return or disposal of movable property Free Zones Section 28. Powers of arrest 29. Provisions relating to arrest without warrant 30. (Deleted) 30A. Obligation of secrecy 30B. Evidence of agent provocateur admissible 31. Protection of informers from discovery 32. Offence by bodies of persons, and by servants and agents 33. Compounding of offences 34. Protection of Government from liability 35. Protection of officers of customs from liability 36. No costs or damages shall be recoverable unless seizure is without reasonable or probable cause 37. Conviction under other written law 38. Goods liable to forfeiture 39. Court to order forfeiture and disposal of goods seized 40. Goods seized in respect of which there is no prosecution 41. Goods seized may be delivered to the owner or other person 41A. Recovery of duty or tax as a civil debt PART V MISCELLANEOUS PROVISIONS 42. Vessel in relation to a free zone 42A. Movement of goods into and from a free zone by sea 42B. Movement of goods into and from a free zone by air 42C. Movement of goods into and from a free zone by road or rail 43. Proper officer of customs may take samples 44. Public servants 45. Rewards 46. Appeal from decision of the Authority or the Director General 5 6 Laws of Malaysia Section 47. Power to make regulations 48. Power of delegation 48A. Power to extend period 48B. Power to modify terms and conditions PART VI AMENDMENTS AND REPEAL 49. Amendments and repeal 50. Free trade zone deemed to be free industrial zone 51. Minister may revoke any declaration or order FIRST SCHEDULE SECOND SCHEDULE THIRD SCHEDULE ACT 438 7 LAWS OF MALAYSIA Act 438 FREE ZONES ACT 1990 An Act to provide for the establishment of free zones in Malaysia for promoting the economic life of the country and for related purposes. [5 September 1991, P.U. (B) 455/1991] BE IT ENACTED by the Seri Paduka Baginda Yang di-Pertuan Agong with the advice and consent of the Dewan Negara and Dewan Rakyat in Parliament assembled, and by the authority of the same, as follows: PART I PRELIMINARY Short title and commencement 1. (1) This Act may be cited as the Free Zones Act 1990. (2) This Act shall come into force on a date to be appointed by the Minister by notification in the Gazette and the Minister may prescribe different dates for the coming into force of different provisions of this Act. Interpretation 2. (1) In this Act, unless the context otherwise requires— “activity” includes commercial activity and manufacturing activity and related operations; 8 Laws of Malaysia ACT 438 “Authority” means any statutory body or company or department of the Government of Malaysia or of any State in Malaysia which has been appointed under the provisions of subsection 3(2) to administer, maintain and operate any free zone; “commercial activity” includes trading (excluding retail trade), breaking bulk, grading, repacking and relabelling; “customs airport” shall have the same meaning assigned to it under the Customs Act 1967 [Act 235]; “customs duty” means any duty imposed by or under the Customs Act 1967; “excise duty” means any duty imposed by or under the Excise Act 1976 [Act 176]; “free zone” means any part of Malaysia declared under the provisions of subsection 3(1) to be a free commercial zone or a free industrial zone; “goods” includes animals, birds, fish, plants and all kinds of movable property; “Labuan” shall have the same meaning assigned to it under section 154 of the Customs Act 1967; “Langkawi” shall have the same meaning assigned to it under section 163A of the Customs Act 1967; “legal landing place” shall have the same meaning assigned to it under the Customs Act 1967; “manufacture” means the conversion by manual or mechanical means of organic or inorganic material into a new product by changing the size, shape, composition, nature or quality of such materials and includes the assembly of parts into a piece of machinery or other products, but does not include the installation of machinery or equipment for the purpose of construction; and the term “manufacturing activity” with its Free Zones 9 grammatical variations and cognate expression shall be construed accordingly and, in relation to such term, it shall include any activity as determined by the Director General to be manufacturing activity: Provided that the Director General may in his absolute discretion determine that the result of any manufacture or manufacturing activity is not a new product or article; “Minister” means the Minister for the time being charged with the responsibility for finance; “operation” means the operations set out under the activity approved by the Minister under the provisions of section 10; “owner” in relation to goods, includes any person being or holding himself out to be the owner, importer, exporter, consignee, agent or person in possession of, or beneficially interested in, or having any control of, or power of disposition over, the goods; “Pangkor” shall have the same meaning assigned to it under section 163Q of the Customs Act 1967; “prescribed place of import or export” means any place prescribed under section 142 of the Customs Act 1967 as a place for the import and export of goods by road and rail; “principal customs area” means any part of Malaysia but excluding a free zone, Labuan, Langkawi, Tioman, Pangkor and Pulau 1; “proper officer of the Authority” means any officer of the Authority acting in the fulfilment of his duties under the Act, whether such duties are assigned to him specially or generally, or expressly or by implication; “Pulau 1” shall have the same meaning assigned to it under subsection 2(1) Customs Act 1967; “Tioman” shall have the same meaning assigned to it under section 163J of the Customs Act 1967; 10 Laws of Malaysia ACT 438 “value” in relation to imported goods has the meaning assigned to it under section 2 of the Customs Act 1967. (2) For the purpose of the definition of the word “value”, import means an import into a principal customs area from a free zone. (2A) For the purpose of the definition of “owner”, “exporter” and “importer” shall have the same meaning assigned respectively to them under section 2 of the Customs Act 1967. (3) The expressions “Director General”, “officer of customs”, “senior officer of customs”, “proper officer of customs” and “dutiable goods” shall have the meaning assigned respectively to them in the Customs Act 1967. Declaration of free zones and appointment of Authority 3. (1) The Minister may, by notification in the Gazette, declare any area in Malaysia to be a free commercial zone or a free industrial zone and every such notification shall define the limits of such zone. (2) The Minister may appoint any statutory body established or constituted by or under a federal law or any department of the Government of Malaysia or with the consent of the State concerned, any statutory body established or constituted by or under a State law or any department of the Government of a State or, any company as the Authority to administer, maintain and operate any free zone which has been so declared under subsection (1). PART II ACTIVITIES PERMITTED WITHIN A FREE ZONE Goods in a free zone 4. Subject to this Act, goods of any description, except those specifically and absolutely prohibited by law, may be brought into, Free Zones 11 produced or manufactured in a free zone without payment of any customs duty or excise duty. Dealing with or disposal of goods in a free zone 5. (1) Unless otherwise provided under this Act or any regulations made thereunder, no person shall deal with or otherwise dispose of any goods in a free zone. (2) Subject to the provisions of this Act, goods in a free zone may— (a) be removed from such free zone for export or sent into another free zone either in original package or otherwise; (b) unless otherwise directed by the Authority— (i) be stored, sold, exhibited, broken up, repacked, assembled, distributed, sorted, graded, cleaned, mixed, or otherwise manipulated or be manufactured in accordance with the provisions of this Act, or (ii) be destroyed; (c) with the approval of the Authority, and subject to such conditions as may be imposed by it, be sent into any part of the principal customs area in the original package or otherwise provided that the Authority shall consult the Director General before movement of the goods is authorized. (3) The provisions of this section shall not apply to goods excluded by order made under subsection 6(1). Exclusion of goods from free status 6. (1) The Minister may, by order published in the Gazette, exclude any goods from the provisions of section 4. (2) Notwithstanding anything to the contrary in any written law, the provisions of the Customs Act 1967 and the Excise Act 1976 shall 12 Laws of Malaysia ACT 438 apply to the goods so excluded as if the free zone is a place within the principal customs area. Retail trade in free zone 6A. The Minister may, at his absolute discretion, authorize any retail trade to be conducted in a free zone and the Minister may in relation to such authorization impose such conditions as he may deem fit. Goods deemed to be exported from, or imported into, Malaysia 7. (1) Unless otherwise provided under this Act or any regulations made thereunder or under any other written law— (a) goods which are taken out from any part of the principal customs area and brought i