APEC RULES OF ORIGIN

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APEC RULES OF ORIGIN - MALAYSIA

2.9 MALAYSIA: PREFERENTIAL RULES OF ORIGIN

2.9.1 BASIS OF SUBSTANTIAL TRANSFORMATION CRITERIA For ASEAN

The criterion used is value-added with 40 percent of the FOB value of the product produced being the minimum content. The base used to determine the 40 percent content in the finished product are raw materials, labour and overhead cost.

For Commonwealth

Malaysia uses a value-added criterion of at least 25 percent of the final product.

2.9.2 BACKGROUND TO PREFERENTIAL RATES OF DUTY Preferential Trade Initiatives

Initiative	Agreement Status	Preference Flow	Respective Preference
Malaysia/ASEAN (CEPT Agreement)	Bilateral	Reciprocal	All ASEAN countries
Malaysia/Australia (Trade Agreement between the Federation of Malaya and the Commonwealth of Australia)	Bilateral	Reciprocal	Australia
Malaysia/New Zealand (Trade Agreement between the Federation of Malaya and the Government of New Zealand)	Bilateral	Reciprocal	New Zealand

Variations in rules of origin

There are two different schemes practiced by Malaysia in relation to ROO.

Common Effective Preferential Tariff Scheme (CEPT)

This scheme is available to ASEAN countries under the following conditions:

(b) content is at least 40 percent of the FOB value of the product produced or obtained or finally processed in the exporting Member Economy; or

Commonwealth Preferences

Malaysia accords preferential tariff treatment under this scheme to manufactured products which meet the value-added criteria of at least 25 percent in the finished state produced or are manufactured in and consigned direct from Australia and/or New Zealand.

Goods that are imported from a country that is not eligible for preference rates pay the full rate of duty.

Malaysia's Tariff

The Malaysian tariff is based on "Customs Duty Order" 1996. The rates of duty payable under the preferential tariff of Commonwealth/ASEAN countries are different to the MFN tariff, as shown in the comparison table below.

Tariff Code	Product	Duty Rate
Number		Commonwealth	MFN

200830911	Citrus fruit containing added sugar or sweetening matter a spirit in air tight containers	15%	20%

Malaysia also has CEPT for ASEAN countries where the duty rate has been scheduled until 2003. An example of the difference between CEPT and MFN is as follows:

Tariff Code	Product	Year	Duty Rate
Number			CEPT	MFN

160510100	Crab in air tight containers	1995	10 percent	20 percent
160510100	Crab in air tight containers	1996	9 percent	20 percent

Cumulative rules of origin, direct consignment, treatment of packing and green-lane clearance counters are only applicable among ASEAN countries.

2.9.3 LEGISLATION AND OTHER RULES/DOCUMENTS Legislation

Malaysia's preferential rules of origin are embodied in the following legislation:

Customs Act 1967 - Section 11

Customs Act 1967

Customs Duties Order 1996

Customs Act 1967

Customs Duties (Goods of ASEAN Countries Origin) Common

Effective Preferential Tariff Order 1995

Other Publicly Available Documents

Malaysia does not have any other publications or documents which describe preferential ROO.

2.9.4 RESPONSIBILITY FOR CORRECT DETERMINATION OF ORIGIN

Malaysian Customs are responsible for the correct clearance of goods. However, to be entitled to enjoy preferential status, the Government authorities of the exporting countries concerned are responsible for providing legal documentation.

In Malaysia, the Ministry of International Trade and Industries (MITI) is responsible for such action.

In the case of fraud, the Government authorities of each member state shall cooperate in the action to be taken in the respective state against the persons involved.

2.9.5 RULES OF ORIGIN

Goods originating in a preference country may be divided into two categories:

Products wholly produced or obtained in the exporting Member State;
Products not wholly produced or obtained in the exporting Member State.

Wholly Produced or Obtained

The following shall be considered as wholly produced or obtained in the exporting Member State:

(a) Mineral products extracted from its soil, its water or its seabed

(b) Agricultural products harvested there

(d) Products obtained from animals referred to in paragraph (c) above

(e) Products obtained by hunting or fishing conducted there

(f) Products of sea fishing and other marine products taken from the sea by its vessels

(g) Products processed and/or made on board it's factory ships exclusively from products referred to in paragraph (f) above

(h) Used articles collected here, fit only for the collection of raw materials

(i) Waste and scrap resulting from manufacturing operations conducted there

(j) Goods produced there exclusively from the product referred to in paragraph (a) to (i) above

Not Wholly Produced or Obtained

(i) A product shall be deemed to be originating from ASEAN Member States if at least 40 percent of its content originates from any Member State.

(ii) The value of the non-originating materials, parts or produce shall be:

(a) The CIF value at the time of importation of the products or when importation can be proven; or

(b) The earliest ascertained price paid for the products of undetermined origin in the territory of the Member State where the working or processing takes place.

The formula for 40 percent ASEAN content is as follows:

Value of Imported Non-ASEAN Materials Origin Materials, Parts or Produce + Value of Undetermined Origin Materials, Parts or Produce ≤ 60% x 100 FOB Price

2.9.6 DIRECT SHIPMENT PROVISIONS For CEPT

The following shall be considered as consigned directly from the exporting Member State to the importing Member State:

(a) If the products are transported passing through the territory of any other ASEAN country;

(b) If the products are transported without passing through the territory of any other non- ASEAN country;

(c) The products whose transport involves transit through one or more intermediate non-ASEAN countries with or without transshipment or temporary storage in such countries, provided that:

(i) the transit entry is justified for geographical reasons or by consideration related exclusively to transport requirements;

(ii) the products have not entered into trade or consumption there; and

(iii) the products have not undergone any operation there other than unloading and reloading or any operation required to keep them in good condition.

2.9.7 OTHER CONDITIONS OR REQUIREMENTS

No other conditions apply.

2.9.8 REVIEW PROCEDURES

The following review procedures apply:

(a) In the case of a dispute concerning origin determination, classification of products or other matters the Government authorities concerned in the importing and exporting Member States shall consult each other with a view to resolving the dispute, and the result shall be reported to the other Member States for information.

(b) Where no settlement can be reached bilaterally the issue concerned shall be decided by the Senior Environment/Economic Officials Meeting.

2.9.9 CONTACTS

MOHD. SEHAN AWANG AIN
Senior Assistant Director of Customs
Research and Corporate Planning Branch
Royal Customs and Excise Department
Block 11, Government Office Complex
Jalan Duta, Kuala Lumpur

Tel: 603-6502189
Fax: 603-651 5485

ISMAIL NIZA ALI
Superintendent of Customs
International Affairs
Royal Customs and Excise Department
Block 11, Government Office Complex
Jalan Duta, Kuala Lumpur

Tel: 603-6502230
Fax: 603-6515485

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