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  • Writer's pictureJodie

What is Free Zone and how it works?

We have been so hyped up with the recent Digital Free Trade Zone (DFTZ) launched by Jack Ma and our Prime Minister Datuk Seri Najib Razak but do you really know what a free trade zone is? We will be sharing with you all about free zone, its benefits and the documents that are required if you happen to be involved with free zones in Malaysia.

Free Zone started with three major policies in Malaysia:

  1. The Free Trade Zone Act 1971

  2. The Free Zones Act 1990

  3. Free Zones Regulations 1991

All the acts were implemented to provide for the establishment of Free Zone in Malaysia to promote economic development.

Free Commercial Zone (FCZ) is a designated area for only commercial activities such as breaking bulk, grading repacking and relabelling to take place (except retail trades).

Free Industrial Zone (FIZ) is meant for manufacturing activities only.

Documentation – Movement of Goods to and from Free ZoneRegulationTypes of MovementPrescribed FormReg. 21Goods entering free zones from outside MalaysiaFZ1 (import)Reg. 22Goods entering free zone to places outside MalaysiaFZ1 (Export)Reg. 23Goods on transshipment at free zonesFZ1 (Transshipment)Reg 24 (1)(a)(aa)Goods entering principal customs area (PCA) from free zone (FZ)K1Reg. 24 (1)(b)(bb)Goods entering FZ from PCA

Goods to bonded warehouse (BW) or another FZ from FZK2

K8Reg. 27Goods entering FZ from BW or another FZK8Reg. 25 (1)(b)(bb)Export of goods from PCA through FZ without intending to deport such goods at FZK2Reg. 26(1)Removal of duty-paid goods from FZ to PCAK3Reg. 28Removal of goods from FZ to LMW, ICD

Export of goods from LMW to FZ

Goods originating from abroad taken to FZ through PCAK1


K8Reg. 29Removal of dutiable or taxable goods within Malaysia through FZK8

Benefits of Using Free Commercial Zone

  1. Lowers your cost (beneficial for cash flow)

  2. Less restrictions on transshipments and re-export trading

  3. Simple documentation and procedures using online transactions

  4. Storage and consolidation

  5. Value added services

  6. Staggered importation to PCA (deferment of duty)

If your company does import and export, it is really wise to consider using the Free Zone for your trades. You save a lot on procedural documents and the costs involved.

Unsure of how to begin? Perhaps drop us an email ( or give us a call (+603 3375 2288) and we shall assist you with all necessary documents and processes.

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