MALAYSIA: Butterworth Port Re-Designated as Free Trade Zone

The North Butterworth Container Terminal, part of Penang’s Butterworth Port, has been designated as a Free Trade Zone (FTZ). This comes as part of wider moves to position the port as a key regional shipping and transhipment hub, while making it a more attractive proposition for overseas investors. Ultimately, it is envisaged that the overall FTZ will be divided into a number of sub-free trade zones, each dedicated to a distinct commercial/trade activity, while a free industrial zone will also be established for manufacturing activities. Following the development of such commercial facilities as logistics services and warehousing, it is anticipated the new zone will undertake break bulking, grading, repackaging, relabelling, transit and re-exporting activities for overseas clients. 

In a bid to attract further overseas investment into the FTZ, a number of incentives will be on offer, including the provision of one-stop centres dedicated to promoting opportunities within the zone’s export, production and processing sectors. Investors will also be able to process imported raw materials free of customs and excise duties, as well as sales and service taxes, prior to exporting their finished products to other countries. This entitlement does not extend to all product, however, with perfumes, alcohol and tobacco all still subject to the statutory surcharges.