— Regulator & Policy Basis

Regulatory Authority and Policy Framework

The WRT (Wholesale and Retail Trade) approval is administered by the Ministry of Domestic Trade and Cost of Living (Kementerian Perdagangan Dalam Negeri dan Kos Sara Hidup, or KPDN). KPDN also serves as the secretariat of the Committee on Distributive Trade and is the main point of contact for enquiries and applications relating to foreign participation in distributive trade.

01 · Lead Ministry & Secretariat

Ministry of Domestic Trade and Cost of Living

Kementerian Perdagangan Dalam Negeri dan Kos Sara Hidup

KPDN · Receives applications & enquiries

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02 · Decision-Making Body

Committee on Distributive Trade

Reviews and decides on WRT applications

Chair: KPDN Secretary-General

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03 · Member Agencies

Multi-Agency Representation

Ministries of Finance, Home Affairs, International Trade and Industry, Federal Territories, Housing and Local Government, and others

Other agencies invited where necessary

— When WRT Is Required

When Is WRT Approval Needed?

“Foreign participation” means non-citizens of Malaysia (including permanent residents), foreign companies or institutions, or local companies or institutions in which more than 50% of the voting rights are held by any of the foregoing (including parties acting in concert). Distributive trade involving foreign participation requires the approval of KPDN’s Committee on Distributive Trade.

> 50%

Treated as “foreign participation”

Foreign participation

Where foreign persons or entities together hold more than 50% of the voting rights, the company is a foreign distributive trade operator

≤ 50%

Generally not “foreign participation”

Generally outside the definition

A local company in which the above parties together hold no more than 50% of the voting rights generally falls outside the definition of foreign participation

Please note: “foreign persons” here includes Malaysian permanent residents — a non-citizen who holds permanent resident status is still counted as foreign, and his or her shareholding counts towards the foreign ownership percentage.

On whether an application is “mandatory”: Section 3 of the official document only “encourages and recommends” that foreign distributive trade operators obtain KPDN approval before commencing business, whereas Section 5 expressly requires Committee approval for applications involving foreign participation in acquisitions and mergers, and the opening, relocation or expansion of outlets. In practice, later steps such as the local authority business licence are generally conditional on this approval, so we recommend applying before you start operating.

Matters Requiring Committee Approval

 
Acquisition of interests;
 
Mergers and/or acquisitions involving foreign participation;
 
Opening of new branches / outlets / chain stores;
 
Relocation of branches / outlets / chain stores;
 
Expansion of existing branches / outlets / chain stores;
 
Purchase or takeover of another operator’s outlets;
 
Buying or selling properties used for distributive trade before obtaining business approval or a licence from the local authority and other agencies.

— Business Types

Scope and Formats of Distributive Trade

Distributive trade refers to all linking activities that move goods and services from the supply chain to intermediaries for resale, or directly to the final buyer. It covers both physical transactions and lawful electronic transactions, whether or not ownership is transferred. Distributive trade operators include wholesalers, retailers, franchisors and franchisees, direct sellers, suppliers distributing goods in the domestic market, online merchants, and commission agents or representatives of international trading companies. Wholesale means selling new or used goods and services to distributors for business purposes; retail means selling to the general public for final consumption.

Different formats are subject to different conditions. They fall into the following eight categories:

Hypermarket

Min. funds RM50 million

Self-service, sales area of 5,000 sq m and above, selling a wide range of food and non-food, mainly consumer goods

Departmental Store

Min. funds RM20 million

General retail zoned by gender, age or lifestyle; sales areas vary, up to 4,999 sq m

Superstore

Min. funds RM25 million

Self-service, sales area of 3,000 to under 4,999 sq m, selling a wide variety of consumer goods

Specialty Store

Min. funds RM1 million

Focused on a single brand or product line, e.g. food and beverage, appliances, apparel, pharmacy or motorcycles

Convenience Store

Min. funds RM1 million

Open 24 hours, selling fast-moving items such as cigarettes, newspapers and bread

Distribution Centre

Min. funds RM1 million

Holds goods for group companies and redistributes against store orders; also fulfils e-commerce orders

Other Formats

Min. funds RM1 million

Other distribution formats and unregulated areas, including e-commerce

Franchise

Under Act 590

Distributive trade run as a franchise system, which must comply with the Franchise Act 1998 (Act 590)

The following two cases are exempt: (1) companies holding a manufacturing licence that distribute only products from the same production line; and (2) companies granted regional establishment status by the Malaysian Investment Development Authority (MIDA), including International Procurement Centres (IPC), Regional Distribution Centres (RDC), Operational Headquarters (OHQ) and Principal Hubs (PH).

Petroleum products, pharmaceuticals and medicinal and orthopaedic products, toxic substances and explosives, arms and ammunition, agricultural raw materials and live animals, among others, are governed by specific legislation and must comply with the relevant laws.

Sectors Not Open to Foreign Operators

The following sectors are not open to foreign operators (this list is not exhaustive):

 
Supermarkets / mini markets;
 
Provision shops / general petty traders;
 
Newsagents and provision shops;
 
Traditional medicinal-herb shops (mainly traditional alternative medicine and general dried goods);
 
Petrol stations;
 
Permanent wet-market stalls;
 
Permanent roadside stalls;
 
Sectors related to national strategic interests;
 
Non-specialised textile, food-and-beverage and jewellery shops.

— Categories & Capital

WRT Categories and Capital Requirements

Capital thresholds are based on “shareholders’ funds” (including paid-up capital). The minimum requirements and key additional conditions for each format are as follows:

Format
Definition
Minimum Shareholders’ Funds
Key Additional Conditions
Hypermarket
Self-service, sales area of 5,000 sq m and above
RM50 million (including paid-up capital)
At least 30% Bumiputera/Malay equity (up to 3 years’ grace period available); 30% of shelf SKUs reserved for Bumiputera/Malay SMEs; limited to city council or municipal council areas
Departmental Store
Zoned by gender, age or lifestyle, up to 4,999 sq m
RM20 million (including paid-up capital and reserves)
30% of shelf SKUs reserved for Bumiputera/Malay SMEs (up to 3 years’ grace period available)
Superstore
Self-service, 3,000 to under 4,999 sq m
RM25 million (including paid-up capital and reserves)
30% of shelf SKUs reserved for Bumiputera/Malay SMEs (up to 3 years’ grace period available); limited to city council or municipal council areas; minimum sales area of 1,000 sq m
Convenience Store
Open 24 hours, selling fast-moving items, sales area not exceeding 180 sq m
RM1 million (including paid-up capital)
Foreign equity capped at 30%, with at least 30% equity reserved for Bumiputera/Malay; must operate as a franchise system, with franchisees limited to Malaysians; 30% of SKUs reserved for Bumiputera/Malay SMEs
Specialty Store
Focused on a single brand or product line
RM1 million (including paid-up capital)
Operating as a franchise requires prior KPDN approval
Distribution Centre
Holds goods for group companies and redistributes against orders; also fulfils e-commerce orders
RM1 million (including paid-up capital)
Must meet distribution centre criteria; site and floor plan must be provided with the application
Other Distribution Formats
Other distribution formats and unregulated areas, including e-commerce
RM1 million (including paid-up capital)
Must meet the relevant criteria; a feasibility and impact study is required where the sales area exceeds 5,000 sq m
Franchise
Distributive trade carried out through a franchise system
Under the Franchise Act 1998 (Act 590)
Foreign participation in franchise businesses must comply with the requirements of that Act

Foreign-owned trading companies, specialty stores, e-commerce and distribution-type businesses typically fall under Specialty Store, Distribution Centre or “Other Distribution Formats”, each with a minimum shareholders’ funds of RM1 million (including paid-up capital). Note that this threshold is calculated on the company’s shareholders’ funds, and is not “RM1 million per outlet”.

— How We Help

How We Can Assist

Yingke Malaysia can help you determine whether your business falls within the definition of foreign participation and which format category applies, assist with company incorporation, capital injection and preparation of the application documents, submit the WRT 1 application to KPDN on your behalf, and follow up on KPDN and Committee review and requests for additional information.

※This page is a general summary prepared mainly with reference to KPDN’s Guidelines on Foreign Participation in Distributive Trade Services in Malaysia (2022 edition). It is intended to give readers a preliminary overview of the WRT framework for foreign-owned wholesale and retail trade in Malaysia, and does not constitute formal legal, tax or compliance advice, nor should it be relied on as the sole basis for any investment or application decision. KPDN’s rules and approval policies on foreign participation in distributive trade may change at any time; the format classification, minimum shareholders’ funds, Bumiputera participation requirements and approval conditions are subject to the latest rules officially published by KPDN. Approval outcomes are determined by KPDN and the Committee on Distributive Trade at their discretion based on the circumstances of each application. Companies are advised to confirm the latest rules and specific requirements with Yingke Malaysia or the relevant authority before submitting an application.