With effect from 20 July 1995, companies, local or foreign, engaging in any construction work in the following fields are required to obtain a license issued by the Construction Industrial Development Board (CIDB) before commencing any business activities in Malaysia:
- civil engineering construction;
- building construction;
- mechanical construction;
- electrical construction.
According to Section 34 (1) of the CIDB Act 520:
“Every contractor shall declare and submit to the Board, in the manner as may be prescribed by the Authority, any contract which has been awarded to it on any construction work”. If the project is eligible for levy, the Levy Imposition Notification Form (Form CIDB L2) will be generated by the system online and the contractor must settle the levy payment within the specified period of liability. A levy of 0.125% is applied to total construction work contracts that exceeds five hundred thousand ringgit. The total contract amount includes GST at 6%.
From July 4, 2017, all construction work declarations must be made online via the following link http://cims.cidb.gov.my
The contractor has to upload the Letter of Award for the related project.
Local contractors can register in any of the above categories for a minimum period of 1 year but not exceeding 3 years to carry out construction works. However, no construction works outside the registered category can be undertaken by the company. There are also 7 specified registration grades for each category as set out below.
- G1 Tender not exceeding RM 200,000
- G2 Tender not exceeding RM 500,000
- G3 Tender not exceeding RM 1 Million
- G4 Tender not exceeding RM 3 Million
- G5 Tender not exceeding RM 5 Million
- G6 Tender not exceeding RM 10 Million
- G7 Tender amount – No Limit
Registration for foreign contractors is project-based, which allows the company to execute only the project specified in the certificate. It does not allow the registrant to participate in a tender or to carry out any other construction works not specified in the certificate.
Other than the CIDB licence, the following licences may be necessary for a construction company in Malaysia:
- Bumiputera Status Certificate to participate in government projects;
- Sijil Perolehan Kerja Kerajaan for allocated construction projects.