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LEGISLATION SUMMARY: MALAYSIA

Expectations towards suppliers as defined in the Guiding Principles and local legislation

1 | L e g i s l a t i o n S u m m a r y

1. Business Ethics

Guiding Principles: Companies are expected to uphold the highest standards of integrity and to operate honestly and equitably throughout the supply chain in accordance with local laws.

Topic Relevant local legislation Benchmark against Guiding Principles / Practical Guidance

1. Responsible Sourcing of Materials

Review of Local Legislation:

o No direct law exists that addresses procurement as well as responsible sourcing of materials to the automotive industry directly.

• Indirect laws on:

• Responsible Extraction: Mineral Development Act 1994 (Act 525) dictates responsible practices of mining. No mention of sourcing.

• Ethical Business Practices: Malaysian Anti-Corruption Commission Act 2018 is covered under separate guiding principles within this document

- Scope of the legislation: n/a

- Key points for suppliers:

• Despite the lacking legislation, the GP and PG documents clearly provide points for suppliers to note, such as:

i. Due diligence with the sourcing and procurement of raw materials is expected

ii. Due diligence regarding procurement of materials include ensuring no ethical, human rights and environmental violations were a result of the raw material extraction and procurement process

iii. Companies may be required to use validated conflict free smelters and refiners of metal products

• Local suppliers should prepare to adhere to the GP and PG document’s requirements.

- Relevant highlights:

• Automobile giants have recently set standards on ensuring that only responsibly-sourced Cobalt is utilised within their supply chain.

• Bauxite mining in Malaysia has had negative impacts on the environment and previously been banned for several years, but recently started operating again – future implication on aluminium procurement may include responsibly-mined metal procurement.

The Guiding Principles (GP) and Practical

Guidance (PG) on Responsible Sourcing of

Materials have set much more stringent

requirements than our current legislation. In

Malaysia, no such legislation exists as yet.

There are laws on extraction of natural

resources, but the law guides mining activities

to ensure that mines are managed well and not

in a detrimental manner to the surrounding

environment and communities.

There are also laws against corruptive practices

that related to the ethical business procurement

point, however, this is further elaborated in the

‘Anti-Corruption’ section.

It has been highlighted within the ‘Relevant

Issues’ section that local suppliers and

manufacturers should be preparing for

compliance to more stringent requirements

(than Malaysian legislation) from their DRIVE

Sustainability clients.

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• Local manufacturers and suppliers should ensure that they are putting some thought into the requirements within the GP and PG, in order to be prepared for stringent requirements that can placed upon them by DRIVE Sustainability’s brands in the near future.

2. Anti-Corruption Review of Local Legislation:

o Malaysian Anti-Corruption Commission (Amendment) Act 2018 (Act A1567)

- Scope of the Legislation:

• Any person who is involved in an act of corruption, whether soliciting or being on the receiving end, is punishable by law.

• Any party witnessing and not reporting an incidence of corruption can be punished by law.

• Amendments to the act include heavier penalties, such as increased corporate offences (compared to other offences).Currently, upon conviction of a corruption charge, a commercial organisation, and potentially the directors, controllers, officers, partners and those concerned in the management of its affairs, are liable to fines, imprisonment or both as well; despite the corruptive action being undertaken by a junior employee.

- Key Points for Suppliers:

• For Automotive industry, it is important that anti-corruption topic is discussed at all level including Board, Management and working level. In Malaysia, Anti-Corruption is a significant compliance agenda, where any non-compliance results in either penalty or imprisonment.

• Companies should be aware of the requirements, definition and scope of “what is considered corruption/bribery”.

• Companies should have their employees educated/trained on anti-corruption issues, including clear understanding that non-reporting of a corruption case being an offence.

• Relevant Highlights:

• The link below has detailed up-to-date information of country and regional based status on corruption and transparency.

• The link is specifically for Malaysia: https://www.transparency.org/country/MYS

The local legislation requirements is as holistic

and directive as the automotive Guiding

Principle. Generally, the GP requires supplier to

abide to anti-corruption Acts globally, where the

business is/are conducted. Suppliers are

required to practice non-tolerance on corruption

or any form of beneficial transactions.

3. Privacy Review of Local Legislation:

o Personal Data Protection Act 2010 (Act 709)


• Under the Act, data users are required to comply with 7 Personal Data Protection Principles as follows:

The local legislation requirements is as holistic

and directive as the automotive Guiding

Principle. Generally the GP requires supplier to

align the company’s data handling to the

following:

https://www.transparency.org/country/MYS

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i. Personal data can only be processed with the data subject’s consent.

ii. Data subjects must be informed by written notice of, among other things, the type of data being collected and the purpose, its sources, the right to request access and correction, and the choices and means by which the data subject can limit the processing of their personal data.

iii. Personal data may not be disclosed without the data subject’s consent for any purpose other than that which the data was disclosed at the time of collection, or to any person other than that notified to the data user.

iv. Data users must take practical steps to protect the personal data from any loss, misuse, modification or unauthorized access or disclosure, alteration or destruction.

v. Personal data shall not be kept longer than is necessary for the fulfilment of its purpose.

vi. Data users must take reasonable steps to ensure that personal data is accurate, complete, not misleading and kept up to date.

vii. Data subjects must be given access to their personal data and be able to correct any personal data that is inaccurate, incomplete, misleading or not up to date.

• Maximum fines for the various offences under the Act range from RM100,000 to RM500,000 per offence. On conviction, offenders may also be liable to imprisonment.

- Key Points for Suppliers

• In Malaysia, PDPA is the ultimate legislation reference on data privacy. The legislation provide protection for an individual's personal information to be processed for the purposes of commercial transactions. Any information/data or a chain of information that allows a living individual to be identified are covered under the Personal Data Protection Act. Examples of data that can be considered as personal data are: Name and address, Identification card number, Passport number, Health Information, E-mail Address, Picture, images recorded by the closed-circuit television (CCTV), and any information contained in personal files

• An organization must comply with the Act only if the organization is "processing" personal data. Personal Data Protection Act gives definition to the meaning of the word "processing". "Processing" personal data means doing something towards the data including collecting, recording, holding, storing, organising, modifying, disclosing and destroying.

- Relevant Highlights:

• Despite the stringent regulation existing since 2010, there have been a few big cases of data misappropriation that has occurred, which highlights that we have room to improve.

• This is the official website for Malaysian Government’s Department of Personal Data Protection. The website provides latest updates on phishing methods; case studies and

o Companies are expected to comply with privacy and information security laws and regulatory requirements in addition to the contracted terms & conditions. Companies are expected to ensure that they cascade these principles and contractual obligations in relation to data privacy to any sub-contractors or Tier 2 suppliers who will be processing the personal data.

o Companies are expected to refrain from using personal data for any purposes beyond the scope of the business arrangement.

o Companies are expected to put in place appropriate measures to respect privacy and to protect personal data against loss and unauthorized / unauthorised access or use, including confidential, proprietary and personal information.

o Reasonable actions could be, but are not limited to: the implementation of policies prohibiting to forward personal data such as addresses, salary information or photos without permission of affected persons etc.

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relevant issues share by other companies. Link to source: http://www.pdp.gov.my/index.php/en/

4. Financial Responsibility/ Accurate Records


o Companies Act 2016 (Act 777)

- Scope of the legislation:

• The act which replaced the original 1965 act came into force in early 2017 and governs all matters relating to registration, administration and dissolution of companies in Malaysia, including shares, administration, AGMs, etc.

• The act includes the requirements to disclose and externally audit annual financial records.

• The 2018 review of this act included much more stringent penalties for financial responsibility and record-related items.


• The companies act provides the basic guidelines of the management of companies from a legal basis, and should be adhered to.

• Penalties include fines and imprisonment for breaching legal requirements of the act.

• The act dictates all types of companies, from privately held to public-listed entities and therefore is applicable to all local suppliers.

- Relevant Issues:

• There is criticism that the increase of penalties lack distinction between small and larger entities.

• Amendments are being called for to address the issue of non-compliance to address lack of difference in the treatment of privately-owned companies as well as public-listed companies.

o Accountants Act 1967 (Act 94)


• The act covers the registration of accountants and the matters associated with it, as well as responsibility of Accountants in auditing financial records of companies.

• Penalties, professional ethics and expectation are included.

• Key points for suppliers:

• Penalties for Accountants that do not act with integrity include the fine and jail terms.

• Companies and their accountants should not compromise the financial declarations as penalties will apply.


The GP and PG on Financial Responsibility and

Accurate Records incorporate two key points

which are in line with the laws of Malaysia. Both

principles have well-established legislation, and

have been quite well enforced by the Internal

Revenue Board of Malaysia, who look into our

taxes (and the related financial figures).

We do have a long way to go in order to ensure

clean governance, however, with stricter Anti-

Corruption Legislation being established, Anti-

Money Laundering Laws and Government

Procurement standards being discussed, it

would be good to note that the regulations and

enforcement related to Financial Responsibility

and Accurate Records should only be improving

here forth.

http://www.pdp.gov.my/index.php/en/

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• The 1MDB Scandal in Malaysia has highlighted the need for much more attention to be given to public accounts and governance issues in the public sector.

• The Internal Revenue board regularly audit the accounts of businesses as well as individuals; specifically related to tax declarations.

• It is likely that the stringency of the financial accounting and reporting will increase, as a tougher stance on corruption is being shown.

5. Disclosure of Information


o The Malaysian Code on Corporate Governance 2017 (“the Code”) issued by the Securities Commission Malaysia on 26 April 2017 contains requirements on the disclosure of information.

o The Main Market Listing Requirements (Main LR) by Bursa Malaysia (the Stock Exchange Regulators) issued amendments on the related to sustainability statements in annual reports (Sustainability Amendments), which took effect starting 31 December 2016.requiring all Public Listed Entities to disclose non-financial and material disclosures.

- Scope of the Code and the Main LR:

• While the Code does not have legislative effect, listed companies are required, pursuant to the Listing Requirements, to include in their annual report a statement of their corporate governance practices. Effectively, listed companies with financial year ending on 31 December 2017 are expected to report their compliance around April 2018.

• The main LR were amended to require the disclosure of a “Sustainability Statement” covering material sustainability matters: “a listed issuer must include in its annual report, a narrative statement of the listed issuer’s management of material economic, environmental and social risks and opportunities”.


• At the moment, the disclosure of non-financial requirements are limited to Public Listed Companies, however, if the impact is positive, there could be government requirements in the future

• Additionally, penalties may not be set yet, this could occur in the future.

• Suppliers should aim to prepare for disclosing material indicators from now, as it is good practice and in line with the GP and PG documents.


• Many global brands have been producing sustainability reports preceding the Listing Requirements due to pressure from international parent companies. These companies have well-established initiatives.

• Local suppliers can aim to prepare themselves even if there is no legal requirement.

Since 2016, Bursa Malaysia has steadily made

Sustainability Reporting a mandatory

requirement for public-listed companies. There

are no pre-requisite topics to be disclosure, and

no penalty for choosing not to disclose data. In

the automotive industry, it is not uncommon for

the local sustainability reports to be lacking

details, despite the international parent

company having comprehensive and balanced

report. Additionally, suppliers, which are not

public-listed companies, are under little to no

obligation to disclose information on a voluntary

basis.

Both the Code and amended Listing

Requirements are in line with the Guiding

Principles and Principal Guidance, where

companies are expected to disclose financial

and non-financial information in accordance

with applicable regulations and prevailing

industry practices.

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6. Fair Competition/ Anti-Trust


o Competition Act 2010 (Act 712)


• Relevant provisions for the prohibition of anti-competitive agreements and the abuse of dominant position by major market players, and has been in force since 1 January 2012.

• All suppliers engaging in commercial activities including the GLCs are subject to this law. Commercial activity is defined in Section 3 (4) of the Act.


• The Competition Act 2010 does not provide for any imprisonment for cartel practices. However, Section 41 of the Act provides for a leniency regime with a reduction of up to a maximum of 100% of any penalties that would be otherwise imposed. In essence, the leniency program is designed to encourage those who are involved in cartel practices to whistle blow by cooperating with the Commission in identifying the infringement.

As stated in the Guiding Principles and similarly

in the Principles Guidelines, companies are

expected to uphold standards of fair business

and conduct business in accordance with all

applicable anti-trust or anti-competition laws

and regulations.

In Malaysia, the Competition Act 2010 has been

established to monitor the Guiding Principle and

Principles Guidelines mentioned above. This

Act is well established, and by Malaysian

standards, relatively well enforced.

7. Conflicts of Interest Review of Local Legislation:

o Companies Act 2016


• Relevant content on the conflicts of interest involving directors and indemnification of directors of the companies which came into force on 31 January 2017.

• The Act embodies common law principles on the duty to avoid conflict, requiring directors of the companies to exercise their powers for the purpose of which they are conferred, and not to advance any personal interest due to their position as directors.


• When directors of the companies have an interest in a contract or proposed contract with the companies (whether directly or otherwise), they are required to declare such interest at a directors’ meeting. Additionally, disclosure is required if a conflict may potentially arise by virtue of a director’s office or property.

• Besides, where a director may benefit or gain profit from his position, he is required to obtain consent or ratification at a general meeting.

According to the Guiding Principles, companies

are expected to conduct business in a manner

that avoids any appearance of impropriety.

Moreover, the Practical Guidelines emphasised

that companies are expected to make decisions

based on solid business judgment unclouded by

favouritism resulting from personal relations and

opinions.

In line with this, the Act stated that while

multiple directorships are not absolutely

prohibited in Malaysia, a director should

nevertheless be mindful of conflict, given that a

director has a statutory obligation to always act

in the best interest of the company.

8. Counterfeit Parts Review of Local Legislation:

o Trade Descriptions Act 2011,


Relevant provisions of the Act and the Order

and the requirements of the Guiding Principles

and Practical Guidance are similar in terms of

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• Relevant provisions of information for protection and enforcement in counterfeiting cases which came into force on 1 November 2011.

• The Act protects the interest of consumers and promotes good trade practices by prohibiting false trade descriptions and false or misleading statements, conduct and practices in relation to the supply of goods and services.


• The Trade Descriptions Act is a powerful tool for enforcing trademark rights, which enables the registered owner of a trademark to lodge complaints with the ministry. Following a raid, which does not require a warrant, the ministry may prosecute the suspected counterfeiters on the advice of the attorney general’s chambers.


• In June 2018, the tactic of premises selling fake Kia and Hyundai car replacement parts around Shah Alam, Gombak and Puchong, Selangor, was uncovered after the Ministry of Domestic Trade, Cooperatives and Consumerism raided the premises. In this operation, 123 fake replacement parts of various types such as oil filters, air filters, fuel filters and timing belts worth about RM24, 060 were confiscated. The case was being investigated under Section 8 (2) (b) of the Trade Descriptions Act 2011. Those convicted face a RM10,000 fine for each of fake item sold, or imprisonment of up to three years, or both.

o Price Control (Labelling by Manufacturers, Importers, Producers or Wholesalers) Order 1980.


• The Order makes it mandatory for goods to carry details of the manufacturer, importer, wholesaler, and producer – and in the case of imported goods – country of origin. These details on counterfeit goods are normally fictitious or inaccurate.


• If so, such products may be seized by the ministry, which is empowered to enforce such provisions under the Order.


• In the wake of the implementation of the Sales and Services Tax (SST) since Sept 1, 2018, the Domestic Trade and Consumer Affairs ministry has visited and inspected several premises nationwide to ensure traders comply with SST and not take advantage of the tax mechanism by raising the price of goods.

the basic principles for counterfeit parts, where

companies are expected to minimise the risk of

introducing counterfeit/diverted parts into

deliverable products.

The Practical Guidance, on another hand, has

more requirements for the companies in terms

of establishment of effective mechanisms to

avoid the usage of and to inspect for counterfeit

parts. If detected, the Original Equipment

Manufacturer (OEM), customer and/or law

enforcement should be notified as appropriate.

9. Intellectual Property Review of Local Legislation:

o Intellectual Property Corporation of Malaysia (Amendment) Act 2018,


Malaysian intellectual property laws are similar

to the Guiding Principles, the laws of other

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• An Act to amend the Intellectual Property Corporation of Malaysia Act 2002 and provide intellectual property protection in Malaysia.

o Patents Act 1983 (Act 291):

- Scope:

• In accordance with TRIPs, under the scope of compulsory licence, the Act allows for importation of patented products that are already in other countries' market (parallel import).

• The Government can prohibit commercialisation of patents due to public order or morality.

o Trade Marks Act 1976 (Act 175):

- Scope:

• In accordance with TRIPs, Malaysia prohibits the registration of well-known trademarks by unauthorised persons.

• The government provides for border measures to prohibit counterfeit trademarks from being imported into Malaysia.

o Industrial Designs Act 1996 (Act 552):

- Scope:

• To be eligible for registration, industrial designs must be new and do not include a method of construction or design that is dictated solely by function.

• The design of the article must not be dependent upon the appearance of another article of which it forms an integral part.

o Layout Designs and Integrated Circuit Act 2000 (Act 601):

- Scope:

• The Act allows action to be taken by the owner if such rights recognised under the Act have been infringed.

• The right can also be transferred either partly or wholly by way of assignment, licence, wills or through the enforcement of law.


• Companies that wish to invest or trade in Malaysia should consider registered their rights in Malaysia. As Intellectual Property rights are generally territorial, one should take all steps to secure their rights before investing or trading. For example, if a foreign entity discovers that a local company is trading in the same trademark as the former and earlier than the former in Malaysia, the former should consider using another trademark or purchase the said trademark from the latter if there is no element of misappropriation.


Commonwealth countries and more or less in

accordance with international practice.

Apart from being a member of the World

Intellectual Property Organisation (WIPO) and a

signatory to the Paris Convention and Berne

Convention, which govern these intellectual

property rights, Malaysia's intellectual property

laws are in conformance with international

standards and have been reviewed by the

Trade Related Aspects of Intellectual

Property Rights (TRIPs) Council periodically.

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• As of March 2, 2019, Malaysia is in the process of acceding to the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (Madrid Protocol), an international treaty administered by the International Bureau of World Intellectual Property Organisation (WIPO). It allows a trademark owner to seek protection of the trademark in several countries simultaneously by filing one application with a single office, in one language and by paying one fee.

• The proposed Trademark Bill 2019 supports Malaysia’s obligation under the Madrid Protocol. It is anticipated that amendments will be made to the Trade Mark Act 1976 to incorporate the changes, among others, as below:

i. Practical monetisation of trademark as an intellectual property asset for business

ii. Intellectual property ownership rights, single enforcement procedures and regulations to be made simpler and easier for implementation by stakeholders with the 12- or 18-month period under Stage 3 of International Trademark Registration Process to be revised to nine months or shorter to avoid delay

10. Export Controls and Economic Sanctions


o Strategic Trade Act 2010 (Act 708)


• The act controls export, transhipment, transit and brokering of strategic items, including arms and related material and other items that may facilitate the design, development and production of weapons for mass destruction, and their delivery systems

• This act was established due to the United Nations (UN) membership and UN Security Council requirements to adhere to UN sanctioned nations.

- Key points for suppliers

• Due to the possible of supplier parts including electronics and motor parts being utilised in vehicles or equipment that can facilitate ‘mass destruction’, companies should be wary of ensuring that their products are declared correctly

• Businesses or individuals must obtain a permit / broker registration certificate from the relevant Authorities and keep records of transactions and relevant documents for a period required by the law for items listed

• Violation include fines, imprisonment and even the death penalty.


• Due to the control on permits by the government and higher levels of governance on the matter as well as through port security control mechanisms, there were not many automotive specific samples of company policies found.

Overall, Malaysia, as a member of the United

Nations must adhere to the UN SC’s sanctions,

and the Strategic Trade Act provides legislation

on this. The Customs act is used for the overall

import and export controls, and from a

legislative sense, we have clearly dictated

regulations that match to the GP and PGs from

DRIVE Sustainability.

Due to import and exportation being controlled

by permits, licences and permission from the

Ministry of International Trade and Industry, as

well as security controls at the Ports, there are

controls that exist from a governance level.

However, again, as corruptive practices are a

common occurrence in the country, the

increased legislation last year on Anti-

Corruption should assist in ensuring better

controls for exports and sanction items

adherence.

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o Customs Act 1967 (Act 235)


• The act covers the customs related dealings, including customs charges, prohibitions and permits required, as well as penalties related to the business of importing and exporting and its controls.


• Penalties do apply for goods that have not been declared properly, are prohibited, do not have the correct licence etc.

• Customs checks are conducted at ports at random, therefore adherence is strongly advised to suppliers.


• In the first two-months of 2019 alone, 325 cases of smuggling alcohol and cigarettes into our Ports was recorded. The Customs department are working to tighten their enforcement to combat corruption which it sees as the route cause.

• The Royal Customs Department has set up a new Customs Internal Investigations Unit this January to monitor their officers and ensure abuse of power and corruptive practices within the organisation.

o Asean Free Trade Area (AFTA) since 1992

- Scope of the agreement:

• This trade agreement was drawn up to provide free trade agreement between all of the Asean countries, to promote regional economic growth and attract foreign investors.


• The AFTA has been a strong force behind the growth of the local automotive industry.

• This is especially evident with parts manufacturing as well as trading.

- Relevant Issue:

• The AFTA has attracted several DRIVE Sustainability brand’s component manufacturing to Malaysia.

On a company/business level, a general search

into company policies on export controls and

sanction adherence yielded limited results,

therefore, this could be a clear area where local

manufacturers and suppliers can aim to improve

on should this guideline or policy not exist

internally yet. Providing clearly drawn policies

on trade controls and sanction management

can be helpful for new, foreign as well as all

staff to refer to in an easy manner.

11. Protection of Identity and Non-Retaliation


o Whistleblowers Act 2010 (Act 711)


• This act was enacted to combat corruption and other wrongdoings in the public as well as private sector.

The GP and PG requirements of the Protection

of Identity and Non-Retaliation are more

stringent than stated in the legislation of

Malaysia. Although officially our legislations say

the right thing, in practice there are many

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• It aims to encourage and facilitate the disclosure of improper conduct

• It also aims to protect the individuals making the disclosures from detrimental action (including immunity from civil and criminal action), with the intention ensuring proper investigation may be conducted


• It is important to note that employees who opt to report on company have the legal grounding to be reinstated or compensated

• Reports can include illegal operations and violations of employee rights for example


• Criticism of the law: While the law applies to both public and private sector;

i. One can only disclose to a government enforcement agency (it is illegal to share with anyone else)

ii. If it concerns government and is considered a ‘secret’, you could be penalised under the Official Secrets Act 1972

iii. The protection is revoked if the whistleblower is found to be involved.

• An example of Whistleblowing backfiring was in 2016 when a then opposition politician enclosed the 1MDB audit report, but then got charged under the OSA a prison sentence (since changed to a good behaviour bond).

• There have been statements made to review the existing law due to the criticism received.

o Malaysia Code on Corporate Governance

- Scope of the Code:

• This code was produced by the Securities Commission (SC) of Malaysia for all listed companies

• This code requires a clear and fair grievance mechanism be set up


• While this may not directly relate to suppliers, it could be considered to enact, as this is good practice.


• Recently, there was complaints by migrant workers at several glove manufacturing companies regarding working hours as well as not receiving salaries. These companies supplied rubber products to European brands, who then placed pressure due to backlash in Europe, rather than immediate action by local authorities here.

o Malaysian Employee Federation (MEF) Guideline

- Scope of the Guidelines:

concerns that arise due to other laws such as

the Official Secrets Act and even provisions

within the Whistleblowers Act.

Most companies have a grievance mechanism

process, however, in terms of data on retaliation

is now known in detail, especially as grievances

are likely not reported by more vulnerable

sectors of the population such as migrant

workers. This has been attributed to fear,

language barriers and through witnessing other

cases of retaliation occur.

Calls to reform the Whistleblower act will

hopefully address the gaps in the current

legislation and result in a better managed

grievance mechanism in Malaysia.

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• This guideline was produced in 2014 with the intention of ensuring good governance practices by employees on migrant workers.

• The guidelines includes research on statistics, and notes the progress and challenges of responsible handling of migrant workers, and includes a section on grievance mechanism.


• This is a useful guide to read on overall management of migrant workers.

2. Working Conditions and Human Rights

Guiding Principles: Companies should respect the human rights of workers, and treat all people with dignity as recognized by the international community.


1. Child Labour and Young Workers


o Children and Young Persons (Employment) Act 1966 (Amendment) Act 2010


• No child (person below 15 years of age) can be engaged in any employment.

• Young person (below 18 years of age), may be employed in any office, godown, factory, workshop, store or an industrial undertaking suitable to his capacity.

• The legislation mandates no young person (below 16 years of age), be permitted to work for more than six days in a week.

• No young person be required to work between the hours of 8 o’clock in the evening and 6 o’clock in the morning or work more than four consecutive hours without a period of rest of at least thirty minutes.

• No child or young person shall be required/permitted to be engaged in employment contrary to the Factories and Machinery Act 1967, the Occupational Safety and Health Act 1994, or the Electricity Supply Act 1990, or any employment making him work underground.

• No child or young person shall be required or permitted to be engaged in hazardous work.


• Suppliers to be aware of the interpretation of what constitutes children, young persons, and hazardous work, and the maximum number of days and hours of work for young persons.

Malaysia’s Children and Young Persons

(Employment) Act 1966 (Amendment) act 2010,

for the employment of young persons and

children for hazardous work, and child labour,

are congruent with the principles outlined of the

Guiding Principles.

However, the law does not cover workplace

apprenticeship, student workers, or student

learning programs.

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• Repeat offenders who hire children aged below 15, can be jailed up to five years, with a maximum fine of up to RM 100,000.

- Relevant Highlights

• In October 2018, the Children and Young Persons Act was amended to include ten-fold increase in fines for offences committed. The Human Resource Minister M.Kulasegaran, said in October 2018 that five cases of child labour have been reported between 2016 and 2018 with offenders in two cases punished with RM 2,000 fines.

2. Wages and Benefits Review of Local Legislation:

o Employment Act 1955


• Wage period for any employee shall not exceed one month.

• For any overtime work carried out, an employee shall be paid not less than one and half times his hourly rate.

• For overtime work carried out during National Holiday or on the Birthday of the Yang di-Pertuan Agong, an employee shall be paid not less than three times his hourly rate or less than three times his ordinary rate per piece, respectively.

• Minimum Wage Order (Amendment) 2018: Standardized minimum wage rate throughout the country is RM 1,100 and hourly rate is RM 5.29 per hour.


• Suppliers should be aware of the conditions within the Employment Act that specifies Payment of Wages, and that specifies overtime benefits to the employees.

• Penalties apply for employers that commits an offence in violation of the Act.

• Local suppliers should understand that DRIVE’s requirements are more stringent than local legislation.


• A 2016 ILO Report state that the enforcement of labour laws on migrant workers is inadequate with an estimated 350 inspection officers expected to monitor more than 400,000 places of work.

• Human Resources Minister M Kulasegaran said in February 2019, that he would look into setting different minimum wages according to sectors due to pressure from Employer-based organisations – this is not encouraging from a human rights perspective.

Although there has been some breakthrough

this year with the increased minimum wage,

which includes migrant workers, Malaysia still

has a long way to go both in terms of fair wages

and benefits for both local and migrant workers.

The basic points of the GP and PG are covered

within local legislation, however, there are many

gaps in the language of the law itself. For

example, the Employment Act 1955 covers the

overtime compensation for workers, including

working on national holidays. The Minimum

Wage Order (Amendment) 2018, has specified

the minimum wage applicable. However, the

laws do not specify the wage statements to

verify compensation for the work performed for

each pay period.

Additionally, the lack of enforcement on this

guiding principle is not assisting with ensuring

fair treatment, especially of migrant workers

who may fear retaliation.

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• In March 2019, Employees Provident Fund (EPF) chief executive officer Tunku Alizakri Alias said that there is a need for an in-depth study on salary and wages of Malaysian employees, taking account of the current cost of living.

• The National Bank of Malaysia (Bank Negara Malaysia, BNM) has issued multiple reports that indicate the minimum wage (as well as average wage) in Malaysia is inadequate.

• In December 2018, protests by migrant workers due to unpaid overtime at a local rubber factory came to light; however, little is known beyond a government statement that it will take action in January 2019.

3. Working Hours Review of Local Legislation:



• An employee shall not be required to work more than five consecutive hours without a 30 minute period of leisure.

• An employee shall not be required to work more than eight hours in a day, in excess of a spread over period of ten hours in a day, or more than forty-eight hours in a week.

• Female workers are not to work in any industrial undertaking between the hours of ten o’clock in the evening and five o’clock in the morning.

• An employee may be required by his employer to exceed the limit of hours prescribed or work on a rest day, if urgent work to be done to machinery or plant, or work to be performed by employees in any industrial undertaking essential to the economy of Malaysia.


• Suppliers are to be aware of working hours, especially in factory or industrial areas where overtime work can be expected.

• Suppliers are also to note working hours of women (Part VIII) as outlined by the law.


• Business Conditions Survey conducted by The Federation of Malaysian Manufacturers (FMM) together with the Malaysian Institute of Economic Research (MIER) shows that the respondents of the survey agreed to remove distinction between manual and non-manual workers, and limit benefits for hours of work, including overtime and rest day, holiday pay and termination benefits to those earning less than RM 5,000 a month.

• Also, 26% of the respondents do not agree with any of the government's proposals to amend the EA.

The Employment Act 1955 outlines the

regulated working hours, leisure period and

maximum consecutive days, with conditions,

which is in congruence with the Guiding

Principles. Employment Act also covers

provisions of employment of female employees

which covers more than what is prescribed in

the Guiding Principles.

According to the Act employees can be made to

work overtime by their employer, and is not

voluntary decision of the employees. This is

incongruent to the Guiding Principles.

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4. Forced Labour Review of Local Legislation:

o Anti-Trafficking in Persons and Anti-Smuggling of Migrants Act 2007


• Any person who traffics a person or a child, or smuggles a child for the purpose of exploitation commits an offence, and shall, on conviction, be punished.

o Passport Act, 1966


• Any person who without lawful authority, has in his possession any passport or internal travel document issued for a person other than himself, shall be guilty of an offence.

o Contracts Act 1950


• All agreements are contracts if they made by the consent of parties competent to contract.

• Two or more persons are said to consent when they agree upon the same thing in the same sense without coercion, undue influence, fraud, misinterpretation, and mistake.

o Employment Regulations 1957


• The Register kept by every employer under the Act to contain particulars of the employees (such as Personal Details, Details of terms and conditions of employment, Details of wages and allowances earned during the each wage period). This register to be kept available for inspection by the Director General.


• Suppliers are to take note of foreign labourers and laws relating to their employment.

• As per the Passport Act, employers should not hold in possession the passport of the workers employed.

• Contracts are to be made available to employees prior to their employment, and to be in a language they understand.

• Please refer to the Employment Regulations to understand the groups of particulars the employees are allowed to hold of the employees.


• In March 2019, the Ministry of Communications and Multimedia deputy secretary-general (Policy) Shakib Shakir said that the human trafficking cases are on the rise in Malaysia. The Anti-Trafficking in Persons and Anti-Smuggling of Migrants Council (MAPO) has recorded a total of 1,360 cases involving human trafficking victims placed at shelters throughout 2018.

Malaysian laws specify that agreements made

by the free consent constitute a contract –

which can be between the employer and

employee. As per the Passport Act, it is illegal

to possess passport (identity documents) of

some other person. Anti-trafficking and Anti-

Smuggling Law covers the laws on forced and

bonded labour.

Malaysian law does not specify that employee

identity documents should not be destroyed,

confiscated, concealed, etc. However, it does

specify that employers are required to hold

employee identity documents and make it

available for inspection, when required.

These are in congruence with the Guiding

Principles.

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• The Human Resource Minister M.Kulasegaran, said in February 2019, that the U.S. might impose a ban on products made by forced labour from around the world and there is fear that advanced economies might follow suit.

• Malaysia has witnessed human trafficking incidents such as that uncovered at Wang Kelian, Perlis. Malaysia remains in Tier 2 on the watch list of the Trafficking in Persons Report 2018 https://my.usembassy.gov/our-relationship/official-reports/report-trafficking-in-persons-062918/.

5. Freedom of Association




• Nothing in any contract shall restrict employees to join registered trade unions, participate in its activities, or associate with other persons for organizing a trade union. [Part II Section 8]

o Industrial Relations Act 1967


• No person shall interfere, restrain or coerce a workman or an employer to form or join a trade union and participate in its lawful activities.

• No employer or trade union of employers, or any person acting on behalf of an employer or such trade unions shall impose any condition, refuse, discriminate, dismiss or threaten any person on the ground that he is or is not a member of a trade union.


• Employees and employers alike, are lawfully free to join unions and associations. Suppliers are to be aware of the rights and liabilities of Trade Unions. Please refer to The Trade Union Act 1959 (Act 262) for more details on the same.

• It appears that the three laws listed does not explicitly state the same rights are awarded to migrant workers.

• However, it should be noted that MNCs are banding together to push for civil liberties, including freedom of association, which is estimated to only be enjoyed by 3% of the global population (https://www.business-humanrights.org/sites/default/files/Statement_Public_v2.pdf)


• In February 2019, Malaysia's Human Resources Minister M. Kulasegaran said the Pakatan Harapan government of Prime Minister Mahathir Mohamad would propose changes to the country's patchwork of decades-old labour laws to offer both domestic and foreign workers

Despite the Industrial Relations Act, Employment Act (and more loosely, the Trade Union Act) outlining the rights of the employee to join associations, without reprimand, in reality this is not always true. The GP state the general requirement for all employees to have Freedom of Association, however, the Malaysian Government have not ratified the core ILO Convention on this, and cases of employee dismissal without apparent reason (except status of union membership) occur to this day.

It should be noted that while legislation are congruent to the GP’s requirements, the reality is not the case. Additionally, the three Acts do not appear to mention the rights of foreign or migrant workers in joining unions.

https://my.usembassy.gov/our-relationship/official-reports/report-trafficking-in-persons-062918/https://my.usembassy.gov/our-relationship/official-reports/report-trafficking-in-persons-062918/https://www.business-humanrights.org/sites/default/files/Statement_Public_v2.pdfhttps://www.business-humanrights.org/sites/default/files/Statement_Public_v2.pdf

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more legal protection. The government is consulting labour groups, including the Malaysian Trade Union Congress and International Labour Organisation (ILO) for these reforms.

• Almost one year later and there remains little signals of the new Government’s support on the ILO Convention on Freedom of Association and Protection of the Right to Organise.

6. Health & Safety Review of Local Legislation:

o Act 514 - Occupational Safety And Health Act 1994

- Scope of the Legislation

• The legislation requires all employers with more than five employee to formulate a written Occupational Safety and Health Policy at the workplace.

• Section 30 – It is compulsory for employers who have 40 or more workers to establish a safety and health committee or otherwise directed by the Director General of OSH

• Classification, Labelling and Safety Data Sheet of Hazardous Chemicals) Regulations 2013 Part 4 on Labelling: A supplier need to label every packaging of a hazardous chemical legibly and indelibly. The labelling should be in the national language and English language.

• Occupational Safety And Health (Safety and Health Officer) Order 1997 [RU (A) 316]: No person to act as a Safety and Health Officer unless registered with DOSH Director General

o Guidelines On Occupational Safety And Health In The Service Sector, Department of Occupational Safety and Health

- Scope of the Act/Regulations

• Personal Protective Equipment (PPE) - it will be necessary to provide protective clothing and/or equipment

• At least one emergency exit should be provided. The employer should, however, make an assessment as to whether additional emergency exits are required. Such exits should be suitably positioned with due regard for the operational layout and should not be obstructed by racking, stock or equipment.


• In Malaysia, Occupational Safety and Health Act (OSHA) ultimate legislation reference on OSH matters. It was enacted on 25th February 1994 with the intent to ensure safety, health and welfare of all persons at all places of work. It is hoped that this document would contribute to the promotion of safety and health culture in Malaysian workplaces. It requires all companies to establish and document:

i. Safety and health policy,

ii. Duties of the employer, employees and the safety and health officers,

The local legislation requirements is more

detailed and directive as compared to the

automotive Guiding Principle. Generally the GP

requires supplier to align the company’s OSH

matters to the following:

o Health and safety related information such as emergency procedures and potential safety hazards should be made known to the worker and should be posted within the facility in a language well understood by the worker.

o Required personal protective equipment should be provided by the company and made easily accessible.

o Companies should ensure that all required permits, licenses, inspection and testing reports are in place, up to date and available as required by law.

o Companies should ensure that emergency exits as well as fire detection, alarm and suppression

o Systems are in place and operational at all times. Fire and evacuation drills should be performed according to local law.

o Companies should implement a machine-safeguarding program including adequate training for workers.

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iii. The safety and health committee of companies, and

iv. Occupational safety and health inspections and officers.

• The provision of the Act 514 is based on the self-regulation approach to suit with the particular industry or organization and to establish effective safety and health organization and performance. Its primary responsibility is to ensure safety and health of work lies with those who create the risks, and those who work with the risks.

- Additionally related acts:

• Act 139 - Factories And Machinery Act 1967 (Revised - 1974) Incorporating latest amendment - Act A1268 of the year 2006

• Act 341 - Fire Services Act 1988 Incorporating all amendments up to 1 October 2009

- Related Highlights:

• This is the official website for Malaysian Government’s Department of Occupational Health and Safety which provides information on detailed local legislations, updates on OHS and latest local statistics. Link to source: http://www.dosh.gov.my/index.php/en/

7. Harassment Review of Local Legislation:


- Scope of the Act/Regulations

• The scope details the definition: "―sexual harassment means any unwanted conduct of a sexual nature, whether verbal, non-verbal, visual, gestural or physical, directed at a person which is offensive or humiliating or is a threat to his well-being, arising out of and in the course of his employment;"

• This definition echoes the longer, more comprehensive description of sexual harassment in the Code of Practice on the Prevention and Eradication of Sexual Harassment in the Workplace, which is a voluntary code issued by the Malaysian Government in 1999 for the purposes of providing guidance to employers in dealing with sexual harassment in the workplace.

• The scope defines that: “an employer who fails to inquire into complaints of sexual harassment; inform the complainant of the refusal and reasons behind it; or, submit a report of the inquiry, can be fined up to RM10,000”

• Part XVA, which applies to all employees irrespective of their wages, creates a complaints mechanism for sexual harassment for employees in the workplace.

• Specifically, it requires employers to inquire into any complaints relating to sexual harassment made by an employee against another employee or an employer, and vice versa.

The local legislation requirements is less

detailed and directive as compared to the

automotive Guiding Principle. Generally the GP

requires supplier to align the company’s take on

harassment topic with the following:

Companies should ensure that there is no harsh

and inhumane treatment including any sexual

harassment, sexual abuse, corporal

punishment, mental or physical coercion or

verbal abuse of workers; nor is there to be the

threat of any such treatment. Disciplinary

policies and procedures in support of these

requirements should be clearly defined and

communicated to workers.

http://www.dosh.gov.my/index.php/en/

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o Penal Code Act 574


• The scope defines that: "Whoever, intending to insult the modesty of any person, utters any word, makes any sound or gesture, or exhibits any object, intending that such word or sound shall be heard, or that such gesture or object shall be seen by such person, or intrudes upon the privacy of such person, shall be punished with imprisonment for a term which may extend to five years or with fine or with both.


• Generally in Malaysia, the take on harassment is more reactive than proactive. The legislation does mention the types and impact of harassment within the working environment. However, the need for written disciplinary policies and procedures are not compulsory.

• The best procedure to depend on as an alternative is to have harassment cases reported and investigated through whistleblowing mechanism, with support of Employment Act 1995.

• At the moment the local legislation does not clearly define harassment, apart from sexual harassment, however this law defines personal attacks from legal point.

o Communications and Multimedia Act 588


• The scope defines prohibits harassment an online inclusion abuse

• This does not apply to in-person harassment.

- Related Highlights:

• Sexual Harassment Act - The Ministry of Women, Family, and Community Development is currently awaiting the results of a study that looked into existing laws. These results will work as a guideline to improve existing policies and help form the Sexual Harassment Act.

• This is the official website for National Human Resource Centre of Malaysia. Main discussion in the link is managing sexual harassment at workplace, guide for HR practitioners. Link:http://www.nhrc.com.my/rss/-/asset_publisher/hCox5XdI5nGy/blog/id/2924455

• It should be noted that ‘bullying’ is not outlawed in Malaysia, yet, workplace (and school) ‘bullying’ is rarely reported due to the lack of support victims receive; until and unless there is direct and substantial evidence.

8. Non-Discrimination Review of Local Legislation:



The GP for Non-Discrimination are much more

stringent than that of the local legislation of

http://www.nhrc.com.my/rss/-/asset_publisher/hCox5XdI5nGy/blog/id/2924455http://www.nhrc.com.my/rss/-/asset_publisher/hCox5XdI5nGy/blog/id/2924455

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• The law covers the employment

• This includes migrant workers, but to a lesser extent, as it highlights preference of local employees based on nationality rather than merit


• It should be noted that complaints on discrimination can be made by both local and foreign employees against companies and the ministry have the right to investigate the matters


• As the review of the employment act takes place, many calls for improved employment conditions have been made.

• The National Bank of Malaysia (BNM) has called for a reform of the employment sector to increase wages and end discriminative practices.

• Trade unions have called for increased wages and fair treatment.

• NGOs and Human rights groups have called for higher remuneration, gender equality as well as equal treatment of migrant workers.

• The potential ratification of the Comprehensive and Progressive Agreement on Trans-Pacific Partnership (CPTPP) will have an impact on the ratification status of ILO core conventions – including the yet-to-be ratified non-discrimination convention (C111).

o Industrial Relations Act 1967 (Act 177)


• The law is intended to promote and maintain industrial harmony and provide the regulation of the relations between employers and workmen and their trade unions

• As well as the prevention and settlement of any differences or disputes arising from their relationship and generally to deal with trade disputes and matters arising therefrom

• The law states the no discrimination should arise amongst employers and employees in any circumstances


• It should be noted that all workers, including foreign workers, are allowed to join unions

• No discrimination should occur based on any employees status as a union member or not


• Labour unions have been calling for better employment conditions such as pay, and less discrimination on many areas, including gender, race, religion and even age.

o Human Rights Commission Act 1999 (Act 597)


Malaysia. Although the Malaysian constitution

and legislation prohibits discrimination, the

lacking enforcement and the not-clearly defined

‘discrimination’ has resulted in the continued

practice of discrimination in both the public and

private sectors.

Discrimination occurs locally in terms of race,

religion and gender as well as nationality, in

relation to foreign migrant workers. We have a

long way to go and the basic rights are often

questionable. The review of the Employment

Act will hopefully address all the issues,

especially with better treatment of foreign

workers.

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• The formation of the HR Commission in 1999 with the purpose to set out the powers and functions of such commission for the protection and promotion of human rights in Malaysia

• To provide for matters connected therewith or incidental thereto; and have the power to create regulations with the purpose of conducting the provisions of the act

• The 2015 Strategic Framework for a National Policy on Business and Human Rights for Malaysia was drafted and includes recommendations to combat gender discrimination as well as migrant worker exploitation

• Known locally as SUHAKAM


• The document called for the ratification of all basic Human Rights Covenants and ILO Conventions by the Malaysian Government.

• The ratification of the ICERD has been denied due to a huge backlash of the Malay majority, however the CRC, CEDAW and the CRPD have been ratified.

• Suppliers should note that the GP are more stringent and they should create policies to meet the GPs requirements.


• Since its establishment in 1999, no formal regulations have appeared to have been made – this may be due to political restrictions

- On the two points within the Practical Guidance document,

• Medical Testing of Potential Worker for the Purpose of Discrimination: There is a code that prevents discrimination of a person with HIV, however no law exists for refusing to hire a potential worker.

• Provision of Reasonable Accommodations for Religious Practice of Workers: This is usually included within the Planning Approval of buildings, therefore most buildings (unless located within a very close distance to a prayer facility) will contain a prayer room each for Muslim employees of both genders.

3. Environment

Guiding Principles: Companies are expected to support a proactive approach to environmental responsibility by protecting the environment, conserving natural resources and reducing the environmental footprint of their production, products and services throughout their life-cycle.


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General o Environmental Quality Act (EQA) 1974 (Act 127)


• The Act restricts the following:

i. Pollution of the atmosphere

ii. Noise pollution

iii. Pollution of the soil

iv. Pollution of inland waters

• The Act prohibits the following:

i. Discharge of oil into Malaysian waters

ii. Discharge of wastes into Malaysian waters

iii. Open burning

iv. Placing, deposit, etc., of scheduled wastes


• Companies should be aware of the requirements and penalty outlined in the Regulation and refer to corresponding Regulations for specific acceptable conditions of emissions, discharge and etc. set up by the Department of Environment.

The Act provides high-level requirements that

supported the following Guiding Principles:

Water Quality & Consumption

Air Quality

Natural Resources Management & Waste

Reduction

Responsible Chemical Management

Kindly refer to the section below to understand

how regulations under the Environmental

Quality Act 1974 benchmark against the

abovementioned Guiding Principles.

1. Energy Consumption & Greenhouse Gas Emissions


o Renewable Energy Act 2011 (Act 725)

- Scope of the Policy:

• The Policy applies to renewable energy producers with an installed capacity of not more than thirty megawatt or such higher installed capacity as may be approved by the Minister are eligible to apply for a feed-in approval allowing the producers to participate in the Feed-in Tariff (FiT) system.

• Effective on 1st January 2019, the new Net Energy Metering (NEM) Scheme announced under the 2016 budget is replacing the FiT system. The NEM Scheme will allow excess solar PV generated energy to be exported back to the grid on a "one-on-one" offset basis.


• Under the Act and the latest NEM Scheme, automotive parts suppliers who adopted renewable energy generations (e.g. solar panel) could be able to save electricity cost, hedge against electricity tariff increase and realise return from investing in renewable energy, as a response to the government target towards achieving 20% renewable energy mix in Malaysia by 2025.

According to the Guiding Principles under

Energy Consumption & Greenhouse Gas

Emissions, companies are expected to

implement a comprehensive energy reduction

strategy and management programme while

increasing use of renewable energy.

The Renewable Energy Act 2011 does not

require companies to track and document

energy consumption and greenhouse gas

emission. It also does not require companies to

formulate and operationalise energy reduction

and management programme towards reducing

their energy consumption and greenhouse gas

emissions. The main objective of the policy is to

provide an avenue for companies to adopt

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• The Supply Agreement for Renewable Energy (SARE) programme, a Solar Leasing Concept where users will be able to lease the solar panels and install them at their households without the need of paying for the system. Users can enjoy zero upfront cost to install photovoltaic (PV) panels, and payment for the monthly leasing fee or solar energy usage can be made to the solar company involved via TNB bills.


• Upcoming legislation:

i. Energy Efficiency & Conservation Act: The government is in the midst of drafting the Act and it is expected to be tabled in the Parliament in mid-2019. The government will also review the National Energy Efficiency Action Plan 2016-2025.

ii. Climate Change Act: The government is expected to table the Act in 2021. Alongside with the Act, the government aimed to complete and announce a national climate change adaptation and mitigation plan by end of 2019.

renewable energy, resulting reduction of

greenhouse gas emissions in their operations.

Moreover, the Practical Guidance set further

requirement that companies shall set targets on

energy consumption and greenhouse gas

emissions as well as reduce greenhouse gas

emissions beyond manufacturing operations to

raw materials extraction, transportation and

end-of-life operations.

2. Water Quality & Consumption


o Environmental Quality (Industrial Effluent) Regulations 2009 under the EQA 1974.

- Scope of the Regulation:

• The Regulation applies to any premises which discharge or release industrial effluent or mixed effluent, onto or into any soil, or into inland waters or Malaysian waters. No work on any premises that may result in a new source of discharge or causes material change in the quantity of the discharge or release is allowed without prior written notification to the Director General.


• Companies should be aware of the requirements, acceptable conditions for the discharge of industrial effluent or mixed effluent and penalty outlined in the Regulation and ensure proper housekeeping in managing industrial effluent or mixed effluent within premises.


• In July 2015, licenses of 34 contractors in bauxite mining were revoked by the Pahang government due to concerns over pollution at coastal waters and air from bauxite residue and dust. In December 2016, RM30 million is contributed by the Kuantan Port Consortium to clean up the pollution.

• This April, the government lifted the ban on bauxite mining in the Kuantan region.

According to the Guiding Principles under

Water Quality & Consumption, companies are

expected to effectively reduce, reuse and

recycle water with responsible treatment of

wastewater discharges to protect the

environment and improve overall water quality.

The Environmental Quality (Industrial Effluent)

Regulations 2009 only focuses on overall water

quality by setting the acceptable industrial

effluent conditions for companies’ industrial

effluent.


requirement that companies are expected to

conduct water stress assessment in operations

and throughout the life cycle of the business. It

also expects companies to establish target for

water reduction and integrate water

management into overall business plan.

3. Air Quality Review of Local Legislation:

-




o Environmental Quality (Clean Air) Regulations 2014 under EQA 1974


• The Regulation applies to any premises used for any industrial or trade purposes, industrial plant and fuel burning equipment that discharges or is capable of discharging air pollutions into the open air. No work on any premises that may result in a new source of emissions or causes material change in the quantity of the emission from an existing source is allowed without prior written notification to the Director General.

• The Regulation requires every premise to be equipped with Air Pollution Control System (APCS) that is designed and constructed by a professional engineer in accordance with the specification as determined by the Director General. APCS shall be operated by a competent person who shall be on duty at all times during operation hour.

• The Regulation requires any activity or industry listed in the First Schedule (e.g. fuel burning boilers with a total capacity > 10MW) incorporate measures to reduce the emission of air pollutants to the atmosphere in accordance with the Best Available Techniques Economically- Achievable (BAT) determined by the Director General.


• Companies should be aware of the requirements, limit value and technical standards and penalty outlined in the Regulation and ensure proper housekeeping in managing emissions within premises.


• The recent Sungai Kim Kim pollution was attributed to a tyre factory, with two directors of the company being charged in relation to air and water pollution (based on the Clean Air and the Industrial Effluent Regulations.


are expected to routinely monitor, appropriately

control, minimise, and to the extent possible,

eliminate emissions contributing to local air

pollution.

The Environmental Quality (Clean Air)

Regulations 1978 sets requirements on air

emissions (e.g. air pollution control system)

similar to the Guiding Principles as well as

Practical Guidance.

4. Natural Resources Management and Waste Reduction


o Environmental Quality (Scheduled Wastes) Regulations 2005 under EQA 1974


• The Regulation requires every waste generator to ensure that scheduled wastes generated by him are properly stored, treated on-site, recovered on-site for material or product from such scheduled wastes or delivered to and received at prescribed premises for treatment, disposal or recovery of material or product from scheduled wastes.

• The Regulation requires every waste generator to ensure that scheduled waste that are subjected to movement or transfer be packaged, labelled and transported in accordance with the guidelines prescribed by the Director General.


are expected to encourage and support the use

of sustainable, renewable natural resources

while reducing waste and increasing reuse and

recycling.

The Environmental Quality (Scheduled Wastes)

Regulations 2005 as well as the Customs Order

in relation to export and import only focuses on

storage, treatment, recovery and transnational

movement of wastes that are categorised as

scheduled waste whereas the Guiding

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• The Regulation requires every waste generator to keep an inventory of schedule wastes in accordance with the Fifth Schedule for a period up to three years from the date the scheduled wastes was generated.


• Companies should be aware of the requirements, waste categorised as scheduled wastes listed in the First Schedule and penalty outlined in the Regulation and ensure proper housekeeping in managing scheduled waste within premises.


• In March 2019, illegal dumping of scheduled waste was found in Sungai Kim Kim, Pasir Gudang, Johor, which has resulted close to 4,000 people seeking medical treatment. A total of 111 schools at vicinity of the dumping area have been order to close until further notice.

• [Refer to Bauxite Mining Pollution in Kuantan stated in ‘Industrial Effluent’ section]

o Customs (Prohibition of Export) Order 1998 (Amended in 2017) under Customs Act 1967

- Scope of the Order:

• Toxic and/or hazardous wastes are listed as Part I of the Third Schedule. This means exportation of the goods is prohibited except it is accompanied by a letter of approval issued by or on behalf of the Director General of Environmental Quality.


• Companies should be aware of the Order if exportation of hazardous wastes occurred as part of the operations.

o Customs (Prohibition of Import) Order 1998 (Amended in 2017) under Customs Act 1967

- Scope of the Order:

• Toxic and/or hazardous wastes are listed as Part I of the Third Schedule. This means importation into Malaysia of the goods is prohibited except it is accompanied by a letter of approval issued by or on behalf of the Director General of Environmental Quality [Clause 6]


• Companies should be aware of the Order if importation into Malaysia of hazardous wastes occurred as part of the operations.

Principles focuses on sustainable use of natural

resources while reducing waste and increasing

reuse and recycling of waste in general.


requirement that companies are expected to set

waste reduction target and take in consideration

the health and safety of employees and the

local communities associated with all waste

(including scheduled waste) generated by the

companies.

5. Responsible Chemical Management


o Occupational Safety and Health (Use and Standard of Exposure of Chemicals Hazardous to Health) Regulations 2000 under Occupational Safety and Health Act 1994



are expected to identify, minimise or eliminate

the use of restricted substances in

manufacturing processes and finished products

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• The Regulation requires an employer to identify and record all chemicals hazardous to health used in workplace.

• The Regulation requires an employer to ensure that the exposure of any person to any chemical hazardous to health are within permissible exposure limit.

• The Regulation requires an employer to conduct risk assessment if it is likely that any employee is likely to expose to any chemical hazardous to health before carrying out any work. An employer shall control chemicals hazardous as well as conduct monitoring of exposure and health surveillance programme if the risk assessment report indicated that these actions are required.


• Companies should be aware of the requirements on chemical hazardous to health, outlined in the Regulation and ensure proper housekeeping in managing chemical hazardous to health within premises.

to ensure regulatory compliance. Companies

should also be aware of any use of reportable

substances in processes and finished products,

and actively investigate suitable substitutes.

The Guiding Principles also highlighted

expectation on minimising and eliminating the

use of restricted substances in manufacturing

processes and finished products.


expectation on collecting data in relation to

chemical management, such as establishing

programmes to collect data from material

manufacturers for all components, measuring

data completeness against bill of materials and

taking corrective measures to assure data is

traceable to the material manufactures.

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