Following from its media release on 10 April 2020^[1], the Ministry of International Trade and Industry (‘MITI’) has issued a third set of Frequently Asked Questions on 13 April 2020 (‘MITI FAQs-III’).
 
Below is our summary of the salient provisions of the MITI FAQs-III.
 
Unless otherwise stated, reference in this Alert to FAQ numbers are FAQ numbers in the MITI FAQs-III.
 
General Questions on Applications
 
MITI has confirmed that only the following may seek approval of MITI to operate during the period of the Movement Control Order (‘MCO’) –
 

1. producers of critical products and those forming part of the supply chain for such products listed in Parts A and B respectively of Appendix 2 to the MITI FAQs-III – these were allowed since the implementation of the first phase of the MCO that commenced on 18 March 2020 – see MITI FAQs dated 19 March 2020; and

2. persons involved in the additional economic sectors set out in Appendix 1 to the MITI FAQs-III – these were announced in MITI’s media release of 10 April 2020^[2],

(see FAQ No. 1.)
 
MITI have emphasised in FAQ No. 2 that –
 

1. companies in sectors that are not listed in Appendix 1 and Appendix 2 are not allowed to operate during the MCO period; and

2. companies in the sectors listed in Appendix 1 and Appendix 2 that are given approval to operate will be subject to stringent health and safety protocols.

Applications for approval to operate are to be submitted online at https://application.miti.gov.my (‘CIMS 2.0’)(FAQ No. 3.)
 
According to FAQ No. 4, applications will be processed within five days and a letter of approval will be automatically generated by CIMS 2.0. Applicants may check the status of their applications through CIMS 2.0 (telephone enquiries will not be entertained). MITI emphasised that companies can only start their operations upon receipt of MITI’s approval.
 
Companies that received MITI’s approval to operate during the first two phases of the MCO are encouraged to re-apply using CIMS 2.0 so that they can receive auto-generated approval letters with a QR code that will facilitate movement of their workers and operations (FAQ No. 5.)
 
Significantly the MITI FAQs-III state that –
 

• companies that received approval during the first two phases of the MCO may apply for additional production capacity (FAQ No. 6);

• companies that received operating approvals from other ministries or local authorities during the first two phases of the MCO are required to re-apply to MITI (FAQ No. 8);

• companies whose applications were rejected during the first two phases of the MCO may re-apply (FAQ No. 7); and

• companies with multiple businesses and sites are required to submit separate applications (FAQ No. 12).

Applicants who are unsuccessful are permitted to appeal through CIMS 2.0 (FAQ No. 10.)
 
A company that is not listed in Appendix 1 which supplies products or services to companies that are permitted to operate may apply for approval to operate (FAQ No. 20.)
 
Business operations
 
Subject to the conditions in the approval letter, companies may commence operations immediately upon receiving MITI’s approval (FAQ No. 15.)
 
Companies whose premises are located in the red zone^[3] will not be excluded from seeking operating approval but will be subject to regulations of the National Security Council and relevant local authority (FAQ No. 16.)
 
Companies can only operate at the operating capacity approved by MITI (FAQ No. 17) and MITI’s approval is required to operate full time. The operating hours are subject to regulation of the National Security Council, State Government and local authorities (FAQ No. 18.)
 
The health and safety protocols are contained in the standard operating procedures that are available on CIMS 2.0. Companies are required to agree to the standard operating procedures before they can register on CIMS 2.0 (FAQ No. 19.)
 
A company that is categorised in Appendix 1 may obtain products or services (e.g. machinery maintenance and spare parts) from a supplier which is not included in Appendix 1 provided that the supplier or service provider obtains approval from MITI (FAQ No. 21.)
 
FAQ No. 22 explains that a company which is categorised in Appendix 1 which has received approval to put its manufacturing equipment on standby mode (warm idle) is not allowed to operate immediately but must apply for approval and update its information on CIMS 2.0.
 
Companies that have obtained approval to operate from MITI are allowed to fulfil orders for both the domestic and export markets (FAQ No. 24.)
 
Companies are permitted to employ third-party service providers to sanitise their premises and factory (FAQ No. 25.)
 
FAQ No. 26 clarifies that in-house service providers (e.g. transportation) do not require separate operating approval. However, the FAQs add that third-party service providers are required to submit separate applications for MITI’s approval.
 
Human Resource
 
A worker included in the exemption list who goes on leave may only be replaced by another worker who is on the exemption list (FAQ No. 29.)
 
Where companies have centralised/ shared services, key staff (e.g. information technology, human resource and finance) are permitted to go to the shared services office only if they have been included in the list of workers submitted to MITI (FAQ No. 31.)
 
Industry Specific FAQs
 
Logistics and Movement
 
FAQ No. 33 states that logistics companies are permitted to operate subject to MITI’s approval.
 
Operating hours for deliveries to domestic customers are subject to rules stipulated by the Ministry of Transport (FAQ No. 32.)
 
Logistics companies with operating approval are permitted to collect materials from its supplier’s warehouse even if the supplier is not allowed to operate (FAQ No. 34.)
 
A company that is allowed to operate is advised under FAQ No. 35 to share a copy of MITI’s permit with its employees. Its employees are advised to carry with them a copy of the approval letter and identification documents such as the company’s identification document so that these documents can be produced to enforcement authorities.
 
Research and Development
 
Research and development applies to both commercial and in-house laboratories (FAQ No. 37.) However they are only allowed to undertake research and development activities within the approved sectors and in any event, are required to apply for operating approval from MITI (FAQ No. 38.)
 
Construction and Building Materials
 
FAQ No. 39 clarifies that a company which is undertaking several construction projects or construction-related services is required to apply for a separate approval for each project.
 
Contractors who undertake works to complete building construction, premises renovation, or machine installation are required to apply for MITI’s approval (FAQ No. 40.)
 
Approval is required not only by the main contractor, but its sub-contractors are also required to apply for MITI’s approval after the main contractor has received its approval (FAQ No. 41.)
 
FAQ No. 44 clarifies that ‘construction-related services’ refers to services within the supply chain of a specific construction project. Companies within this supply chain are required to apply for MITI’s approval.
 
Rubber Products and Rubber Gloves
 
Rubber glove manufactures who wish to increase their capacity beyond 50% are required to apply for MITI’s approval (FAQ No. 45.)
 
Direct and indirect suppliers of raw materials are allowed to apply to MITI for approval to operate (FAQs No. 47 and 48.)
 
Oil and Gas
 
MITI has clarified in FAQ No. 49 that although the oil and gas sector is listed as an essential service and allowed to operate, there is no blanket approval for oil and gas services and equipment companies to operate. Each individual company is required to apply for approval.
 
Chemical and Petrochemicals
 
Suppliers of paint and its raw materials are required, as part of the value chain, to apply for MITI’s approval (FAQs No. 50 and 51.) It would appear from these FAQs that approval will not be given on a general basis but only for specific instances where the supply is required as part of specific value chains.
 
Machinery and Equipment
 
Companies related to the machinery and equipment sector (e.g. equipment suppliers, spare parts suppliers, repair and maintenance companies) are allowed to apply for operating approval from MITI (FAQ No. 52.)
 
However, companies in the machinery and equipment sector which are given approval to operate are no permitted to service machinery at companies that have not received approval to operate or at companies that produce non-essential goods (FAQ No. 53.)
 
FAQ No. 52 states that warm idle companies in the machinery and equipment sector are permitted to apply for MITI’s approval to operate.
 
Industrial Gases
 
Industrial gases companies that supply industrial gases to factories that produce essential goods are permitted to apply for MITI’s approval even if such supplier of industrial gases does not have a manufacturing licence (FAQ No. 57.)
 
Where an industrial gases supplier uses third-party transporters to deliver industrial gases to factories that produce essential goods, FAQ No. 58 clarifies that such third-party transporter is required to obtain MITI’s approval to operate.
 
Automotive
 
FAQ No. 60 clarifies that the expression ‘after sales services’ for the automotive sector is limited to local services. It is further clarified in FAQ No. 61 that ‘after sales service’ refers to the operation of maintenance and service of vehicles and includes spare parts centre/ shop and service workshop that are operated independently or by the manufacturer and dealers.
 
It has also been clarified in FAQ No. 66 that ‘after sales service’ includes body and paint repair and in FAQ No. 71 that ‘after sales service’ operators are allowed to order and transport automotive parts and components.
 
Spare parts centres are only allowed to distribute spare parts to service centres upon approval of MITI. Any other sales that are beyond ‘after sales services’ are prohibited (FAQ No. 62.)
 
A local automotive components and parts manufacturer with approval to operate is permitted to manufacture, sell and deliver components and parts to local spare parts shops that supply these parts to car workshops for repair and maintenance upon MITI’s approval^[4] (FAQ No. 63.)
 
In relation to the assembly and export of vehicles, FAQ No. 64 states that a company may export units that were assembled before the MCO (i.e. before 18 March 2020) and operate to assemble new vehicles for export upon approval from MITI.
 
Completing the assembly of vehicles that were partly assembled is permitted provided that they are for export (FAQ No. 65.)
 
Spare parts centres and stockists are allowed to distribute spare parts to service centres to support the latter’s operations upon approval from MITI (FAQ No. 67.)
 
Subject to approval of MITI, dealers who have vehicles registered but were unable to deliver them because of the MCO are allowed to deliver such vehicles (FAQ No. 68.)
 
Tyre
 
FAQ No. 69 states that the production of tyres for export and after sales service is permitted. For the aforesaid purpose, FAQ No. 70 clarifies that after sales service includes tyre shops for repair and maintenance/ workshops.
 
FAQ No. 72 clarifies that tyre manufacturers are permitted to deliver their products to their after sales service providers.
 
It is clarified that tyre producers may only supply tyres to vehicle manufacturers for vehicles that are to be exported (FAQ No. 63.)
 
Comments
 
It is clear from the MITI FAQs-III that operating approval for sectors and activities in Appendix 1 and Appendix 2 of the FAQs are being consolidated under the purview of MITI (see FAQ No. 8.)
 
The MITI FAQs-III are helpful as they clarify many issues pertaining to the approval requirements. In particular, there are instances, such as in construction projects, where operating approvals are required by every company in the supply chain to enable operations to be carried out smoothly during the MCO.