Special Economic Zones in the OIC Region:
Learning from Experience
72
Figure 12 – Penang FIZs and Industrial Estates
Source: PDC (2017)
5.2.3 Legislative and Regulatory Framework
Special Economic Zone Act and Regulations
5.2.3.1 Legal
In 1971, Malaysia passed the Free Trade Zone Act to create Export Processing Zones within
Malaysia. Penang SEZ in Bayan Lepas was the first zone to be set up in 1972.
As industrialisation spread rapidly across Malaysia there was a corresponding development of
trade and services such as bulk breaking, repacking, re-labelling and other ancillary activities
attributed to the export market which required bonded areas or free zones to facilitate these
new activities.
These free zone categories are governed via the Free Zones Act 1990 and the Free Zones
Regulations 1991 which replaced the original Free Zones Act 1971. Under the Free Zones Act
1990, the Minister of Finance may declare an area to be a free zone, primarily for the
manufacture of goods for export.