License and Permit

In Malaysia, direct selling industries has contribute over RM 5.5 billion worth of sales in 2008 and offers business opportunities to Malaysian public. However, it also appears as the top of the list of complaints at the National Consumer Com-plaints Centre. There were 2,339 complaints in 2008, a substantial increase of 21% as compared with the 1,933 complaints in 2007. Normally, the complaints are related to scratch-and-win scams, credit card payments, cooling-off period (time given to consumers to reconsider the purchase), lack of information and defective products offered.

Malaysian Direct Distributors Association (MDDA) president Datin Sylvia Koh pointed out that out of 100 complaints of cheating lodged with the Domestic Trade, 90 were found to be committed by unregistered companies. Consumers now are sceptical about direct selling companies.

As stated in The Malaysia Government's official portal, in order to carry out activities in the manufacturing industry, a business is required to obtain a premise license as well as business license. In addition, special licenses are also required for manufacturing of specific products depending on the type of materials used.

According to Local Government Act 1976, section 107(5) every person to whom a liscence has been granted shall exhibit his liscence all the time in some prominent place on the liscence premises and shall produce such lisccence if required to do so by any officer of the local authority authorized to demand the same. Besides, under section 107(6), any person who fail to exhibit such liscence under subsection (5) shall be guilty of an offence and shall on conviction be liable to a fine not exceeding five hundred ringgit or to imprisonment for a term not exceeding six months or to both.

The Star newspaper reported that, on 3th of December 2009, there were four companies and four directors were fined RM203,700 by a magistrate’s court here on 28 counts of illegally conducting a direct-selling business. The companies are Waterdrops Holding Sdn Bhd, Waterdrops Sdn Bhd, Waterdrops Ventures Sdn Bhd and Waterdrops Corporation Sdn Bhd were fined RM52,500 for the seven charges they faced. They were pleaded guilty for selling Smart Kiosk products, water vending machines, and R.O. Water Machines via direct-selling.

In addition to the issue, MDDA (Malaysian Direct Distribution Association) will launch its homepage which will be officiated by Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Ismail Sabri Yaakob. This homepage enables consumers to check whether the products/services offered to them are registered or legal direct selling companies as the site will provide a full list of MDDA members for them to counter-check.

So, if anyone of you are interested in starting up a business, don't forget to apply the license before operating the business. This is not only a legal document giving official permission to do something, but also to determine the specific obligations of your new business. By knowing all the qualification, is one of the basic elements of expanding your business from scratch. Malaysia is currently ranked 12th in terms of sales in direct selling business worldwide. Hence, the potential of direct selling business is huge and this can prosper in future, with the requirement that each of the direct selling operators must obtain the permits in order to eliminate the unecessary court cases.