CIDB License for Malaysian Companies
A CIDB license is a permit issued by Malaysian Construction Industry Development Board (CIDB) to all contractors, whether local or foreign before carrying out any construction work legally in Malaysia. Contractors seeking registration must adhere to the established requirements and procedures prior to the submission of their application.
- Registration with CIDB
Generally, the type of CIDB registration required depends on the nature of the company, the type of construction project (whether private or government), and the location where the project will be carried out.
Below are the 6 different types of registration with CIDB:
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Registration
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Purpose
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Local Contractor Registration Certificate (PPK)
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Allows contractors with local equity of at least 70% to participate in local private construction projects.
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Foreign Contractor Registration Certificate (PPKA)
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Allows contractors with foreign equity exceeding 30% to undertake private construction projects in Malaysia.
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Government Employment Certificate (SPKK)
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Additional license to allow local contractors to undertake government construction projects.
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Government Employment Certificate for Foreign Contractors (SPKKA)
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Additional license to allow foreign contractors to undertake government construction projects.
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Contractor Consortium or Joint Venture Registration
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Allows the combination of 2 or more construction companies to undertake a construction project.
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International Contractor Registration
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Allows local CIDB registered contractors to participate in overseas construction projects.
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- Grades and Categories of CIDB Registration
CIDB classifies contractors into seven grades based on their tender capacity and paid-up capital. This classification matches contractors with projects of various sizes and complexities. The grades are enumerated as follows:
(1) Grade G1 ?with tender value of up to RM200,000.00
(2) Grade G2 ?with tender value of up to RM500,000.00
(3) Grade G3 ?with tender value of up to RM1,000,000.00
(4) Grade G4 ?with tender value of up to RM3,000,000.00
(5) Grade G5 ?with tender value of up to RM5,000,000.00
(6) Grade G6 ?with tender value of up to RM10,000,000.00
(7) Grade G7 ?with no tender value limit
There exist four (4) distinct categories of registration, namely Civil Engineering Construction (CE), Building Construction (B), Mechanical and Electrical (ME), and Facility (F). Contractors can apply for more than one (1) categories based on the works to be carried out as well as the academic qualifications and experience of their technical personnel.
Generally, new application will be assigned to Categories B and CE. Category ME is designated for companies with technical personnel with technical certificate or academic certificate in construction-related field. On the other hand, Category F is granted to companies that are registered under the Registrar of Companies, the Malaysia Co-operative Societies Commission, or the Registrar of Societies Malaysia, and are applying for Grade G4 registration or higher.
- Qualifying criteria for a new registration with CIDB
(1)
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The applicant must be either one of the owners or directors of the company. Each owner or director is only allowed to submit one company registration application.
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(2)
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The application must be made by a registered business entity, which can be a private limited company, enterprise or limited liability partnership registered with the Companies Commission of Malaysia (CCM).
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(3)
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The applicants must be free from conviction of disciplinary action or court during the submission of the application.
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(4)
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The company’s technical personnel must have relevant qualification and year of experience in the industry.
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(5)
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The applicant must maintain the following minimum paid-up capital throughout the registration period:
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Grade
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Paid-up capital (RM)
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G1
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5,000 / 10,000 (SPKK)
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G2
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25,000
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G3
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50,000
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G4
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150,000
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G5
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250,000
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G6
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500,000
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G7
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750,000
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(6)
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Obtaining a valid SCORE assessment certificate of at least 3 stars for contractors of grades G5, G6, and G7; at least 2 stars for contractors of grades G2, G3, and G4.
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(7)
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Obtaining valid ISO 9001:2008/2015 certification for grade G7.
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- Post Registration Compliance
Contractors are required to adhere to the following conditions throughout the two-year new registration period:
(1)
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Attend and pass the Contractors Integrity and Code of Ethics Course.
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(2)
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Fulfill the minimum Contractor Continuous Development points.
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(3)
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Attend and pass the Business Management course for grades G1 to G3 contractors who do not have a Technical Certificate.
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(4)
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Attend and pass the Facility Management course and Facility Skills Competency Certificate course for companies with Facility (F) category.
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- Ministry of Finance (MOF) Certificate Register
While not mandatory, registering with Malaysia’s Ministry of Finance (MOF) is essential for the company to qualify for bidding on government contracts. This registration opens up opportunities to supply goods, provide services, or offer consulting to various government ministries, departments, and agencies. It enhances a company’s credibility and trustworthiness and ensures compliance with relevant regulatory requirements, providing legal assurance and facilitating timely payments for government projects. Although there are no direct penalties if the MOF certificate expires, the company will be unable to participate in new government contracts or renew existing ones without a valid certificate.
The CIDB license is a critical requirement for Malaysian companies in the construction industry. It helps ensure that contractors meet the necessary standards and regulations to operate safely and efficiently. Obtaining and maintaining a CIDB license opens the door to government contracts, enhances credibility, and promotes business growth. As such, companies seeking to thrive in the construction sector must prioritise obtaining the proper CIDB certification and adhere to industry guidelines.
Kaizen, together with its associate firms in Malaysia, can help the clients to perform these compliances formalities so as to maintain the Malaysia company in good standing. Please call and talk to our professional accountants in Kaizen for further clarification.
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