# Bumiputera Equity Requirements in Malaysian Business Regulation

> A descriptive map of where Bumiputera equity and participation conditions appear in Malaysian business regulation, with the named instrument for each.

- Category: business
- Language: en
- Status: published
- Updated: 2026-07-20
- Canonical: https://negaraku.md/en/business/bumiputera-equity-requirements

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Bumiputera equity and participation conditions are a live part of Malaysian business
compliance. They appear in government procurement, in the distributive trade guideline, in
several sector licences, and in property acquisition rules. They also do not appear in
many places where they are widely assumed to apply.

This page is descriptive. It states what each requirement is, which instrument imposes it,
and where it applies. Where a requirement is commonly asserted but no instrument could be
found, that is said plainly rather than repeated.

## Where do these conditions come from constitutionally?

Article 153 of the Federal Constitution is headed *Reservation of quotas in respect of
services, permits, etc., for Malays and natives of any of the States of Sabah and
Sarawak*.

Article 153(2) provides that the Yang di-Pertuan Agong shall exercise his functions in
such manner as may be necessary to ensure the reservation of such proportion as he may
deem reasonable of, among other things, permits and licences — but only where a permit or
licence for the operation of a trade or business is required by federal law, and subject
to the provisions of that law. Article 153(8) provides that where federal law requires
such a permit or licence, that law may provide for the reservation of a proportion of
those permits or licences.

Two points follow directly from the text, and both matter for compliance work.

**Article 153 sets no percentage.** It is an enabling provision. Every figure in this
article comes from a subsidiary instrument, a treasury circular or a published ministerial
guideline, not from the Constitution.

**It operates through permits and licences required by federal law.** That is why the
conditions in practice sit inside licensing and procurement instruments rather than in
company law.

Definitions are also constitutional rather than instrument-specific. Article 160 defines
*Malay* and Article 161A defines *native*, and the operating instruments cross-refer to
them.

## What does government procurement require?

The governing instrument is **Pekeliling Perbendaharaan PK 1.5, Dasar Keutamaan Kepada
Syarikat Bumiputera**, in force from 29 November 2022, amended with effect from 10 April
2023 and again from 1 January 2025. Paragraph 1.2 records that the policy has been in
force since 1995.

### The definition is six limbs, not one

Paragraph 2.1 requires all of the following:

| Limb | Requirement |
| --- | --- |
| 2.1(i) | At least 51 percent of shares held by Bumiputera, and individual Bumiputera shareholdings must exceed individual non-Bumiputera shareholdings |
| 2.1(ii) | At least 51 percent of the board of directors |
| 2.1(iii) | Chief executive, managing director or general manager, financial controller or finance director and other key posts held by Bumiputera, at at least 51 percent by number |
| 2.1(iv) | At least 51 percent of financial management, with the finance head Bumiputera |
| 2.1(v) | At least 51 percent of employees |
| 2.1(vi) | Organisation chart and management functions showing at least 51 percent control |

Paragraph 3.1 addresses joint ventures with foreign companies: the joint venture must be
incorporated in Malaysia, Malaysian Bumiputera equity must be not less than 51 percent and
foreign equity not more than 49 percent, and the board, management and employees must
follow the equity proportions.

### Who grants and withdraws the status

Under paragraph 4.1, the Sijil Taraf Bumiputera for supplies and services procurement is
issued by the Ministry of Finance following a premise visit by Pusat Khidmat Kontraktor
(PKK) under KUSKOP; for works procurement, both the certificate and the visit come from
PKK, with Grade G1 Bumiputera works contractors rated on submitted documents alone.
Paragraph 4.2 allows a premise visit at any time. Paragraph 4.3 allows the status to be
cancelled or withheld for non-compliance.

Paragraph 5.1 grants status automatically, at parent level, to Bumiputera-mandated
agencies — statutory bodies or government companies established by the Federal or a State
Government to increase Bumiputera participation in commerce. Subsidiaries must apply
separately under paragraph 5.2.

### The preferences themselves

For supplies and services outside free trade agreement coverage:

- **Paragraph 6.1** — procurement above RM50,000 up to RM100,000 must be invited among
  Bumiputera companies registered with the Ministry of Finance.
- **Paragraph 6.2** — above RM100,000, a price preference, the margin of preference, applies
  at the financial evaluation stage:

| Procurement value | Preference |
| --- | --- |
| Above RM100,000 to RM500,000 | 10% |
| Above RM500,000 to RM1.5 million | 7% |
| Above RM1.5 million to RM5 million | 5% |
| Above RM5 million to RM10 million | 3% |
| Above RM10 million to RM15 million | 2.5% |
| Above RM15 million | No preference |

- **Paragraph 6.3** — Bumiputera manufacturers, where manufacturer status is conferred by the
  Ministry of Finance, receive 10 percent up to RM10 million, 5 percent above RM10 million
  to RM100 million, and 3 percent above RM100 million.
- **Paragraph 6.4** — Bumiputera sole importers and franchise holders receive a separate
  margin of preference on a similar banded scale. The exact band-to-percentage mapping is
  not reproduced here because it did not extract reliably from the published circular.

For works outside free trade agreement coverage, **paragraph 7.1** sets allocation rather
than price preference:

- At least **30 percent of each agency's annual allocation** must be identified and
  reserved for Bumiputera contractors, contested among them alone.
- Works valued at **not more than RM200,000 are reserved for Bumiputera contractors only**.
- For works above RM200,000 up to RM350,000, **at least 50 percent** must be reserved for
  Bumiputera contractors.

Paragraph 7.2 sets a further margin of preference for prime cost sum, mechanical and
specialist works; as with 6.4, the band mapping is flagged rather than reproduced.

Where procurement **is** covered by a free trade agreement, paragraph 8 substitutes a
different and lower set of preference bands, split into three categories by the origin of
the goods and by manufacturer status, with paragraph 8.3 setting the order of priority
between them. Paragraph 9.1 provides that for covered works, the Ministry of Economy
identifies and allocates up to 30 percent of the relevant annual development allocation to
Bumiputera contractors, published as the Senarai Projek Carve-out and Compete Bumiputera.

Paragraph 10.1 requires agencies to state the invitation preference, special allocation and
margin of preference clearly in the quotation and tender documents from the outset, and
paragraph 10.2 requires it in the advertisement.

## What applies to listed companies?

**Pekeliling Perbendaharaan LB 1.1** sets the criteria for Bumiputera Controlled Public
Listed Company (BCPLC) status for companies listed on Bursa Malaysia. Applications go to
MITI under paragraph 3.1, and MITI issues a confirmation letter copied to the Ministry of
Finance or PKK.

Lampiran A sets seven criteria, of which the equity test is materially different from the
51 percent used in PK 1.5:

- The listed company is directly controlled by an identified Bumiputera institution, group,
  company or individual holding **at least 35 percent of voting power** as the single
  largest owner, or by two or three such holders aggregating at least 35 percent.
- No non-Bumiputera institution, group, company or individual holds **more than 10 percent
  of voting power**, and identified non-Bumiputera substantial shareholders, meaning those
  at 5 percent and above, hold **not more than 24 percent** in aggregate.
- The Bumiputera holding is not associated or combined, directly or indirectly, with any
  non-Bumiputera party, and the holder is the lawful owner able to exercise voting rights
  independently.
- At least **51 percent of the board including the chairman** is Bumiputera.
- The **managing director or chief executive officer** is Bumiputera.
- At least **51 percent of management, professional and supervisory staff** is Bumiputera.

Paragraph 4.1 permits a BCPLC currently above 51 percent to reduce Bumiputera equity in
stages but not below 35 percent, with the shares transferred to another Bumiputera company;
paragraph 4.2 allows MITI to consider a release to non-Bumiputera parties on sufficient
evidence that no Bumiputera company is interested. Paragraph 5.1 requires quarterly status
reports to MITI on equity, chairman, board and management, and immediate reporting if the
holding falls below 35 percent, with paragraph 5.2 requiring immediate cancellation on
non-compliance.

Paragraph 6 is the limb most often overlooked, because it is a restriction rather than a
benefit. **A BCPLC may only enter government works tenders valued above RM30 million**, and
that condition applies to all its subsidiaries. Under paragraph 6.2, a BCPLC may not enter
any tender reserved for companies holding Bumiputera status as defined in the procurement
circulars.

## What does the distributive trade guideline require?

The instrument is the **Guidelines on Foreign Participation in the Distributive Trade
Services Malaysia (Pindaan 2022)**, published by KPDN in English.

Its own compliance clause is worth quoting for its strength. Clause 3.0 states that all
foreign business operators engaged in distributive trade services in Malaysia are
**encouraged and recommended** to obtain approval from KPDN prior to commencing operation.
Clause 5.4 introduces the general conditions as **recommendations** that companies with
foreign involvement must adhere to, and its list includes appointing Bumiputera or Malay
directors at clause 5.4(a) and encouraging Bumiputera or Malay participation in the sector
at clause 5.4(e).

### Equity conditions apply to two formats

| Format | Clause | Equity condition |
| --- | --- | --- |
| Hypermarket | 6.2.3.1 | At least **30 percent** Bumiputera or Malay ownership; a three-year grace period may be granted by the Distributive Trade Committee; applies to operations established before the guideline; no additional branches until met |
| Convenience store | 10.2.4 | Foreign interest capped at **30 percent** maximum and a minimum **30 percent** reserved for Bumiputera or Malays, to be satisfied at the time of application |
| Departmental store | 7.2 | Incorporation and capital conditions only; no equity clause |
| Superstore | 8.2 | Incorporation and capital conditions only; no equity clause |
| Specialty store | 9.2 | Incorporation and capital conditions only; no equity clause |
| Distribution centre | 11.2 | Incorporation and capital conditions only; no equity clause |
| Other formats | 12.2 | Incorporation and capital conditions only; no equity clause |

Clause 6.2.3.2 provides an alternative for hypermarket operators that do not meet the
30 percent: a revenue contribution of 0.1 percent of annual revenue to the Bumiputera
Retail Development Trust Fund for ten years, a limit of 10 percent non-Malaysians in key
posts and managerial positions, a minimum 30 percent of business lots in the hypermarket
provided to Bumiputera, and appointment of local companies for supply and service work.

### Shelf allocation is a separate obligation

The 30 percent that appears most frequently in this guideline is not an equity figure at
all. Clauses 6.3.6, 7.3.5, 8.3.6 and 10.3.7 each require **at least 30 percent of total
stock keeping units displayed on shelf space** to be allocated to Bumiputera or Malay SME
goods, with a three-year grace period available and half-yearly reporting to KPDN in June
and December.

That obligation covers hypermarkets, departmental stores and superstores, and applies per
outlet for convenience stores — including formats that carry **no** equity condition. The
two requirements are frequently reported as one.

Clause 18.2 supplies the definitions, cross-referring to Articles 161A and 160 of the
Federal Constitution and extending the expression to a company, association or body of
persons a majority part of whose capital is owned by, and whose management and employees
are made up of, Malays or Bumiputera.

## Which sector licences impose conditions?

**Communications and multimedia.** The MCMC Licensing Guidebook sets, for an Individual
licence, a minimum of **30 percent Bumiputera shareholding**, alongside paid-up capital of
RM2,000,000 for a Network Facilities Provider or Network Service Provider licence and
RM500,000 for an Applications Service Provider licence, plus net tangible assets of at
least RM500,000. The same conditions apply on transfer or assignment of an individual
licence. The guidebook contains no foreign equity ceiling.

**Oil and gas.** Under the PETRONAS Licensing and Registration General Guidelines, the
condition is set **per work and equipment category** at 100, 51, 30 or 0 percent, and
applied at four levels — equity, board, management and employment. The applicable
percentage then varies by company type: for a category set at 51 percent, the requirement
is 51 percent for a private company, 35 percent for a listed company, 35 percent for a
private company at least 51 percent owned by a listed company, and 17.85 percent for a
listed company at least 51 percent owned by another listed company. There is no single
PETRONAS figure.

**Customs and forwarding agents.** The Customs guide on agents under s.90 of the Customs
Act 1967 bands the requirement by year of registration: 51 percent for agents registered
before 1976, 30 percent for 1976 to 1990, 51 percent after 1990, and 51 percent with
Integrated Logistics Services status. Shipping agents and carrier agents are not subject to
a condition unless also registered as forwarding agents. Companies with MIDA Integrated
Logistics Services status where more than 51 percent of directors and shareholders are
foreign-owned are exempt, as are Bursa-listed forwarding agents, though not their
subsidiaries. Participation is measured at four levels: share capital, directors and
owners, management staff and support staff.

**Property.** Under the Ministry of Economy's Guideline on the Acquisition of Properties
effective 13 July 2022, foreign interests are barred from acquiring units allocated to
Bumiputera in a development and from Malay Reserve Land. Ministry of Economy approval is
required for a direct acquisition that dilutes Bumiputera or government property ownership
valued at RM20 million and above.

## Where do these conditions not apply?

**Incorporation.** The Companies Act 2016 imposes no equity condition. MIDA states
expressly that Malaysian incorporated companies are governed by that Act, which does not
stipulate any equity conditions, and that specific equity conditions may be imposed for
specific approvals, operating licences, permits or registrations by the regulating
ministries and agencies.

**Manufacturing.** MIDA records that since June 2003 foreign investors may hold 100 percent
of the equity in new projects and in expansion or diversification projects, irrespective of
export level. No Bumiputera equity condition attaches to the manufacturing licence itself.

**General share transactions.** The Foreign Investment Committee guidelines, which imposed
a general 30 percent Bumiputera equity condition on share transactions, are universally
reported as repealed on 30 June 2009. No official government page confirming the repeal was
located, so the mechanism should be treated as settled but the citation as weak. MCMC's own
2025 Licensing Guidebook still requests documentation on compliance with Foreign Investment
Committee requirements in an annexure checklist, which appears to be a stale reference
rather than a live requirement.

## Requirements asserted without a traceable instrument

The following are commonly stated. No instrument imposing them was located, and they are
recorded here as untraced rather than repeated as fact:

- A general 30 percent Bumiputera equity requirement applying to all Malaysian companies.
- A flat 51 percent requirement for all freight forwarding agents. The Customs guide bands
  the figure by registration year and carries three exemptions.
- A blanket 30 percent equity requirement across retail. In the KPDN 2022 guideline the
  equity clauses appear only for hypermarkets and convenience stores.
- Specific Bumiputera lot quotas and price discounts in housing developments. These are set
  by each State Authority under state rules; no national instrument stating a figure was
  located.
- Bumiputera shareholding conditions for banking, insurance and takaful licensees. No
  published Bank Negara document stating one was retrieved.

## Common mistakes

**Reading Article 153 as imposing a percentage.** It authorises reservation of a proportion
of permits and licences required by federal law; the proportion itself is set elsewhere.

**Treating procurement Bumiputera status as an equity test.** PK 1.5 paragraph 2.1 is six
cumulative limbs covering board, key posts, financial management, employees and the
organisation chart as well as shares.

**Assuming BCPLC status is uniformly advantageous.** LB 1.1 paragraph 6.1 confines a BCPLC
and its subsidiaries to government works tenders above RM30 million, and paragraph 6.2 bars
them from reserved tenders.

**Applying the hypermarket 30 percent to all retail formats.** Five of the seven formats in
the KPDN guideline carry no equity clause.

**Conflating the 30 percent shelf SKU allocation with equity.** They are separate clauses
with separate grace periods and separate reporting obligations.

**Quoting one PETRONAS percentage.** The figure is set per work category and then varies by
company type across four different values.

**Assuming the procurement bands are uniform.** Free trade agreement coverage substitutes a
different and lower set of preference percentages under PK 1.5 paragraph 8.

## What's next

For the wider picture of which sectors carry equity conditions of any kind, including
foreign ownership caps, see `foreign-ownership-malaysia`. For the distributive trade
approval process itself, including what KPDN asks for and what Immigration does with the
approval letter, see `wrt-licence-malaysia`. For where the paid-up capital figures that
often travel alongside these conditions actually originate, see
`paid-up-capital-foreign-company`.

This page carries a sensitivity flag and is held in draft until a named human reviewer
signs it off.

## Sources

- Federal Constitution, reprint as at 15 October 2020 — https://lom.agc.gov.my/ilims/upload/portal/akta/LOM/EN/Federal%20Constitution%20(Reprint%202020).pdf (Attorney General's Chambers)
- Pekeliling Perbendaharaan PK 1.5 — Dasar Keutamaan Kepada Syarikat Bumiputera — https://ppp.treasury.gov.my/ (Perbendaharaan Malaysia)
- Pekeliling Perbendaharaan LB 1.1 — Kriteria Pemberian Taraf Bumiputera Controlled Public Listed Companies — https://www.mof.gov.my/portal/pdf/bahagian/gic/Syarikat_Tersenarai_Bumiputera.pdf (Kementerian Kewangan Malaysia)
- Guidelines on Foreign Participation in the Distributive Trade Services Malaysia (Pindaan 2022) — https://www.kpdn.gov.my/images/muat-turun/gp-2022-1.pdf (KPDN)
- MCMC Licensing Guidebook — https://www.mcmc.gov.my/skmmgovmy/media/General/Licence/2025/MCMC_Licensing-Guidebook_150425.pdf (Malaysian Communications and Multimedia Commission)
- PETRONAS Licensing and Registration General Guidelines version 15.0 — https://www.petronas.com/sites/default/files/uploads/content/2026/(English)%20PETRONAS%20L&R%20General%20Guidelines_v15.0.pdf (PETRONAS)
- Panduan Ejen Kastam di Bawah Seksyen 90 Akta Kastam 1967 — https://www.customs.gov.my/images/03-import/import/panduan_ejen_kastam_di_bawah_seksyen_90_akta_kastam_1967_22_april_2025.pdf (Royal Malaysian Customs Department)
- Equity Policy — protection of foreign investment — https://www.mida.gov.my/setting-up-content/equity-policy-protect-foreign-investment/ (MIDA)

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