Royal Malaysian Custom

Royal Malaysian Custom

Infobox Law enforcement agency
agencyname = Royal Malaysian Custom
nativename = Kastam Diraja Malaysia
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abbreviation = RMC / "KDRM"
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badgecaption = Royal Malaysian Custom

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formed = 1931
preceding1 = Customs Union
preceding2 = Customs and Excise Department
preceding3 = Royal Malaysian Customs and Excise Department
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dissolved =
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country = Malaysia
national = Yes
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legaljuris = National
governingbody = Government of Malaysia
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custom = Yes
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headquarters = Kuala Lumpur, Malaysia
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multinational =
electeetype =
minister1name = Syed Hamid Albar
minister1pfo = Minister of Home Affairs
chief1name = Dato' Sri Haji Abd Rahman Bin Abd Hamid
chief1position = Director General Of Customs
parentagency = Ministry of Home Affairs
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The Royal Malaysian Customs or Royal Customs and Excise Department "(Malay:Kastam Diraja Malaysia / Jabatan Kastam dan Eksais Diraja; KDRM)" is the government agency responsible for administrating the nation’s indirect tax policy. In other words, KDRM administers seven main and thirty-nine subsidiary laws. Beside that, KDRM implements eighteen laws for other government agencies.

Our core business is to collect tax and in line with that, KDRM vision is to be a respected, recognized and a world class Customs Administration.

Therefore, our mission is to collect revenue efficiently and help the expansion of trade and industry through continuous facilitation whilst enhancing legal compliance in order to safeguard the nation’s economic, social and security interest.


The Establishment Of Customs Union In The Malay Peninsula

In 1931 during the Federated Malay States Rulers Conference or Durbar in Sri Menanti, Negeri Sembilan, the British High Commissioner, Sir Cecil Clementi proposed an expansion of the union. The proposition was based on the annual increase of import tax.

Until the year 1932, Customs Tariff had already encompassed a majority of goods and preferential duty had to be created for goods coming from the British empire. The heavy reliance on import duty as a source of revenue for the Federated Malay States led Sir Cecil to opine:

"Like the rest of the British Empire, the Malay States had become increasingly dependent on Customs import duties as their main source of revenue, and it was on this score that he strongly recommended the creation of a customs union embracing the whole of the Malay peninsula if trade is not to be intolerably cramped, and the interdependence of one territory upon another in matter of commerce ".(C.R. Emerson, Malaysia a study in Direct and Indirect Role, Out 1979, p.190).

Henceforth he suggested an establishment of a Customs Union for the whole of the Malay Peninsula. This was so that the tariff growth in the Federated Malay States would not disturb the smooth trade transactions in the states.

However, the Customs Union for the Malay Peninsula could only be established in 1946, that is with the formation of the Malayan Union in April, 1946, and the department was given the name Customs and Excise of Malayan Union. Nevertheless, with the dissolution of the Malayan Union in 1948, this department was reorganised. The Customs Department then did not only comprise of those under the Federated Malay States but it also included those under the administration of the Non-Federated Malay States and the Straits Settlements.

With the formation of the Federation of Malaya, the Customs and Excise Department were established for the whole of the Malay Peninsula. Under the Customs Ordinance 1952, this department was put under the control of the High Commissioner for Malaya and headed by a Comptroller of Customs as can be found since 1938. This lasted until the country achieved its independence in 1957.

Section 138, Customs Ordinance, 1952 gave the Federation Council power to issue all rules and regulations on Customs affairs. The Customs main area at that time was the whole of the Peninsular of Malaya excluding Penang (to maintain its free port status).

As a result from the formation of the Customs Union in the Malay States in 1948, there was a dire need to boost staff performance to fulfill the needs of the country which was on her way to independence. In 1956 a training center was formed in Bukit Baru, Melaka.

When the Federation of Malaya achieved its independence on August 31, 1957, the organisational structure of the Customs and Excise Department was reshuffled again to fulfill the needs of an independent Malaya. Customs and Excise Department administration was assigned under the Finance Ministry led by a Customs and Excise Comptroller who was responsible to the Finance Minister.

The department was divided into three zones based on three main trading centers. For the Northern Zone the base was in Penang and covered Kedah, Perlis and Perak. The Central Zone was based in Kuala Lumpur and its area encompassed Terengganu, Kelantan and Negeri Sembilan. Lastly, the Southern Zone was comprised of the remaining states of Johor, Pahang, Melaka and the Customs station in Singapore. Each Zone was led by a Senior Assistant Comptroller of Customs.

Development, Progression of Royal Malaysian Customs and Excise Department

On September 16, 1963, the structure of the Customs and Excise Department administration was reshuffled again with the inclusion of Sabah, Sarawak and Singapore into the Federation of Malaysia. The Customs department was divided into three main territories, that is the Peninsular of Malaysia (at that time known as West Malaysia), Sabah and Sarawak, where each territory were led by a Regional Comptroller of Customs and Excise.

On Tuesday, October 29, 1963, in the Dewan Tunku Abdul Rahman, Jalan Ampang, Kuala Lumpur, an auspicious event unfurled as the Customs and Excise Department was conferred the title Diraja / Royal by HRH Seri Paduka Baginda Di Pertuan Agong. This was an honor from the Government for the Department’s untold contribution to the country. It was a momentous occasion in the history of the Royal Customs and Excise of Malaysia.

Amendment to the Customs Ordinance 1952, enforced on 1 October 1964, had annulled the posts of Revenue Officer and Junior Customs Officer, and in its stead new posts were introduced called Customs Officer, Senior Customs Officer and Chief Customs Officer. Beside that, this amendment also created the posts of Assistant Superintendent of Customs and Superintendent of Customs.

1964 also saw an all local selection of Customs Officers upon service completion of the last two English officials.

Even though the Peninsula of Malaysia, Sabah and Sarawak were contained in the Federation of Malaysia, each state still worked under separate Customs Ordinances and Duty Orders. These affected the movement of goods from one territory to the other thus creating a bumpy journey through the different bureaucracies. Following these difficulties the Comptrollers from the three territories met in mid 1967.

A result of the meeting was the enactment of the Customs Act No. 62, 1967 that gave the whole of Malaysia a single Customs law. Consequently, the Indirect Tax Committee of the Treasury actively prepared a collective tariff for the three zones.

In 1972, the Royal Customs and Excise Malaysia were involved in a restructuring exercise following a report by an expert from the International Monetary Fund (IMF). On 1 August 1972, the title for the head of Customs Department was changed to Director General of Customs and Excise; and two new posts were created, that is the Deputy Director General of Customs (Implementation) and Deputy Director General of Customs (Management). From that date onwards, the position of Regional Comptroller of Customs and Excise (West Malaysia) was abolished and replaced with one Regional Customs Director each for the three areas, North, Central and South which were previously led by a Senior Assistant Customs Director.

In 1972, a revenue legislation called the Sales Tax Act 1972 was declared in the Government Gazette as Malaysia Law Act 64 and implemented on February 29, 1972. This tax, known as Sales Tax, was imposed on all imported and local products, except those exempted under Sales Tax (Exemption) Order 1972, or were produced by manufacturers exempted from being licensed under Sale Tax (Licence Exemption) Order 1972.

Accordingly in 1975, the Government introduced yet another law called the Service Tax Act 1975. This enabled the Department to collect service tax from business premises that provided services and goods which were taxed under the Second Schedule, Service Tax Regulations, 1975.

The enforcement of the Motor Vehicle Levy Act taking effect on the 1st January 1984 also contributed towards increasing the department’s revenue collection. With the enforcement, all motor vehicles ferrying certain goods either leaving or entering the country, notwithstanding laden or empty, (unless those exempted) will be levied.

Until the year 1977, even though Malaysia had existed for 14 years, there were still a few minor legislations in the three Customs controlled territories which operated separately. Research was done so that only one legislation is used in the regions of the Malay Peninsula, Sabah and Sarawak. The movement was called the Harmonisation Movement. The first benefit reaped was that movement of goods from one territory to another will no longer be considered as import or export; and goods will only be taxed once, that is when the goods were imported or exported for the first time from Malaysia. This means business transactions between territories can proceed unhindered.

On 19th December 1977, Penang was declared as a Main Customs Area. With that, Penang’s free port status was withdrawn. The year also saw the Department embracing the International Unit System or SI, converting everything into metric by the 1 January 1978 through the Customs Duty Order1978.

The Customs Department had another restructuring exercise in 1979. Whilst continuing to be helmed by the Director General of Customs, he was now assisted by three Deputy Director Generals who would be responsible for the Implementation, Prevention as well as Management and Policy programmes. Organisational structure at the headquarters level was arranged based on regional activity whereby each activity was headed by a Director of Customs. The activities were the Prevention Division, Customs, Internal Tax, Research, Planning and Training, Revenue Collection as well as General Administration and Finance. The same applied at state level where each state in the Federation of Malaysia were led by a Director of Customs. In addition, the department also had a station in Singapore administered by a Federation Customs Tax Collector.

In 1983 history was made when, for the first time ever, the Royal Malaysian Customs and Excise Department celebrated World Customs Day. The date January 26 was chosen to coincide with the 30th anniversary of the Customs Cooperation Council ( now known as the World Customs Organization or WCO for short). The first Customs Day celebration was inaugurated by the Honourable Minister of Finance on the compound of the Royal Customs and Excise Malaysia Training College (now Royal Malaysian Customs Academy).

1987 saw Langkawi declared detached from the Main Customs Area and made the second free port in Malaysia after Labuan. Free port status was conferred on the island beginning 1 January 1987 to encourage tourism in Langkawi (which had not been developed accordingly) wherewith it would increase the standard of living of the local people.

In the fast paced world of the domestic and foreign trade development, the department’s role is always at a threat. To equip the Department with the required work force in facing this challenge, an upsurge in knowledge level, skills and ability of the work force is crucial. Among the main steps towards achieving this is by developing the Royal Malaysian Customs College that had been established since August 1956 (formerly known as the Federal Customs Training Center, Federal Customs Training School and Royal Customs Training College).

After several years of going through the research and planning process, in 1989 the college was expanded. Now it is known as the Royal Malaysian Customs Academy (Akademi Kastam Diraja Malaysia or AKMAL, meaning ‘perfect’).

Beginning 1st January 1990 another event was chalked in the Customs annals. Perlis was created a new Customs administration. Previously, the Perlis Customs came under the auspices of the State Customs Director of Kedah/ Perlis with Alor Setar, Kedah as the headquarters. With the establishment of the new Customs administration, all activities and Customs affairs could be ran more smoothly in the state of Perlis.

In 1995, the Royal Malaysian Customs and Excise Department once again reorganised its structure. At the top level management, the status quo was retained whereby the Director General of Customs, aided by his three deputies, spearheaded the Implementation, Prevention and Management Programme. A new programme was introduced called the Corporate Planning and Development Programme. However this programme could only be found at the Headquarters level. In tandem with that, Customs activities in the Headquarters were arranged thus:

Each of these activities is led by a Director of Customs. The post of State Director of Customs in the states remained. The same goes for the Federal Customs Tax Collector in Singapore and Customs Advisory Minister in Brussels, Belgium. Beside that, to create a greater impact for the Department, the Public Relations Unit, Internal Audit Unit and Legal Affairs are assigned directly under the Director General of Customs.

On October 23 1998, the Right Honourable Prime Minister who was also the Minister of Finance I, in his speech for the Budget of 1999 in the Dewan Rakyat, announced a levy on windfall profit imposed beginning 1 January 1999 to help the government secure added revenue. Windfall profit is a surplus profit whereby a higher selling price occurred as a consequence of the Ringgit depreciation riding on the backlash of the economic crisis that hit the country since the middle of 1997. The first commodity to be slapped by this levy is crude palm oil where levy is imposed when the price exceeds RM2, 000 per tonne.

The Twentieth century has ended and with the dawn of the Twenty-first century, Malaysia had announced the year 2020 as the definitive year – the year to declare that this country had attained the status of a developed country. Verily, the Royal Malaysian Customs carries a big responsibility in realising Vision 2020.

As the main revenue collector, the Customs Department not only must continue to contribute but it also has to increase revenue collection annually. These are done with a delicate balancing act so as not to jeopardise the performance of the industrial sector. In fact, the department has to ensure that whilst its control on the related industries is minimal but effective, it is also there to lend a helping hand and push and prod the industries to develop and prosper. At the same time, preventive work, especially in stopping the entry of negative elements that can threaten the country’s security or those that brought moral decay, must be executed continuously.

Thus, the upcoming years promise a million and one event that will be a part of history. May all the events be of benefit one way or another as we tread the path to glory.

ee also

* Royal Malaysian Police
* Malaysian Maritime Enforcement Agency

External link

* [ Kastam Diraja Malaysia website]

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