Foreign shareholding is limited to up 70% in hypermarkets and up to 30% in convenience stores. Foreign investment in several specific wholesale and retail distribution activities is prohibited (e.g. supermarket/mini-market; provision shop/general vendor; news agent and miscellaneous goods store; medical hall (inclined towards traditional alternative medicines plus general dry foodstuff); fuel station; permanent wet market store; permanent pavement store; National Strategic Interest; and non-exclusive textile, food and beverage, jewellery shops). In other distribution activiites, such as departmental stores, superstores, specialty stores and franchise, 100% foreign ownership is allowed subject to discriminatory minimum capital requirements and local content requirements.

"On 1 June 2020, Kuala Lumpur City Hall (DBKL) banned foreign nationals from applying licenses to open the following businesses in Kuala Lumpur:  supermarket/mini-marke; sundry shop; 24-hours convenience store; petrol station; wet market; cybercafe; bag shop; spa; jewelry shop; car workshop; computer and accessories shop; laundry service; hair salon and barbershop; five-foot-way kiosk; food and drinks kiosk; restaurant; furniture shop; retail shop; mobile phone shop; and herbal and Chinese medicine shop. The regulation aimed to control the number of foreign-owned businesses in the above sectors in Kuala Lumpur as they have impacted the revenues of the local businesses.  The regulation came into force on 1 June 2020." (Global Trade Alert database) "[...] The target industries are mainly service industries such as restaurants, retail stores, and beauty salons, and some industries are excluded if they are international brands or luxury brands (see the attached document table). In addition, even if it corresponds to a specific industry, if it is not a store but a management office that manages operations and office work, it will not be subject to foreign capital regulations. In addition, before June 1, the business license of the store corresponding to a specific industry has been acquired, and this regulation does not apply in the case of renewal, but it applies in the case of a new application for a new store. Any changes to the application will also be considered as a new application. Business licenses need to be renewed annually.[...]" (JETRO (2020), "Foreign capital restrictions on business licenses for some service industries in Kuala Lumpur", published on 4 December 2020, in Japanese [google translated]). For the purposes of the OECD FDIRRI, it is assumed that DBKL's new regulation extends only slightly the number of retail activities closed to FDI in the capital city, i.e. in the main Malaysian market.


"4.5 Exemptions
For the purpose of these Guidelines, the following distributive trades are exempted: 
4.5.1  Companies with manufacturing licenses which only distribute products under the same production line; and 
4.5.2  Companies which are granted the status of regional establishments by the Malaysian Industrial Development Authority (MIDA), which includes International Procurement Centres (IPC), Regional Distribution Centres (RDC), Operational Headquarters (OHQ) and Principal Hub (PH).
[...]
5.0 ADMINISTRATIVE CONDITIONS
5.1  Approval by the Distributive Trade Committee of MDTCA must be obtained for any applications on foreign involvement in the distributive trade, including the following applications: a. acquisition of interest; b. mergers and / or takeovers by foreign participation; c. opening of new branches / outlets / chain stores; d. relocation of branches / outlets / chain stores; e. expansion of existing branches / outlets / chain stores; f. buying over / taking over of outlets of other operators; and g. purchase and sale of properties to operate distributive trade activities prior to obtaining the approval / license from local authorities and other agencies to operate distributive trade activities. 
[...]
5.4 All distributive trade companies with foreign involvement must adhere to the following recommendations: 
a. to appoint Bumiputera or Malay director/directors; 
b. to hire local (Malaysian) personnel at all levels particularly for the management positions and above; [...]
e. to encourage Bumiputera or Malay participation in the distributive trade sector; [...]
h. to encourage utilisation of local professional services which are available in Malaysia; 
[...]
6.0 HYPERMARKET 
6.1 Definition:  Hypermarket means a self-service distribution store with a sales floor area of 5,000 square meters or more, selling a wide variety of mainly consumer goods, comprising a combination of food and non-food products and in different forms of packaging. 
6.2 Incorporation, Capital and Equity Structure Conditions: Any foreign involvement in a hypermarket is recommended to be in compliance with the following conditions: 
6.2.1.  Local Incorporation: All hypermarket businesses with foreign equity must be incorporated locally under the Companies Act 2016 [Act 777]. This condition also applies to existing businesses operating under foreign branches of hypermarkets.
6.2.2  Minimum Capital Requirement: The capital investment in terms of a company’s shareholders funds is RM50 million at the minimum, which includes paid-up capital.
6.2.3  Equity Structure: Hypermarket operators must provide at least 30 percent Bumiputera or Malay ownership in the company’s equity structure. However, a grace period of three (3) years for compliance may be granted by the Distributive Trade Committee of MDTCA upon the approval of the applications made by the operators. This requirement also applies to  13  operations established prior to the coming into effect of these Guidelines. Henceforth, hypermarket operators are not allowed to open additional branches unless it has fulfilled the requirement of 30 percent Bumiputera or Malay ownership in the company’s equity structure.  
6.3 Operational Conditions [...]
6.3.6 At least 30 percent of total stock keeping unit (SKU) displayed on the shelf space are to be allocated for Bumiputera or Malay small medium enterprise’s (SME) goods / products. A grace period of three (3) years for compliance may be given by MDTCA. 
[...]
7.0 DEPARTMENTAL STORE
7.1 Definition: Departmental store means a distribution store with sales floor area of varying sizes, usually engaged in retailing an extensive assortment of consumer goods that are departmentalized by gender, age or lifestyle, through self-service or with sales assistance and generally under one common store management. A departmental store may include a supermarket of not less than 1,000 square meters or 15 percent of the total sales floor area with a maximum of 4,999 square metres. 
7.2 Incorporation and Capital Conditions: Any foreign involvement in a departmental store is recommended to be in compliance with the following conditions: 
7.2.1  Local Incorporation: All departmental store businesses with foreign equity must be incorporated locally under the Companies Act 2016 [Act 777]. This condition also applies to existing businesses operating under foreign branches of departmental store.
7.2.2  Minimum Capital Requirement: The capital investment in terms of a company’s shareholders funds is RM20 million at the minimum, which includes paid-up capital and reserves. 
7.3 Operational Conditions [...]
7.3.5 At least 30 percent of total SKUs displayed on the shelf space are to be allocated for Bumiputera or Malay SMEs goods/products. A grace period of three (3) years for compliance may be given by MDTCA.
[...]
8.0 SUPERSTORE
8.1 Definition: Superstore means a self-service distribution store with a sales floor area of 3,000 square meters to less than 4,999 square meters, retailing a very wide variety of mainly consumer goods, comprising a combination of food and non-food products. A superstore is allowed to operate sales floor area of 1,000 square meters at the minimum, at a location under the jurisdiction of either City Council or Municipal Council only.
8.2 Incorporation and Capital Conditions: Any foreign involvement in a superstore is recommended to be in compliance with the following conditions:
8.2.1 Local Incorporation: All superstore businesses with foreign equity must be incorporated locally under the Companies Act 2016 [Act 777]. This condition also applies to existing businesses operating under foreign branches of superstore.
8.2.2 Minimum Capital Requirements: The capital investment in terms of a company’s shareholders funds is RM25 million at the minimum, which includes paid-up capital and reserves.
8.3 Operational Conditions [...]
8.3.6 At least 30 percent of total SKUs displayed on the shelf space are to be allocated for Bumiputera or Malay SMEs goods/products. A grace period of three (3) years for compliance may be given by MDTCA. 
[...]
9.0 SPECIALTY STORE
9.1 Definition
9.1.1 Specialty store means stores dealing with one main brand name/product/line of goods associated with one product in the following categories: 9.1.1.1  Exclusive food and beverage business; 9.1.1.2  Food/drink/tobacco 9.1.1.3  household/personal goods; 9.1.1.4  exclusive furniture; 9.1.1.5  household appliances; 9.1.1.6  electrical appliances; 9.1.1.7  healthcare products; 9.1.1.8  optical goods; 9.1.1.9  footwear; 9.1.1.10 clothing and apparel; 9.1.1.11 sports goods; 9.1.1.12 books; 9.1.1.13 jewelry; 9.1.1.14 electronic goods; 9.1.1.15 motorcycles / motor vehicles; 9.1.1.16 small machinery (e.g. industrial, agricultural equipment for     small users); 9.1.1.17 pharmacy, serviced by a pharmacist at each outlet (retailing only drugs, health and beauty care goods); or 9.1.1.18 others. 
9.1.2 The criteria [for approval] of specialty store as categorized under paragraph 9.1.1 are as follows:  9.1.2.1 contribution to the socio-economic development in Malaysia; 9.1.2.2 generate substantial foreign direct investment; 9.1.2.3 absence of local players in proposed formats; 9.1.2.4 create employment opportunities; 9.1.2.5 transfer of technology/skills to locals; and 9.1.2.6 unique/ exclusive nature of business.
9.2 Incorporation and Capital Conditions: Any foreign involvement in specialty store is recommended to be in compliance with the following:
9.2.1 Local Incorporation: All specialty store businesses with foreign equity must be incorporated locally under the Companies Act 2016 [Act 777]. This condition also applies to existing businesses operating under foreign branches of specialty store.
9.2.2 Minimum Capital Requirement: The capital investment in terms of a company’s shareholders funds is RM1 million at the minimum, which includes paid-up capital. 
[...]
10.0 CONVENIENCE STORE
10.1 Definition
10.1.1 Convenience store means a distribution store which operates 24 hours and sells fast moving items.
10.1.2 Convenience store companies with foreign interests are companies that cooperates with a foreign distribution company which at all times must comply with the following requirements:
10.1.2.1 have any form of agreement, partnership, agent, service  contract or supply; and 
10.1.2.2 use or do not use foreign company distribution trademark as  the name of convenience stores; or
10.1.2.3 have equity holders and/or board of directors from foreign  distribution company.
10.1.3 Fast-moving items are items with a fast stock turnover rate, for examples cigarette, newspaper, magazine and bread. 
10.2 Incorporation of Company, Paid-up Capital and Equity Structure Conditions: Any foreign involvement in convenience store is recommended to be in compliance with the following rules and conditions:
10.2.1 Local Incorporation: The convenience store companies must be locally incorporated under the Companies Act 2016 [Act 777]. 
10.2.2  Franchise Format For Convenience Stores Of Foreign Interest: The convenience store companies with foreign interest must operate through franchise system provided under the Franchise Act 1998 [Act 590].
10.2.3 Minimum Capital Requirement: The capital investment in terms of a company’s shareholders funds is RM1 million at the minimum, which includes paid-up capital.
10.2.4 Equity Structure: (a) a foreign interest is only allowed to hold a maximum of 30 percent out of the company equity structure and a minimum of 30 percent  equity structure is reserved for Bumiputera or Malays; 
[...]
10.3 Conditions of Convenience Store Operation  Convenience store with foreign interest is recommended to comply with the conditions as follows: [...]
10.3.2  Only Malaysians are allowed to be the franchisees. [...]
10.3.7 To allocate at least 30 percent from overall SKU for Bumiputera or Malay product from SME per outlet. 
[...]
11.0 DISTRIBUTION CENTRE   11.1  Definition Distribution centre means a specialized building designed to temporarily store goods for its group of companies and redistribution of goods to another location according to the outlet orders. Distributions centre is also caters for order fulfillment process, especially for online retailers and e-commerce businesses.  11.2 Incorporation and Capital Conditions: Any foreign involvement in the distribution centre is recommended to be in compliance with the following conditions:  11.2.1 Local Incorporation All various other distribution format businesses with foreign equity must be incorporated locally under the Companies Act 2016 [Act 777]. This condition also applies to existing businesses operating under foreign branches of distributive centre.  11.2.2 Minimum Capital Requirement  The capital investment in terms of a company’s shareholders funds is RM1 million at the minimum, which includes paid-up capital. 
[...]
12.0 VARIOUS OTHER DISTRIBUTION FORMATS  12.1 Definition 12.1.1 Various other distribution formats mean other types of distributive formats and unregulated sector, including e-commerce.  12.1.2 The criteria of various other distribution formats are as follows: a. contribution to the socio-economic development in Malaysia; b. generate substantial foreign direct investment; c. absence of local players in proposed formats; d. create employment opportunities; e. transfer of technology / skills to locals; and f. unique/ exclusive nature of business. 12.2 Incorporation and Capital Conditions 12.2.1 Any foreign involvement in various other distribution formats are recommended to be in compliance with the following conditions:  12.2.1.1 Local Incorporation All various other distribution format businesses with foreign equity must be incorporated locally under the Companies Act 2016 [Act 777]. This condition applies also to existing businesses operating under foreign branches.  12.2.1.2 Minimum Capital Requirement  The minimum capital investment in terms of a company’s shareholders funds, which include paid-up capital is RM1 million. 12.3 Operational Conditions [...]  12.4 Feasibility and impact studies on existing local retailers and residents are to be carried out if the sales floor area is more than 5,000 square meters. 
[...]
15.0 FOREIGN INVOLVEMENT
15.1 The involvement of foreign business operators is subject and limited to the distributive trade sector as mentioned above. Sectors which are not applicable to foreign business operators include the following (the list of which is not exhaustive):
a. supermarket / mini market; b. provision shop / general vendor; c. news agent and miscellaneous goods store; d. medical hall (inclined towards traditional alternative medicines plus general dry foodstuff); e. fuel station; f. permanent wet market store; g. permanent pavement store; h. National Strategic Interest; and i. Non-exclusive textile, food and beverage, jewellery shops. 
[...]
18.0 GLOSSARY [...]
18.2  Definition of “Bumiputera” and “Malay”: a) “Bumiputera” must have the same meaning as assigned to it in Article 161A of the Federal Constitution; b) “Malay” must have the same meaning as assigned to it in Article 160 of the Federal Constitution; and  c) the expression “Bumiputera” or “Malay”  includes a company, an association or a body of persons whether corporate or unincorporate, a majority part of whose capital is owned by and the management and employees are made up of Malays or Bumiputera. [...]
18.4  Foreign participation / Foreign Business Operator Foreign participation or foreign business operator means any interest, associated group of interests or parties acting in concert which comprises the following: i. individual (including permanent resident) who is not a Malaysian citizen;  ii. foreign company or institutions; or iii. local company or local institution whereby the parties as stated in item (i) and/or (ii) hold more than 50 percent of the voting rights in the company or institution.[...]
18.12 Small and Medium Enterprises (SME) The criteria to determine definition of small and medium enterprises are sales turnover and number of fulltime employees as well as the following:   i. for the manufacturing sector, SMEs are defined as firms with sales turnover not exceeding RM50 million or whereby the number of fulltime employees does not exceed 200 employees. ii. for the services and other sectors, SMEs are defined as firms with sales turnover not exceeding RM20 million or the number of fulltime employees does not exceed 75 employees. [...]" (Guidelines on Foreign Participation in the Distributive Trade Services Malaysia, 2020)
---------------------------------
"PREMISE LICENSE 
Appendix: LIST OF ACTIVITIES NOT PERMITTED FOR NON-CITIZEN OWNERSHIP 
1. Supermarket / Mini Market  ( less than 3000 square meter) 2. Convenience Store / 24-Hour Convenience Store 3. Permanent Wet Market 4. Petrol Station (With or Without Convenience Store)  5. Permanent Sidewalk Shop/Kiosk 6. Textiles / Clothing / Footwear (Except International or Exclusive Brands) 7. Business Bag (Except International or Exclusive Brands) 8. Restaurant / Bistro / Cafe (Except International or Exclusive Brands) 9. Jewelry Store 10. Herbal / Health Business Products (Ministry of Health (MOH) approved) 11. Traditional Chinese Medicine Store 12. Workshop (Car / Motorcycle / Glass / Aluminum (Except International or Exclusive Brands) 13. Computer and Accessories (Retail) 14. Teak wood furniture and General Furniture 15. Barber Shop / Hair Salon 16. Cyber Center / Cyber Cafe 17. Food Stalls / Kiosk 18. Telecommunication Equipment Store / Prepaid Pad Card Store / Telephone Card / Telephone Accessories 19. Laundry 20. Spa industry [...]" (Kuala Lumpur City Hall, Frequently Asked Questions, DEPARTMENT OF LICENSING AND BUSINESS DEVELOPMENT)
---------------------------------
Previously: up to 2019
---------------------------------
"[...] No foreign involvement in the sector as below:
- Supermarket/ mini market (less than, 3000 square meters sales floor area) / Provision shop/General vendor / Convenience store (that opens for business for 24 hours) / News agent and miscellaneous goods store / Medical hall (inclined towards traditional alternative medicines plus general dry foodstuff) / Fuel Station with convenience store / Fuel Station without convenience store / Permanent wet market store / Permanent pavement store / National Strategic Interest / Textile, restaurant (non exclusive), bistro, jewellery shops / Others." (Guidelines on Foreign Participation in the Distributive Trade Services, Ministry of Domestic Trade Co-Operatives and Consumerism, 2010)
Guidelines on Foreign Participation in the Distributive Trade Services Malaysia, 2020
Kuala Lumpur City Hall, "Frequently Asked Questions", DEPARTMENT OF LICENSING AND BUSINESS DEVELOPMENT.
Guidelines on Foreign Participation in the Distributive Trade Services, Ministry of Domestic Trade Co-Operatives and Consumerism, 2010.
[<a href="https://www.kpdnhep.gov.my/images/FINAL_GP_2020.pdf">Guideline</a>],[<a href="https://elesen.dbkl.gov.my/Borang/FAQ_JPPP_PREMIS_EN.pdf">FAQ</a>],[<a href="http://www.kpdnkk.gov.my/kpdnkk/wp-content/uploads/2017/05/guidelines-on-foreign-participation-in-the-distributive-trade-services-malaysia.pdf">Guideline</a>],[<a href="https://www.globaltradealert.org/intervention/83645/fdi-entry-and-ownership-rule/malaysia-foreigners-banned-from-opening-certain-types-of-business-in-kuala-lumpur">Other</a>],[<a href="https://www.jetro.go.jp/biznews/2020/12/5d091ce79df50e70.html">Other</a>]