Before the Budget there was public discussion about whether Malaysia would follow other countries in legislating payment terms. We reviewed the Budget 2027 speech (PMO) and the main coverage. We found no announcement of a late payment law.
What other countries do
Some jurisdictions legislate maximum payment periods for commercial contracts or give suppliers a statutory right to interest and compensation for late payment. These laws aim to stop large buyers from stretching smaller suppliers. Malaysia has not adopted a general law of this kind.
What protects Malaysian creditors today
Your contract
The payment term is whatever you agreed. If your quotation or terms say 30 days, that is the due date. If they say nothing, a court will look at the course of dealing. Put your terms in writing and have the customer accept them.
Contractual interest
A clause providing for interest on overdue amounts at a stated rate is generally enforceable if it is a genuine pre-estimate or reasonable commercial rate rather than a penalty. Without such a clause, you can still ask the court to award interest when it gives judgment.
Construction: CIPAA 2012
The Construction Industry Payment and Adjudication Act 2012 gives parties to construction contracts a statutory adjudication process for unpaid claims, with decisions that can be enforced quickly. It applies only to construction work and consultancy contracts within its scope. See CIPAA 2026 amendments and our guide to CIPAA payment claims for subcontractors.
Court action and insolvency tools
For everyone else, the route is demand, claim, judgment and enforcement, with winding-up available against companies owing more than RM50,000. Budget 2027 did not change that threshold.
What Budget 2027 did do
- Raised SME financing and guarantees to RM57 billion, and set RM10 stamp duty on excess-credit agreements from 2027 to 2030 (see Budget 2027 for SMEs).
- Announced a rise in the individual bankruptcy threshold to RM150,000 beginning 2027. Not yet law; see our explainer and bankruptcy threshold guide.
- Expanded the Second Chance Fast Track Policy for bankrupts.
- Reinstated a price-adjustment clause for contractors on diesel and bitumen, per The Edge (Budget highlights).
How to protect yourself without a statute
- Written terms with a clear due date and a late-interest rate.
- Credit checks before extending terms; see credit checks before extending credit.
- Deposits or progress billing on larger orders.
- Personal guarantees from directors of small companies.
- A fixed escalation timetable: reminder, call, letter of demand, then legal action. See our unpaid invoice checklist.
Will Malaysia introduce a late payment law?
We cannot say. Nothing in Budget 2027 indicates one is planned. If a bill appears, we will cover it. Until then, the contract and the courts are your protection.
Our debt claim calculator shows what interest adds to a claim, and our debt recovery service handles recovery when terms are ignored.
Frequently asked questions
Does Malaysia have a late payment law?
There is no general statute setting maximum B2B payment terms or automatic late-payment interest. CIPAA 2012 provides statutory adjudication for construction payment disputes only.
Did Budget 2027 introduce late payment legislation?
No. We found no such announcement in the speech or coverage.
Can I charge interest on late payment without a law?
Yes, if your contract provides a reasonable rate. Otherwise the court may award interest when it gives judgment.
What applies to construction payment disputes?
The Construction Industry Payment and Adjudication Act 2012, which provides adjudication of payment claims.