Second-Hand Dealers Act 1946 Malaysia: Requirements for Watch and Jewellery Resellers
If you're buying and selling pre-owned watches or jewellery in Malaysia, you need to understand the Second-Hand Dealers Act 1946 (Act 189). Unlike Singapore's detailed SHGD regime, Malaysia's framework is state-administered through police licensing officers, with specific exemptions for goldsmiths and jewellers. This guide covers what the Act requires, who needs a licence, and how to stay compliant.
What is the Second-Hand Dealers Act 1946?
The Second-Hand Dealers Act 1946 (revised 1977 as Act 189) provides for the control and licensing of dealers in second-hand goods in Malaysia.
Key Points
- Geographic scope: Applies only to Peninsular Malaysia
- Effective since: 1 August 1946 (revised 1 October 1977)
- Licensing authority: State Chief Police Officers
- Purpose: Combat trade in stolen goods and ensure accountability in secondhand transactions
Who is Considered a "Dealer"?
Under the Act, you're deemed a dealer if:
- Second-hand goods are found in your possession apparently exposed for sale
- You possess second-hand goods in an unusual quantity
The burden of proof is on you — you must prove you're not a dealer if the above conditions apply.
Definition of "Second-Hand Goods"
The Act covers goods that have been previously sold or used. For watch and jewellery dealers, this includes:
- Pre-owned watches
- Used jewellery
- Vintage timepieces
- Estate jewellery
- Consignment items from individuals
The Goldsmith/Jeweller Exemption
Here's an important provision for jewellery businesses:
This means if you're a goldsmith or jeweller buying back items you originally sold, you don't need a second-hand dealer's licence for those specific transactions.
What the Exemption Doesn't Cover
- Buying pre-owned items from the general public (not your own past sales)
- Trade-ins of items originally purchased elsewhere
- Operating as a general secondhand goods dealer
If you're buying pre-owned watches or jewellery that you didn't originally sell, you likely need a licence.
Licensing Authority: State Police
Unlike Singapore's centralized SHGD system, Malaysia's second-hand dealer licensing is administered at the state level.
Who Issues Licences?
- The Chief Police Officer of each state is the licensing officer
- Powers may be delegated to police officers of Inspector rank or above at district level
Application Process
- Contact your state police headquarters or local district police
- Obtain application forms for second-hand dealer licence
- Submit required documentation
- Pay prescribed fees
- Await approval at the licensing officer's discretion
Discretionary Approval
The Act states that the licensing officer "may in his discretion issue licences... to persons approved by him." This means approval is not automatic — your application can be rejected.
Types of Licences
The Act provides for different licence categories based on the nature of goods dealt. The First Schedule and Second Schedule specify different categories of second-hand goods.
First Schedule Items
Includes items requiring more stringent controls.
Second Schedule Items
Includes items like:
- Gunny bags, sail cloth, canvas
- Bottles
- Old iron and metals (other than brass, copper, lead, zinc, and block tin)
- Wooden and tin-lined boxes and cases
Watches and jewellery typically fall outside these specific schedules, meaning they're subject to the general licensing provisions.
Licence Conditions and Requirements
Signage Requirements
Licensed dealers must display a sign indicating "Licensed Dealer in Second-hand Goods" in:
- English
- Malay
- Chinese
- Tamil
Record Keeping
Licensed dealers must maintain records of transactions, typically including:
- Description of goods purchased
- Seller information
- Purchase price
- Date of transaction
Police Inspection Rights
Police officers have the right to:
- Enter and search licensed dealers' shops
- Inspect records and goods
- Verify compliance with licence conditions
Penalties Under the Act
Operating Without a Licence
Those found dealing in second-hand goods without the required licence face penalties including:
- Fines
- Imprisonment
- Or both
Purchasing Stolen Property
If a licensed dealer fails to exercise due care in purchasing stolen property:
| Item Type | Maximum Fine | Maximum Imprisonment |
|---|---|---|
| General goods | RM2,000 | 3 months |
| Motor vehicle parts | RM20,000 | 3 years |
Agent and Employee Liability
If an agent or employee commits an offence under the Act, the licensed dealer (employer) is also liable for that offence.
Due Care Obligations
The "due care" requirement is critical. To demonstrate due care when purchasing:
Verify Seller Identity
- Check MyKad or passport
- Record seller details
- Retain copies of identification
Verify Ownership
- Ask for proof of purchase or ownership
- Be suspicious of unusually low prices
- Question sellers who can't explain item provenance
Document Everything
- Keep detailed transaction records
- Photograph items before purchase
- Maintain records for inspection
Comparison: Malaysia vs Singapore
| Aspect | Malaysia (Act 189) | Singapore (SHGD) |
|---|---|---|
| Licensing Authority | State Police | Singapore Police Force (centralized) |
| Geographic Scope | Peninsular Malaysia only | Nationwide |
| Application Portal | State police offices | GoBusiness online |
| Jeweller Exemption | Yes (for own items) | No |
| Transaction Reporting | Records required | SHOTS system (electronic) |
| Signage | 4 languages required | English |
Other Compliance Requirements
Beyond the Second-Hand Dealers Act, watch and jewellery resellers must also consider:
SSM Business Registration
Register your business with SSM as outlined in our jewellery business startup guide.
Local Council Business Licence
Obtain a business premise licence from your local PBT (Pihak Berkuasa Tempatan).
AML/CFT Compliance
As a dealer in precious metals and stones, you're subject to Bank Negara Malaysia's AML/CFT requirements as a DNFBP.
Trade Descriptions Act Compliance
Gold hallmarking requirements apply — ensure 916 gold is properly marked as per Malaysian Standards.
High-Value Goods Tax (2024)
Malaysia implemented a 10% luxury goods tax in May 2024, potentially affecting high-value watch sales. Consult with your accountant on HVGT implications.
Practical Steps for Watch/Jewellery Resellers
Step 1: Determine If You Need a Licence
- Only repurchasing your own previously sold items? → Exemption may apply (jewellers/goldsmiths)
- Buying pre-owned goods from public? → Likely need licence
- Operating in East Malaysia (Sabah/Sarawak)? → Act doesn't apply, check local regulations
Step 2: Contact State Police
- Visit your state police headquarters commercial crime division
- Request application forms and fee schedule
- Clarify specific requirements for watches/jewellery
Step 3: Prepare Documentation
- SSM registration certificate
- Business premise licence
- Identity documents of directors/owners
- Premises information
Step 4: Implement Compliance Systems
- Transaction record keeping system
- Seller verification process
- Multi-language signage
- Staff training on due care requirements
Insurance Considerations
Pre-owned watch and jewellery dealers face unique risks:
- Theft exposure — high-value, portable items
- Authenticity risks — accidentally purchasing counterfeits
- Consignment liability — holding customer goods for sale
Jewellers block insurance provides comprehensive coverage specifically designed for these risks — protecting your inventory, consigned goods, and items in transit.
Common Questions
Do I need a licence to sell vintage watches?
If you're buying vintage watches from the public (not just selling your own collection), you likely need a second-hand dealer's licence.
What about online sales?
Operating online doesn't exempt you from licensing requirements if you're buying pre-owned goods in Peninsular Malaysia.
Can I operate without a licence in Sabah/Sarawak?
The Second-Hand Dealers Act 1946 doesn't apply to East Malaysia. Check with local authorities for any applicable regulations.
Key Takeaways
- Second-Hand Dealers Act 1946 governs pre-owned goods dealing in Peninsular Malaysia
- State police are the licensing authority — contact your state headquarters
- Goldsmith/jeweller exemption applies only to repurchasing your own previously sold items
- Due care obligation — verify sellers and document transactions to avoid stolen goods liability
- Multi-language signage required (English, Malay, Chinese, Tamil)
- East Malaysia (Sabah/Sarawak) is not covered by this Act
- Additional compliance: SSM, PBT licence, AML/CFT, Trade Descriptions Act
- Insurance essential — jewellers block covers pre-owned dealer risks
Malaysia's secondhand dealer framework is less centralized than Singapore's, but the core principle remains: dealers must be licensed, exercise due care, and maintain proper records. If you're operating a pre-owned watch or jewellery business, verify your licensing requirements with your state police and build compliance into your operations from day one.
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