Even prior to the setting up of the National Film Development Corporation Malaysia (FINAS) in 1981, the country had an existing film industry. What this means is the activities of producing, distributing (importing) and exhibiting films. In the area of film production the activities of local feature film productions receive wide media coverage. The second area that is also well known by the public is film exhibition (cinemas). The distribution sector is relatively unknown to the general public even though it is the most profitable one.

One of the reasons why the government decided to set up FINAS is because of the problems and obstacles faced by local film entrepreneurs in their efforts to profit from exhibiting their feature films. The government then decided that the local film industry's activities should be encouraged, protected and consolidated. Toward these ends the Perbadanan Kemajuan Film Nasional Malaysia Act was enacted in 1981 (Act 244).

To encourage filming activities among our industrialists or the private sector, the involvement of the public sector was to be avoided at all cost. On this basis, FINAS is not allowed to involve itself in film production