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Strict censorship rules in the mostly Muslim country mean books and films are routinely banned or scenes deleted that are deemed detrimental to moral values or religious sensitivities.
The new censorship guidelines reverse a ban on scenes featuring homosexuality, Malaysian Film Producers' Association president Ahmad Puad Onah said. But there's a catch.
"We are now allowed to show these scenes," he told AFP. "As long as we portray good triumphing over evil and there is a lesson learnt in the film, such as from a gay (character) who turns into a (straight) man.
"Previously we are not allowed to show these at all."
The new rules, he insists, will allow greater freedom of expression for film-makers. But kissing, undressing and obscenity scenes will still be banned.
"We can do almost anything now but we are urged to give due considerations on the film's impact on certain areas like public order, religion, socio-culture elements and moral values."
It is not just homosexuality, subjects such as illegal racing can also be depicted.
A New Sunday Times report at the weekend said a local movie "V3 Road Gangster" on illegal racing was being shown in the cinemas since it satisfied the rules as the illegal racers either died or were caught by police at the end.
Another movie that has recently passed Malaysian censors was a film featured the life of a transvestite. It will be screened in May.
The Film Censorship Board could not be reached for comment.