Malaysia aspires to become developed and high income nation by year 2020. Under the Tenth Malaysia Plan, herbal industry was the first Entry Point Project for Agricultural National Key Economic Area in Economic Transformation Programme. To understand the current status of the herbal industry, FRIM (Forest Research Institute Malaysia) conducted the survey on 6,923 herbal chain players, consisted from upstream to downstream activities. A face-to-face interview was conducted using a structured questionnaire to gather the information. This paper highlighted the relationship between concentration of the herbal industry and urbanization's status of the areas. The finding shows that a statistically significant difference exists between category of herbal activities and status of the areas. The upstream activities are more concentrated in rural areas, while most of downstream activities in urban areas. It is in line with central place of theory on how settlements and places are located in relation to one another and their functions. Therefore, to further develop the herbal industry, the government should consider strategic location by category of industrial activities in policies planning, programmes implementation and providing infrastructural support needed by the industry.