• Private Limited Company (Sdn Bhd): The only option for foreign investors is a Private Limited Company. This company type is a separate legal entity, enabling it to bind contracts, purchase assets and act as its own legal entity in court.

Private Limited Companies in Malaysia can be owned by locals or foreigners, as long as at least one director has a residential address in Malaysia (see step 3). However, unlike Public Limited Companies, Private Limited Companies can only have up to fifty shareholders, and cannot offer shares to the public. To learn more, contact our specialist team.

• Public Limited Company (Berhad): Most large-scale enterprises in Malaysia are Public Limited Companies, which allows them to sell shares and generate further investment. Listing the company as public also enhances the corporate image and profile, potentially inviting new business opportunities and further expansion.

However, Public Limited Companies need to adhere to strict compliance requirements, including holding annual general meetings and audits. Additionally, to own a Public Limited Company in Malaysia, you need to be a Malaysian citizen.

• Sole Proprietorship and Partnership: This entity type is also only available to Malaysian citizens. It’s ideal for local small business owners with either a sole proprietorship or up to 20 partners.
• Limited Liability Partnership (LLP): This entity type combines the properties of a Private Limited Company and a conventional partnership. A Limited Liability Partnership is a separate legal entity from its owners, which provides additional protection for the partners’ personal assets and wealth.

Please note that to help rebuild local trade during the COVID-19 pandemic, the Malaysian government has restricted foreigners from initiating some business types. These types may include supermarkets, convenience stores, hairdressers, retail shops and more. Contact our specialist team for the most up-to-date information on foreign business restrictions.

The name of your business can fall under two different categories:

• Personal Name: This is the name on your identity card, which does not need approval.
• Trade Name: All business names must be approved by the Registrar of Business, Companies Commission of Malaysia (SSM).

Your company name must meet the following conditions:

• No negative connotations or undesirable names: A business name cannot breach the constitution or law, or contain any elements that are negative, vulgar, obscene or offensive.
• Correct spelling: The company name must use correct language and spelling. If the name contains a word that is not from Bahasa Malaysia or English, or that is fictitious, you must provide the meaning and/or origin of the word.
• No generic names: Your business name must have its own identity, and must not be too common. Avoid using only generic words like ‘Marketing Resources’.
• Not already registered: You cannot use a business name that has already been registered or in safekeeping. This includes changing symbols, letters or words that carry the same meaning.

View the complete list of guidelines for business name registration online, and find out if your business name is available in Malaysia.

Next, determine your company structure, ensuring you meet the following requirements for a Private Limited Company (Sdn Bhd):

• Director: your company will need at least one director who meets all of the following criteria:
  • Must be a natural person (individual) and at least 18 years of age;
  • Must be of sound mind;
  • Must ordinarily reside in Malaysia, with a principal place of residence there;
  • Must not be an undischarged bankrupt under the Insolvency Act 1967; and
  • Must not be disqualified under the Companies Act 2016.

To satisfy your local director requirements in Malaysia, we can provide a nominee director service.

• Shareholder: you must also have at least one shareholder, who can be either a foreigner, a local or a corporate entity.
• Company secretary: you must appoint a qualified natural person living in Malaysia as your company secretary.

We provide expert company secretarial services to ensure your company meets all of its statutory obligations in Malaysia.

• Share capital: you must issue a minimum share capital of:
  • RM1,000 for locally owned companies; or
  • RM500,000 for foreign-owned companies.
• Registered address: your registered office must be a physical address in Malaysia. If your business does not have local office space, professional service firms like BoardRoom can provide a registered office location.

To submit your company application, the owner or partner who submits it must be a Malaysian Citizen or Permanent Resident of Malaysia, aged 18 years or over. Only the owner or partner/s can apply to register a new business.

To help you navigate the process of registering your business in Malaysia, we have a comprehensive company setup and incorporation service with local experts.

Depending on your specific business operations, you may also need to apply for additional permits and business licences. Find out which permits and business licenses you could require after you register your company in Malaysia.

Comparatively, Malaysia is possibly one of the easiest places for businesses to incorporate. Malaysia’s effort to reform —policy enhancements and procedural improvements — over the past few years have increased efficiencies and reduced the waiting time involved with registration and permit application processes. Registration of a new business takes between 5-10 days and employment permits for expatriates will be processed within 5 working days.

Operationally and financially Malaysia builds a strong case for itself. It boasts one of the lowest start-up costs compared to the other Asia Pacific countries. This is largely driven by its low property rental rates and generally low minimum wage.

Knight Frank currently estimates supply of office space in Kuala Lumpur (KL) city is 58.26 million sq ft, followed by KL fringe with 29.43 million sq ft and Selangor with 23.91 million sq ft. This brings the total to 111.60 million sq ft² with affordable average office rental rate at RM5.55 psf².

In addition to low office rental rates, businesses can operate economically because of Malaysia’s relatively low minimum wage, which sits at RM1,200 (US$286) per month.

In most countries, double taxation usually occurs when any taxpayer of a specific country engages in international business transactions. However, this is not the case for businesses in Malaysia. The country is a part of DTAs (Double Taxation Agreements) involving counties located in every continent of the world. This allows Malaysia to create an attractive tax environment where a greater international flow of investment, trade and financial activities, and technical knowledge are facilitated and exchanged.

These DTAs, outline the treatment of income or profits earned outside of Malaysia by Malaysian businesses and within Malaysia by foreign-owned businesses. On that note, businesses in Malaysia are protected against the possibility of a singular income being subject to two countries’ tax simultaneously. The double taxation agreement also provides taxpayers with certainty about their tax treatment. In the event of an absent DTA, businesses are still eligible for tax relief through the foreign tax credit.

When shortlisting a country for your business expansion plans, qualifying your list of countries based on their economic strength is an excellent place to start. A country’s GDP is the best measure to assess its’ overall economic strength because it is closely connected with the country’s average consumer purchasing power. Malaysia’s GDP is expected to reach US$359 Billion by the end of 2021³ with a healthy growth rate of 3.0% – 4.0%.⁴

Malaysia’s strong GDP is attributed to the government’s effort to remain robust in the agriculture, construction, manufacturing, mining, and services industries. One of the main objectives of its Budget 2022 is to strengthen economic recovery and improve business resiliency as the world move into the Covid-19 epidemic stage. With such a thriving market, Malaysians’ incomes are increasing and depending on your type of business, you can expect a growing number of consumers becoming or already are in the position to purchase low to middle market products and services readily.

Malaysia has been growing economically in tandem with global trends. In line with the Industrial Revolution 4.0 (IR4.0) adoption, it has introduced its own National 4IR Policy – a broad, overarching national policy that drives coherence in transforming the socioeconomic development of the country through ethical use of 4IR technologies.

While there are limited restrictions on foreign ownerships in certain strategic sectors, the Malaysian government encourages inflow of foreign investments. This is apparent in the incremental liberalization of equity conditions by various government agencies and the broad range of attractive incentives to entice new foreign investments and promote local start-ups. These incentives range from generous tax exemptions and allowance to grants.

Depending on your business, you might even be eligible for specific grants and incentives aimed at supporting innovation or projects that contribute strategically to the country’s economy and industries. Having a good knowledge of these incentives and how they may apply to you will allow you to maximise your business potential and put you on the fast track to success. Here are 5 grants that might be helpful as you incorporate in Malaysia.

1. Cradle Investment Programme 300 (CIP300)
2. MaGIC Global Accelerator Programme (MaGICGAP)
3. Technology Acquisition Fund (TAF)
4. Domestic Investment Strategic Fund
5. Women Exporters Development Programme (WEDP)

The Malaysian government also has a dedicated agency – the Malaysian Investment Development Authority (“MIDA”) to help facilitate your new venture into the country.