{"id":7510,"date":"2021-12-10T03:42:53","date_gmt":"2021-12-10T03:42:53","guid":{"rendered":"https:\/\/www.boardroomlimited.com\/my\/?p=7510"},"modified":"2023-12-18T16:27:02","modified_gmt":"2023-12-18T08:27:02","slug":"business-expansion-into-malaysia-yay-or-nay","status":"publish","type":"post","link":"https:\/\/www.boardroomlimited.com\/my\/2021\/12\/10\/business-expansion-into-malaysia-yay-or-nay\/","title":{"rendered":"Business Expansion into Malaysia \u2014 Yay or Nay?"},"content":{"rendered":"

[vc_row full_width=”stretch_row” css_animation=”fadeInLeft” el_class=”business-insights-content”][vc_column][vc_row_inner el_class=”m-t-50″][vc_column_inner][vc_custom_heading text=”4 Reasons why incorporating in Malaysia could be a wise decision” use_theme_fonts=”yes” el_class=”m-b-30″][vc_column_text]Over the last ten years, Malaysia has become a destination of choice for business expansion. The World Bank ranked Malaysia at a respectable 55th place out of 157 countries across the globe as the easiest place to do business. While the government continues to play its part in facilitating greater ease, there are geographical factors that help boost Malaysia\u2019s chances as the\u00a0next destination to launch your business expansion strategy.<\/p>\n

The country is strategically located in the Asia Pacific Rim, at the centre,\u00a0with numerous other ASEAN nations surrounding it. This means businesses in Malaysia can take advantage of\u00a0and gain easy access to a substantial 667 million regional population1<\/sup>, which together boast a combined GDP of over US$3.3 trillion1<\/sup>.<\/p>\n

If you are thinking of expanding your business into Malaysia, here are\u00a0FOUR reasons why it would prove to be a wise choice.[\/vc_column_text][\/vc_column_inner][\/vc_row_inner][vc_row_inner content_placement=”bottom” css=”.vc_custom_1634118887832{margin-top: 30px !important;}”][vc_column_inner][vc_custom_heading text=”01<\/span> It\u2019s Quick, Easy, and Low-Cost to Incorporate” font_container=”tag:h3|text_align:left|line_height:50px” use_theme_fonts=”yes” el_class=”m-b-30 service-heading”][vc_column_text css=”.vc_custom_1702887647198{margin-left: 0px !important;}”]Comparatively, Malaysia is possibly one of the easiest places for\u00a0<\/a><\/span>businesses to incorporate<\/u><\/a><\/span>. Malaysia\u2019s efforts\u00a0to reform\u2014policy enhancements and procedural improvements\u2014over 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 5-10 days,\u00a0and employment permits for expatriates are\u00a0processed within 5 working days.\u00a0Find out the steps on How to register a company in Malaysia<\/u><\/a><\/span>.<\/p>\n

Operationally and financially,\u00a0Malaysia has built\u00a0a strong case for itself. It boasts one of the lowest start-up costs compared to the other Asia Pacific countries, as shown by its 17.5 days and 11.1% of income per capita2<\/sup>\u00a0required to start a business. This is largely driven by its low property rental rates, with an average gross rental yield of 5.16%3<\/sup>,\u00a0and its generally low minimum wage.<\/p>\n

Knight Frank currently estimates the\u00a0supply of office space in Kuala Lumpur (KL) city is 58.33\u00a0million sq ft, followed by KL fringe with 30.31\u00a0million sq ft and Selangor with 26.09\u00a0million sq ft, which brings the total to 114.73\u00a0million sq ft4<\/sup>.<\/p>\n

In addition to low office rental rates, businesses can operate economically because of Malaysia\u2019s relatively low minimum wage, which sits at RM1,288.35 (US$275.235<\/sup>)\u00a0per month.[\/vc_column_text][vc_single_image image=”7527″ img_size=”full” alignment=”center” css=”.vc_custom_1637838172310{padding-top: 30px !important;}”][\/vc_column_inner][\/vc_row_inner][vc_row_inner content_placement=”bottom” css=”.vc_custom_1634118899702{margin-top: 30px !important;}”][vc_column_inner][vc_custom_heading text=”02<\/span> You\u2019ll Avoid Double Taxation for Your Business Expansion Strategy” font_container=”tag:h3|text_align:left|line_height:50px” use_theme_fonts=”yes” el_class=”m-b-30 service-heading”][vc_column_text css=”.vc_custom_1702887675918{margin-left: 0px !important;}”]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\u00a0<\/a><\/span>DTAs (Double Taxation Agreements)<\/u><\/a><\/span>\u00a0involving countries\u00a0located 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.<\/p>\n

These DTAs outline the treatment of income or profits earned outside Malaysia by Malaysian businesses and within Malaysia by foreign-owned businesses. On this note, companies\u00a0in Malaysia are protected against the possibility of a singular income being subject to two countries\u2019 taxes\u00a0simultaneously. 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.<\/p>\n

For advisory on double taxation reduction, consider speaking with a professional tax consultant\u00a0who can provide\u00a0expert guidance\u00a0on how to enhance your company\u2019s tax savings.[\/vc_column_text][\/vc_column_inner][\/vc_row_inner][vc_row_inner content_placement=”bottom” css=”.vc_custom_1634118917632{margin-top: 30px !important;}”][vc_column_inner][vc_custom_heading text=”03<\/span> The Locals are Ready to Buy” font_container=”tag:h3|text_align:left|line_height:50px” use_theme_fonts=”yes” el_class=”m-b-30 service-heading”][vc_column_text css=”.vc_custom_1702887703358{margin-left: 0px !important;}”]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\u2019s GDP is the best measure to assess its\u00a0overall economic strength because it is closely connected with the country\u2019s average consumer purchasing power. Malaysia\u2019s total nominal\u00a0GDP is expected to reach US$710 billion by 2030 and US$1 trillion by 20356<\/sup>,\u00a0with a healthy growth rate of 4.0% \u2013 4.5%7<\/sup>.<\/p>\n

Malaysia\u2019s strong GDP is attributed to the government\u2019s effort to remain robust in the agriculture, construction, manufacturing, mining, and services industries. The theme of Budget 2024, \u201cReformasi Ekonomi, Memperkasa Rakyat8<\/sup>\u201d (Economic Reform, Empowering People), focuses on three main objectives: improving governance and public delivery system, transforming the business and economic sectors, and enhancing the quality of life of the people. This budget, which is the largest in the nation\u2019s history, also reaffirms the government\u2019s dedication to fiscal reforms to overcome the dual challenges of a less robust global economic outlook and Malaysia\u2019s financial constraints.<\/p>\n

With such a reform-oriented and resilient budget, Malaysians\u2019 incomes are improving, and depending on your type of business, you can benefit from a growing number of consumers who are able or willing to purchase low- to middle-market products and services readily.[\/vc_column_text][\/vc_column_inner][\/vc_row_inner][vc_row_inner content_placement=”bottom” css=”.vc_custom_1634118917632{margin-top: 30px !important;}”][vc_column_inner][vc_custom_heading text=”04<\/span> The Local Government Supports Your International Expansion Strategy” font_container=”tag:h3|text_align:left|line_height:50px” use_theme_fonts=”yes” el_class=”m-b-30 service-heading”][vc_column_text css=”.vc_custom_1702888017560{margin-left: 0px !important;}”]Malaysia has been growing economically in tandem with global trends. In line with the adoption of\u00a0Industrial Revolution 4.0 (IR4.0), it has introduced its own\u00a0<\/a><\/span>National 4IR Policy<\/u><\/a><\/span>. This\u00a0broad, overarching national policy drives coherence in transforming the socioeconomic development of the country through the\u00a0ethical use of 4IR technologies, such as Artificial Intelligence, Blockchain, and the Internet of Things.<\/p>\n

The National 4IR Policy aims to attract foreign investments by fostering a culture of innovation and digitalisation, enhancing the performance and productivity of local industries, and enabling Malaysia to join global value chains. The policy also offers incentives and support for foreign investors who adopt 4IR technologies and develop the human capital and infrastructure in Malaysia. By tapping into the opportunities of 4IR, Malaysia can position itself as a regional hub for advanced and knowledge-intensive industries and achieve its vision of becoming a high-income and inclusive nation by 2030.<\/p>\n

While there are limited restrictions on foreign ownership\u00a0in certain strategic sectors, the Malaysian government encourages the\u00a0inflow of foreign investments. This is apparent in the incremental liberalisation\u00a0of 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 allowances\u00a0to grants.<\/p>\n

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\u2019s 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.<\/p>\n

    \n
  1. <\/span>Cradle Investment Programme 300 (CIP300)<\/u><\/a> <\/span>stands as a pre-seed initiative targeting aspiring entrepreneurs in sectors such as ICT and other technology fields. This program offers up to RM 300,000 to these startups looking to develop and promote their innovative services.<\/li>\n
  2. <\/span>MaGIC Global Accelerator Programme (MaGICGAP)<\/u><\/a> <\/span>is a three-month intensive programme that helps promising local and global mid-to-late stage start-ups with established product-market-fit to get investment. It is designed for start-ups that have launched a product with reasonable traction, as well as highly scalable ones carrying a growth potential business model. This programme is open to start-ups from various industries, such as creative and lifestyle, e-commerce, education, finance, healthcare, and smart cities.<\/li>\n
  3. <\/span>Technology Acquisition Fund (TAF)<\/u><\/a> <\/span>is a hybrid grant and loan scheme that assists eligible Malaysian companies in procuring foreign technologies and integrating them into their existing business and manufacturing activities. The fund aims to allow companies to accelerate their growth potential by acquiring new technology and improving their technological capabilities and production processes. This applies to businesses in the priority technology clusters identified by MOSTI, such as aerospace, medical devices, pharmaceuticals, advanced electronics, and renewable energy.<\/li>\n
  4. <\/span>Domestic Investment Strategic Fund<\/u><\/a> <\/span>is a matching grant designed to offer incentives to established companies within the manufacturing and services sectors, boasting a minimum of 60% Malaysian equity ownership. This fund supports and encourages reinvestments, encompassing activities such as expansion, modernisation, and diversification. Notably, it facilitates initiatives like training, R&D, outsourcing, international standards, and technology licensing or acquisition. The fund is accessible to businesses in priority sectors such as aerospace, food security, machinery and equipment, and services.<\/li>\n
  5. <\/span>Women Exporters Development Programme (WEDP)<\/u><\/a> <\/span>is a specialised export support program aimed at empowering women in the export industry. This three-year program is tailored to assist competitive and sustainable businesses led by women to foster the growth of product and service exports. To be eligible for this programme, the company must be women-owned, hold a majority stake (at least 51%) and hold key leadership positions as the CEO and\/or Managing Director. This programme covers both merchandise and services trade across various industries.<\/li>\n<\/ol>\n

    The Malaysian government also has a dedicated agency,\u00a0the\u00a0<\/a><\/span>Malaysian Investment Development Authority (\u201cMIDA\u201d)<\/u><\/a><\/span>,\u00a0to help facilitate your international expansion strategy\u00a0into the country. Besides the ease and low cost of incorporation, Malaysia also offers other advantages for businesses, including:<\/p>\n