How to Start a Business in Malaysia Effectively | INS Global

How to start a business in Malaysia

How to start a business in Malaysia

March 9, 2023

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Key Takeaways

  1. Malaysia has low start-up costs and a government that encourages foreign investments
  2. Company registration fees range from RM5,000-70,000, depending on the amount of shared capital
  3. A global PEO or EOR can streamline the expansion process and handle all legal responsibilities within days
Summary

 

Malaysia’s strategic location and stable economy make it a popular choice for businesses wanting to expand into Asia. If you’re interested in entering the market, it’s helpful to know the steps required to start a business in Malaysia, including costs and potential risks you might face during expansion.

This article walks you through how to start a business in Malaysia and the solutions that can make your entry faster and less complicated.

 

What is There to Know About Starting a Business in Malaysia as a Foreigner?

 

Any foreigner can set up a business in Malaysia as long as they have a valid residential address in the country. However, setting up a business in a new country is not just a one-step process. Below, we’ve outlined the main steps you need to complete when thinking about expansion:

 

Evaluate Every Detail of the Business Plan

 

Before you start the legal steps of registration and applying for the necessary permits, you need to go over your business plan and ensure that every aspect is correct and legally secure. Foreigners are free to open businesses, but there may still be extra points to consider like how your business will function in the local culture and language.

Choosing the right business model, picking a strong name for the company and registering it, and deciding on an office location are all necessary tasks that should be completed before you can begin the incorporation process.

 

Register with the Right Company Structure

 

There are several ways foreigners in Malaysia can set up a business. Individuals typically choose to establish a private limited company (aka limited liability company) a sole proprietorship, or a partnership with a local partner. There are also options for a branch or representative office of an existing company in another country.

Once a company name has been decided it has to be registered with the local registry office. In Malaysia, this body is known as the SSM. Business owners need to submit all the required documents, and if they are not in Bahasa Malaysia or English, translations will be required. The exact cost of company registration fees varies according to the size of the company.

 

Opening a Local Bank Account, and More

 

After successful registration, there are still many different responsibilities to complete before you can begin operations. To pay staff, you’ll need to open a corporate bank account with a local bank. You will also need to obtain relevant business permits and, depending on your industry, you may have to apply for specific additional licenses. Many of these may not be immediately obvious to foreigners.

Even after you’ve completed all these steps, bringing in staff requires you to adhere to local employment and payroll laws. Knowing local employment regulations is doubly important if you are considering hiring local employees. Any mistakes made can result in having to pay heavy fees or fines as the country treats employee rights seriously.

 

What are the Costs of Setting Up a Business in Malaysia?

 

The country has low start-up costs and the government has put a lot of effort into encouraging foreign investments. As a result, Malaysia has entered into DTAs (Double Taxation Agreements) with over 60 countries worldwide. This way, investors and business owners don’t have to waste funds on double taxation.

While exact figures will vary depending on your specific situation, and requires asking question about the type of business activity you want to pursue, the scale of business entity you are ready to support, and the type of organizational structure you choose to set up. We’ve provided some information here so that you can have an idea of what you’ll need to spend in order to set up in Malaysia.

You can then submit the company name to the Companies Commission of Malaysia for a fee of RM50. Changing a foreign company name will cost RM250.

The fees for registering your business are as follows:

 

Companies in Malaysia with share capital equal to or less than RM 1 million: RM 5,000

1 million – 10 million: RM 20,000

10 million – 50 million: RM 40,000

50 million – 100 million: RM 60,000

100 million +: RM 70,000

 

Company incorporation in Malaysia does not automatically require an immediate capital injection. However, if the company wants to give work permits to foreign employees and the company is entirely owned by foreign citizens, then the company needs to submit documents proving that they have minimum paid-up capital.

The amount you require ranges from RM 350,000 to 1 million, depending on the industry and specifics of the company.

 

How a Global PEO (Professional Employer Organization) or EOR (Employer of Record) Can Help

 

Branching into a new country comes with a new set of challenges and problems to solve, often at the most inconvenient times. Finding the solutions on your own can cost you energy and expenses.

By partnering with a global PEO or EOR you can have all expansion services in one place while still retaining full control over company operations and management. These HR outsourcing services hire or offer HR functions for your staff in Malaysia, saving you from needing to ensure labor compliance by yourself.

An international PEO or EOR helps you with all the necessary administrative and legal tasks involved in global employment. These include employment contract compliance, payroll, and HR services, all of which allow you to fully focus on market entry.

With a PEO or EOR partner in Malaysia, you can:

 

  • Be assured of legal security for every aspect of the company
  • Skip unnecessary red tape and set up in a fraction of the time it would take otherwise
  • Improve employee productivity by guaranteeing benefits and timely payroll
  • Access local and international resources like expanded talent pools for recruitment
  • Receive regular personalized counsel and advice from an experienced legal team