Malaysia offers many advantages as a viable destination to start your own business and setup a company here. From manufacturing to services sector, the country offers various capabilities across the value chain for foreigners to start a business here.

Singaporeans Can Set Up a Company in Malaysia

Yes, not only limited to Singaporeans but foreigners can set up company in Malaysia.

As the economy is growing rapidly in Malaysia, more foreign investors are willing to invest in the country and therefore starting a business here is comparatively profitable than other South Asian countries. Although setting up a company in Malaysia is possible as a foreigner, you will need to go through the registration process, and there are several regulations and restrictions placed on foreigners in setting up a company in Malaysia. Due to the bureaucratic complications, it is advisable that if you are a foreigner who is planning to start a business, you should carefully examine the requirements as well as the benefits and limitation in running a business in the country.

Type of Business Entity You Can Set Up as a Foreigner

Under the Company Commission of Malaysia (SSM), all foreigners are only allowed to register a company as either one of these 3 types of business entity:

  1. Private Limited Company / Sendirian Berhad (Sdn Bhd)
  2. Labuan International Company
  3. Representative/Regional Office

Foreigners are not permitted to set up a company as sole proprietorship, partnership, enterprise, or Limited Liability Partnership (LLP) companies in Malaysia as these entities are meant for Malaysians only.

Thinking of incorporating in Malaysia? Let’s get started.

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Basic Requirements to Set Up a Company in Malaysia

A private limited company is usually identified through the words ‘Sendirian Berhad’ or ‘Sdn Bhd’ and is the most common business vehicle in Malaysia for starting own business.

The basic requirements to set up a locally incorporated company under the Companies Act 1965 are the same for both Malaysian and foreigner setup:

  1. A minimum of 2 directors
  2. A minimum of 2 shareholders
  3. A company secretary who can be either: –
  • An individual licensed by the Companies Commission of Malaysia (SSM); or
  • An individual who is a member of any professional body prescribed by the Minister of Domestic Trade Cooperative and Consumerism

Both the director and company secretary should have their principal place or residence within Malaysia.

Pros of Setting Up a Company in Malaysia

On a global scale, Malaysia is ranked as one of the easiest places to do business in the world. When it comes to the time, cost and complexity of business registration process, Malaysia is notably one of the ideal destinations for foreigners to start a business.

Besides that, there are no restrictions on the maximum amount of shareholding by foreigners. This means that a private limited company in Malaysia can be owned 100% by foreign shareholders. The only exceptions here are unit trust companies and stock brokerages, which currently have a foreign ownership limit of 70%.

In addition, opening a corporate bank account here is a relatively straightforward and simple as the banking system in Malaysia is reliable. Some of the world’s top retail banks such as Citibank and HSBC are represented in the country.

Also, the business efficiency, infrastructure and the overall economic performance of the country have received good ratings in the past few years and Malaysia has been ranked as having the 16th most competitive economy in the world by the 2011 World Competitiveness Report.

Important Key Points in Setting Up a Company

  1. If you wish to set up a company that will do business with the local government departments, it must be approved by the Foreign Investment Committee (FIC) beforehand. In this case, at least 30% of the company must be owned by ethnic Malays.
  2. You will need a minimum of RM500,000 paid-up capital depending on the nature of your business. Do note that only unique businesses, where the local Malaysians do not have the knowledge or skills to do, will be granted. This is to protect the Malaysians’ opportunities and competitions. For certain business nature, a higher amount of paid capital is required to meet the necessary requirement of the relevant authorities to issue the trade license for your company.
  3. Companies in Malaysia are required to pay a 25% corporate profits tax on all generated incomeand every year, a tax return will need to be submitted to the Malaysian tax authorities and the company’s financial statements must be audited by approved auditors.
  4. Setting up a company in Malaysia requires a minimum of two directors and shareholders and the directors must have a permanent address in Malaysia, but not necessarily that they be Malaysian citizens.