Starting a business is a massive step, and Malaysia is an ideal destination for foreigners to establish an entrepreneurial status due to the country’s excellent infrastructure and talented labour force. Unlike other countries in the Asia region, there are not many restrictions or conditions imposed by the government for foreign ownership of companies.
If you are a foreigner and thinking of making your first foray into the business world, it is vital that you have a deep understanding of the business environment, limitations and legalities involved in starting a business here.
Factors to Consider in Starting a Business
You will need to be aware of certain factors before venturing into your business journey in Malaysia. There are few regulations set by the authority and not every product or service are offered in the country. Hence, before stepping a foot, make sure you consider few factors which are outlined below:
Type of Business
This is one of the most fundamental factors in any business venture and you will need to determine the type of business you want to start. The important determinant here is that you must check if there is a ready market for your business as there is no point in starting a business is the Malaysian market is not in a fit state for you.
Suitability as a Foreigner
As a foreigner, you must identify which business is the most suitable and right for you. You should not embark in a business which could only be done the locals here. Some businesses are very sound if they are run by foreigners such as retail or consultancy, while some are totally out of your forte, like Malaysian food.
Rules and Regulations
No matter what type of business you decide to start, do ensure that you have checked all the regulations set by the authority and seek any relevant permission if it is required for your business. In Malaysia, you are required to obtain the right license for the type of business entity you are about to set up, and any trade licenses relevant to your business type, only then you are allowed to run your business.
Note that not all types of business entities are allowed to run by a foreigner, mainly the sole proprietorship and partnership. There are only 3 types of company in Malaysia you may set up as a foreigner:
- Private Limited Company or Sendirian Berhad (Sdn Bhd)
- Labuan International Company (LIC)
- Representative/Regional Office
Financing your Business
All businesses will definitely need financial support, and you will need to identify all available sources to prepare the necessary capital that your new business need. You may consider the following list for some of common financial support in starting a business:
- Personal savings
- Government grants or scheme
- Debt financing from existing personal assets
- Angel investors
- Venture capitalists
- Borrowings from family and friends
This is one of the biggest challenge foreigners face when entering the business market, to apply for a work visa. This is where you will need ensure you have all the relevant documentation prepared and sorted out prior to your presence in Malaysia. You will need to comply with the immigration law and make sure to apply for a suitable work permit as it is not a smooth sailing process dealing with the government agencies.