How to Start a Trading Company in Malaysia?

As one of the most vibrant countries in Asia, Malaysia offers many advantages as an investment destination and starting your own business here.

Basic requirements to start a Trading Company in Malaysia

As a foreigner, you must set up a Private Limited Company (Sdn. Bhd.) as it is the most common business vehicle in Malaysia for starting your own business.

The basic requirements to set up a Locally Incorporated Company under the Companies Act, 2016 are the same for both Malaysian and Foreigner setups:

• One subscriber to the shares of the company (Section 14 CA);
• One resident director (Section 122); and
• One company secretary
• A minimum paid-up capital of RM 1,000

Who can be the Director, Shareholder, and Secretary?

Since there is a need for a director and shareholder, who is eligible to fill the position? The criteria for director is as follows:

• Must be at least 18 years of age
• Must be a resident of Malaysia
• Not convicted or imprisoned for the last 5 years
• Should not be a bankrupt

As for the specified shareholder(s) of a trading company in Malaysia, the conditions are similar to those of directorship as stated above; there is no need to be a resident of Malaysia. For SDN BHD companies, there is a maximum of 50 shareholders.

The secretary must be an individual who is a member of a professional body prescribed by the Minister of Domestic Trade Cooperative and Consumerism, or licensed by the Companies Commission of Malaysia (SSM).

Note that both the director and company secretary shall have their principal or only place of residence within Malaysia.

Our Take: Local vs Foreigner-Owned Companies

When setting up a business in Malaysia, the business structure varies between a locally-owned company as well as a foreign-owned company.

Based on our experiences, locally-owned companies lean more towards opening a Sole Proprietorship, while Foreign-owned companies are more likely to own Private Limited (Sdn Bhd) companies in Malaysia.

There are also a few key pointers that foreign-owned companies look out for:

• Import Tax – As a general rule, Sales & Service Tax (SST) is at a rate of 10%
• Export Tax – As a general rule, the Ad Valorem Rate of export duty is at a rate of 10%
• Warehousing matters

We will compare the advantages of handling fulfilment on your own against outsourcing the warehouse logistics.

Advantages of Starting a Trading Company in Malaysia

Asia has some great countries to consider for a foreign investor who wants to set up a base of operations in this region.

Friendly and hospitable, Malaysia has successfully attracted many foreigners to venture into the trading business in the country over the years.

Among the advantages of starting a trading company in Malaysia are:

• Ease of Registration – If all your documents are in order, registering a business can be done in as quickly as a week. Similarly, opening a bank account in Malaysia for corporate use is a relatively straightforward process. Plus, Malaysia is home to some of the world’s major banks.
• Strategic Location – Malaysia’s strategic location makes it easily accessible to other ASEAN economies
• Foreign Shareholding Liberty – this means businesses in Malaysia can be 100% foreign-owned.
• Cost-Effective – brought about by cheaper labour than its counterpart Singapore.
• Communication – English is widely spoken in Malaysia, making communication much easier.
• Highly Developed Infrastructure – in both transport and telecommunications.
• Labuan – Labuan is a highly regarded offshore company jurisdiction if you’re considering setting up an offshore company in Malaysia.

The Labuan International Business and Financial Centre offers foreign investors attractive offshore company benefits. Many investors also look into setting up their businesses in Labuan.

Wholesale, Retail Trade (WRT) License: is it needed?

Our simple answer to that for you is: YES!

Applied to the Ministry of Domestic Trade and Consumer Affairs (KPDNKK), the Wholesale and Retail Trade License (WRT) is one of the most common licenses required by a foreigner who wishes to conduct business in wholesale and retail trade in Malaysia. Before you even plan to venture into the trading industry, you must first obtain this license.

The WRT is a requirement for the application for an Employment Pass in Malaysia. As such, obtaining this licensing is crucial. We at Paul Hype Page have 13 years of proven track record helping clients acquire the WRT license. Do speak to us for assistance regarding this matter.

The WRT License is mainly are 4 categories of trades in Malaysia, namely:

• Retail and Trading
• Franchise
• Services and Consultancy
• Restaurants

Procedure

The general process of acquiring a WRT License can be as below:

1. You must have a registered SDN BHD company, with the appropriate minimum paid-up capital. In this case, the minimum paid-up capital requirement is RM 1 million.

2. You must have your own office space

3. You must have your staff employed or the director has to be present during site inspections

4. Provide us with the documents required (see checklist below)

5. After all the conditions are correct, we will then submit your application to the relevant government organisation

Checklist

List of Top Trading Companies in Malaysia

Closing off, here is a list of the top trading companies in Malaysia, including the products and services they provide:

1. Heap Lee Chan Trading Company Sdn Bhd
   (Consumer food products: Onions, Ginger, Chilli, etc)
2. Sidick General Trading (M) Sdn Bhd
   (Goods ranging from food ingredients to construction materials)
3. Union Trading Company
   (Commercial and industrial, retail and home sectors, laboratory use, and jewellery)
4. Lean Lee Trading Co Sdn Bhd
   (Medical Sector, Merchandize / Retailer / Food Packaging, Industrial, Agriculture, Commercial)
5. Wah Seong (Malaya) Trading Co Sdn Bhd
   (Oil and Gas, Industrial Services)

Taking inspiration from these trading companies in Malaysia, start yours today!