After setting up your company in Malaysia, you must obtain the necessary business licenses required. Business licenses in Malaysia are categorised into three main groups, namely: general licenses, sector/ industry-specific licenses, and activity specific licenses. The type of business license in Malaysia that you will need depends on the industry that you are involved in.
How Malaysia Business Licenses Apply To Foreigners
Before applying for business licenses, however, one must first set-up a business. Companies (Sdn. Bhd.) in Malaysia can be 100% foreign-owned, without any local director requirements. A minimum of one director must have local residence in Malaysia.
If you are operating a business without license requirements, having a Sdn. Bhd. is the easiest to set up, operate, and maintain. A few examples of business activities include:
E-commerce platforms or other forms of digital platforms
Offering services like photography, commissioning art, coaching etc.
General consulting or management consulting
TIP: With a generic business activity and if you do not require a work visa to live and work in Malaysia, you usually do not require a specific business license. Of course, it is always better to check with your service provider.
According to the Companies Act, all companies are regulated by the Companies Commission of Malaysia (SSM). In operating business in a physical location (office, shops etc) and in specific to certain industries, every company must obtain a business license.
Locally owned companies would generally experience swifter and smoother approvals and less stringent requirements in comparison with foreign owned companies.
Foreign owned companies are often asked if they have local representatives, and without one, the process might drag on for a longer time. As it goes, while complete foreign ownership is permitted, if you are in an industry that requires licenses, running your business in Malaysia might be more difficult than your counterparts.
Things You MUST Prepare Before Applying for Malaysia Business Licenses
While the requirements may differ slightly according to the category of license you’re applying for, the documents you will need to obtain a business license in Malaysia include the following:
A copy of your identity card/passport
A passport sized photograph
A copy of your rental/tenancy agreement or sale and purchase agreement
Photographs of your business premise
Photographs of the intended location for your company’s signboard (applicable to the Signboard License). You will also need to provide samples indicating the colour and the design of your intended signboard.
Copy of your Certificate of Fitness for the business premise
Copy of Fire Department’s support letter
On top of that basic documentation, here are top 3 factors to consider in your application:
1. Have You Prepared a Business Plan?
A business plan is one of the most common documents requested by authorities for license applications (work visa & employment pass applications too). A business plan should serve as a key point of reference to gauge the feasibility of a business, how it contributes to the local economy and to set progress against objectives.
Questions your business plan should answer:
- Is the business contributing to the local economy?
- Does the business plan address feasibility of the business?
- Is Malaysia a key market in your business plan?
2. What Business Can Foreigners Be Involved In?
There are generally minimal restrictions on foreign investment in Malaysia. Subject to the qualifications set out below, foreign investors can hold 100% equity in all investments.
The principal industries that are subject to restrictions on foreign investment and might require a minimum Bumiputera ownership include:
- Financial services
- Capital markets
- The insurance and Islamic insurance (takaful) industries
- The petroleum industry
- Communications and multimedia
- Wholesale and distributive trade (in relation to hypermarkets and food and restaurant businesses)
- Freight forwarding and shipping
- Energy supply
- Professional services
- Security and employment agencies
NOTE: Who are Bumiputeras? An individual is considered to be bumiputera if he/she is a Muslim Malay. The Federal Constitution defines a Malay as a person who professes the religion of Islam, habitually speaks Malay, conforms to Malay customs and is the child of a Malaysian parent.
3. Have You Got the Necessary Funds?
Find out what are the paid-up capital requirements for the sector you are in. Usually, the amount of paid-up capital required depends on the level of local ownership in a company. For example:
- Less than 25% local shares require RM1,000,000 paid up capital;
- 25% local shares require RM750,000 paid up capital;
- 50% local shares require RM500,000 paid up capital;
- More than 75% local shares require RM250,000 paid up capital only.
Duration of Business License Approval in Malaysia
The total application time may be anywhere between one month and six months. The duration depends on the type of industry license for which the business owner is applying (this includes small businesses and retail stores). The ministry that issues the business license in Malaysia will inspect the business premises before doing so.
Types of Business Licenses in Malaysia
Generally, Malaysia’s business licenses are divided into 3 categories:
General licenses from local town councils
Industry or sector specific licenses from government ministries
Activity specific licenses
NOTE: The requirements of local town council licenses will vary; they depend on the local authorities and state authorities in the location where the application is to be lodged. Applications may require additional processing time if a premise inspection is to be conducted.
2. Industry or sector specific licenses
The following table lists the available licenses offered by the Malaysian government.
||Malaysian Investment and Development Authority (MIDA)
||Central Bank License for Banking, Financing, and Leasing
||Bank Negara Malaysia
||Direct Selling License
||Malaysian Direct Distribution Association (MDDA)
||Construction Industrial Development Board and Engineering License
||Construction Industry Development Board (CIDB)
|Distributive Imports and Exports
||Wholesale Retail Trade (WRT) License for Trading, Import and Export, Consultancy, and Restaurant Business Management
||Malaysian Ministry of Domestic Trade and Consumer Affairs (MDTCA) or KPDNKK as locally known
||Licenses for establishing Schools, Colleges, Universities, Tuition Centers, and Language Centers
||Ministry of Education
||Car Rental and Vehicle Leasing License
||Ministry of Tourism, Arts and Culture Malaysia (MOTAC)
||For Budget Hotel License and Luxury Hotels
||Inbound, Outbound, Ticketing License
||Publication License for Magazines and Books / Broadcasting License for Music, Singing, TV, and Radio
||Malaysian Communications And Multimedia (MCMC)
||Multimedia Super Corridor (MSC) License
||Malaysia Digital Economy Corporation (MDEC)
3. Activity specific licenses
- Sales Tax License
- Certificate of Fitness for Certified Machinery
- Building Plan Approval
- Expatriate Post Approval
- Air Pollution Control Equipment Approval for any installation, alteration or relocation
For example, those who intend to operate in the retail industry or oversee factories or restaurants as a foreigner in Malaysia, will be required to apply for business licenses from the following government departments:
- Local town councils in Malaysia
- Fire Brigade Department