Ease of Business Incorporation Procedures
The steps to incorporating a company in both Malaysia and Singapore take less than 5 days to complete. The steps of incorporation are:
- A name search must be done and approval obtained before using that name for a business entity like a company. The request is submitted to the Companies Corporation of Malaysia (SSM). The process can be done online on the SSM’s MyCOID portal. A nominal fee is paid per name searched. The approval or rejection notice is issued within 1 working day.
- The company secretary must submit incorporation documents to the SSM within 3 months of the approval of the company’s name. This can also be done online or in person. The SSM issues a Certificate of Incorporation in 1 day if the documents are filed properly.
- The company must register with the Royal Malaysian Customs to obtain a Goods and Services Tax number where applicable, which is if the company has a turnover exceeding RM 500,000. The number is generated in 2 weeks.
- The company must also register with the Inland Revenue Board to obtain a tax number.
- If the company is hiring local employees it must register with the Social Security Fund and the Employee Provident Fund.
- A name search and approval must be obtained before registration. The application is done online on the Company Registrar’s website. The approval or rejection is done on the same day.
- The incorporation documents must be filed with the company registrar within 90 days of the name approval. This can be done online. The company registrar sends an official email showing the company’s registration number. The email serves as the Certificate of Incorporation.
- The company must apply for a Goods and Services Tax number issued by the Inland Revenue Authority of Singapore. This is applicable where the company is expecting to make an annual company turnover exceeding SGD 1 million.
Ease Of Trade
Openness in trade is assessed for ease of access to domestic and foreign markets, efficiency and ease of import and export, customs administration and the trade regulatory environment. The World Economic Forum’s Global Competitiveness index ranked both countries in the top 30 in the world. Malaysia was 18 while Singapore was number 1 among 191 countries.
Singapore was ranked first ahead of economies such as Hong Kong, Denmark, Sweden, New Zealand, Finland, Netherlands, Switzerland, Canada and Luxembourg. This report assesses the indicators listed above as well as border administration, transport and communications infrastructure and business environment.
Malaysia was also ranked highly coming in at number 18. This was ahead of bigger economies like France and Australia. This was a strong improvement from the previous ranking in 2012. The categories that performed strongly were macroeconomic stability (35th), higher education and training (36th) and technology readiness (47th).
Ease of Foreign Investments
In both Malaysia and Singapore, regulations on the participation of foreigners in business are easy as compared to other Asian countries.
In Malaysia, a foreigner intending to hold more than 30% shareholding in a company must get approval from the foreign investment committee.
In Singapore, a foreigner can hold 100% ownership in a company without seeking any approval.
Both Malaysia and Singapore do not have visa requirements for foreigners incorporating companies without the intention of relocating. The foreign shareholders can attend to company matters while on short stay visas.
A foreign investor planning to relocate to Malaysia must obtain an employment pass. The foreigner must show that the company has RM 500,000 in paid up capital if it is 100% foreign owned, and RM 350,000 if the company is a joint venture with local Malaysian partners.
Foreign investors wishing to relocate to Singapore must show that they have 30% or more shareholding in the company and that the company has a minimum paid up capital of SGD 50,000.
Intellectual Property Protection
While Singapore ranked 4th in the WEF’s Global competitiveness report of 2015/2016, Malaysia was ranked 23rd.
Investing in either country is a very attractive option for a foreign investor looking to tap into the larger South Asian markets.