• Private Limited Company (Sdn Bhd): Although there are many different business entities, the only option for foreign investors registering a company in Malaysia is a Private Limited Company. This private company type is a separate legal entity, enabling it to bind contracts, purchase assets and act as its own legal entity in court.

Private Limited Companies in Malaysia can be owned by locals or foreigners, as long as at least one director has a residential address in Malaysia (see step 3). However, unlike Public Limited Companies, Private Limited Companies can only have up to fifty shareholders, and cannot offer shares to the public. To learn more, contact our specialist team.

• Public Limited Company (Berhad): Most large-scale enterprises in Malaysia are Public Limited Companies, which allows them to sell shares and generate further investment. Listing the company as public also enhances the corporate image and profile, potentially inviting new business opportunities and further expansion.

However, Public Limited Companies need to adhere to strict compliance requirements, including holding annual general meetings and audits. Additionally, to own a Public Limited Company in Malaysia, you need to be a Malaysian citizen.

• Sole Proprietorship and Partnership: This entity type is also only available to Malaysian citizens. It’s ideal for local small business owners with either a sole proprietorship or up to 20 partners.
• Limited Liability Partnership (LLP): This entity type combines the properties of a Private Limited Company and a conventional partnership. A Limited Liability Partnership is a separate legal entity from its owners, which provides additional protection for the partners’ personal assets and wealth.

Please note that to help rebuild local trade during the COVID-19 pandemic, the Malaysian government has restricted foreigners from initiating some business types. These types may include supermarkets, convenience stores, hairdressers, retail shops and more. Contact our specialist team for the most up-to-date information on foreign business restrictions.

When you register a company, the name of your business can fall under two different categories:

• Personal Name: This is the name on your identity card, which does not need approval.
• Trade Name: All business names must be approved by the Registrar of Business, Companies Commission of Malaysia (SSM).

The Companies Commission will make sure your company name meets the following conditions:

• No negative connotations or undesirable names: A business name cannot breach the constitution or law, or contain any elements that are negative, vulgar, obscene or offensive.
• Correct spelling: The company name must use correct language and spelling. If the name contains a word that is not from Bahasa Malaysia or English, or that is fictitious, you must provide the meaning and/or origin of the word.
• No generic names: Your business name must have its own identity, and must not be too common. Avoid using only generic words like ‘Marketing Resources’.
• Not already registered: You cannot use a business name that has already been registered or in safekeeping. This includes changing symbols, letters or words that carry the same meaning.

View the complete list of guidelines for business name registration online, and find out if your business name is available in Malaysia before registering a company.

Next, determine your suitable business entity or company structure, ensuring you meet the following requirements for a Private Limited Company (Sdn Bhd company), as this is the only option for foreign companies:

• Director: your company will need at least one director who meets all of the following criteria:
  • Must be a natural person (individual) and at least 18 years of age;
  • Must be of sound mind;
  • Must ordinarily reside in Malaysia, with a principal place of residence there;
  • Must not be an undischarged bankrupt under the Insolvency Act 1967; and
  • Must not be disqualified under the Companies Act 2016.

To satisfy your local director requirements in Malaysia, we can provide a nominee director service.

• Shareholder: you must also have at least one shareholder, who can be either a foreigner, a local or a corporate entity.
• Company secretary: you must appoint a qualified natural person living in Malaysia as your company secretary.

We provide expert company secretarial services to ensure your company meets all of its statutory obligations in Malaysia.

• Share capital: you must issue a minimum share capital of:
  • RM1,000 for locally owned companies; or
  • RM500,000 for foreign-owned companies.
• Registered address: your registered office must be a physical address in Malaysia. If your business does not have local office space, professional service firms like BoardRoom can provide a registered office location.

To submit your company registration application, the owner or partner who submits it must be a Malaysian Citizen or Permanent Resident of Malaysia, aged 18 years or over. Only the owner or partner/s can apply to register a new business entity.

To help you navigate the process of registering your company in Malaysia, we have a comprehensive company setup and incorporation service with local experts.

Depending on your specific business operations, you may also need to apply for additional permits and business licences. Find out which permits and business licenses you could require after your Malaysian company registration.

Comparatively, Malaysia is possibly one of the easiest places for businesses to incorporate. Malaysia’s efforts to reform—policy enhancements and procedural improvements—over the past few years have increased efficiencies and reduced the waiting time involved with registration and permit application processes. Registration of a new business takes 5-10 days, and employment permits for expatriates are processed within 5 working days. Find out the steps on How to register a company in Malaysia.

Operationally and financially, Malaysia has built a strong case for itself. It boasts one of the lowest start-up costs compared to the other Asia Pacific countries, as shown by its 17.5 days and 11.1% of income per capita² required to start a business. This is largely driven by its low property rental rates, with an average gross rental yield of 5.16%³, and its generally low minimum wage.

Knight Frank currently estimates the supply of office space in Kuala Lumpur (KL) city is 58.33 million sq ft, followed by KL fringe with 30.31 million sq ft and Selangor with 26.09 million sq ft, which brings the total to 114.73 million sq ft⁴.

In addition to low office rental rates, businesses can operate economically because of Malaysia’s relatively low minimum wage, which sits at RM1,288.35 (US$275.23⁵) per month.

In most countries, double taxation usually occurs when any taxpayer of a specific country engages in international business transactions. However, this is not the case for businesses in Malaysia. The country is a part of DTAs (Double Taxation Agreements) involving countries located in every continent of the world. This allows Malaysia to create an attractive tax environment where a greater international flow of investment, trade and financial activities, and technical knowledge are facilitated and exchanged.

These DTAs outline the treatment of income or profits earned outside Malaysia by Malaysian businesses and within Malaysia by foreign-owned businesses. On this note, companies in Malaysia are protected against the possibility of a singular income being subject to two countries’ taxes simultaneously. The double taxation agreement also provides taxpayers with certainty about their tax treatment. In the event of an absent DTA, businesses are still eligible for tax relief through the foreign tax credit.

For advisory on double taxation reduction, consider speaking with a professional tax consultant who can provide expert guidance on how to enhance your company’s tax savings.

When shortlisting a country for your business expansion plans, qualifying your list of countries based on their economic strength is an excellent place to start. A country’s GDP is the best measure to assess its overall economic strength because it is closely connected with the country’s average consumer purchasing power. Malaysia’s total nominal GDP is expected to reach US$710 billion by 2030 and US$1 trillion by 2035⁶, with a healthy growth rate of 4.0% – 4.5%⁷.

Malaysia’s strong GDP is attributed to the government’s effort to remain robust in the agriculture, construction, manufacturing, mining, and services industries. The theme of Budget 2024, “Reformasi Ekonomi, Memperkasa Rakyat⁸” (Economic Reform, Empowering People), focuses on three main objectives: improving governance and public delivery system, transforming the business and economic sectors, and enhancing the quality of life of the people. This budget, which is the largest in the nation’s history, also reaffirms the government’s dedication to fiscal reforms to overcome the dual challenges of a less robust global economic outlook and Malaysia’s financial constraints.

With such a reform-oriented and resilient budget, Malaysians’ incomes are improving, and depending on your type of business, you can benefit from a growing number of consumers who are able or willing to purchase low- to middle-market products and services readily.

Malaysia has been growing economically in tandem with global trends. In line with the adoption of Industrial Revolution 4.0 (IR4.0), it has introduced its own National 4IR Policy. This broad, overarching national policy drives coherence in transforming the socioeconomic development of the country through the ethical use of 4IR technologies, such as Artificial Intelligence, Blockchain, and the Internet of Things.

The National 4IR Policy aims to attract foreign investments by fostering a culture of innovation and digitalisation, enhancing the performance and productivity of local industries, and enabling Malaysia to join global value chains. The policy also offers incentives and support for foreign investors who adopt 4IR technologies and develop the human capital and infrastructure in Malaysia. By tapping into the opportunities of 4IR, Malaysia can position itself as a regional hub for advanced and knowledge-intensive industries and achieve its vision of becoming a high-income and inclusive nation by 2030.

While there are limited restrictions on foreign ownership in certain strategic sectors, the Malaysian government encourages the inflow of foreign investments. This is apparent in the incremental liberalisation of equity conditions by various government agencies and the broad range of attractive incentives to entice new foreign investments and promote local start-ups. These incentives range from generous tax exemptions and allowances to grants.

Depending on your business, you might even be eligible for specific grants and incentives aimed at supporting innovation or projects that contribute strategically to the country’s economy and industries. Having a good knowledge of these incentives and how they may apply to you will allow you to maximise your business potential and put you on the fast track to success. Here are 5 grants that might be helpful as you incorporate in Malaysia.

1. Cradle Investment Programme 300 (CIP300) stands as a pre-seed initiative targeting aspiring entrepreneurs in sectors such as ICT and other technology fields. This program offers up to RM 300,000 to these startups looking to develop and promote their innovative services.
2. MaGIC Global Accelerator Programme (MaGICGAP) is a three-month intensive programme that helps promising local and global mid-to-late stage start-ups with established product-market-fit to get investment. It is designed for start-ups that have launched a product with reasonable traction, as well as highly scalable ones carrying a growth potential business model. This programme is open to start-ups from various industries, such as creative and lifestyle, e-commerce, education, finance, healthcare, and smart cities.
3. Technology Acquisition Fund (TAF) is a hybrid grant and loan scheme that assists eligible Malaysian companies in procuring foreign technologies and integrating them into their existing business and manufacturing activities. The fund aims to allow companies to accelerate their growth potential by acquiring new technology and improving their technological capabilities and production processes. This applies to businesses in the priority technology clusters identified by MOSTI, such as aerospace, medical devices, pharmaceuticals, advanced electronics, and renewable energy.
4. Domestic Investment Strategic Fund is a matching grant designed to offer incentives to established companies within the manufacturing and services sectors, boasting a minimum of 60% Malaysian equity ownership. This fund supports and encourages reinvestments, encompassing activities such as expansion, modernisation, and diversification. Notably, it facilitates initiatives like training, R&D, outsourcing, international standards, and technology licensing or acquisition. The fund is accessible to businesses in priority sectors such as aerospace, food security, machinery and equipment, and services.
5. Women Exporters Development Programme (WEDP) is a specialised export support program aimed at empowering women in the export industry. This three-year program is tailored to assist competitive and sustainable businesses led by women to foster the growth of product and service exports. To be eligible for this programme, the company must be women-owned, hold a majority stake (at least 51%) and hold key leadership positions as the CEO and/or Managing Director. This programme covers both merchandise and services trade across various industries.

The Malaysian government also has a dedicated agency, the Malaysian Investment Development Authority (“MIDA”), to help facilitate your international expansion strategy into the country. Besides the ease and low cost of incorporation, Malaysia also offers other advantages for businesses, including:

• Low corporate tax rates of 15%-24%⁹ depending on the company size and income
• New Companies Act 2016 simplifies the registration process and reduces the compliance burden for companies

Strategic location in the heart of the ASEAN Community, providing access to a large and diverse market of over 600 million people