Entrepreneurship Guide
Establishing a Company by Non-Malaysian Citizens
Investment Environment in Malaysia
Malaysia is a federal constitutional monarchy with a bicameral parliament composed of the appointed Senate and the elected House of Representatives. Since gaining independence in 1957, rapid industrialization has transformed Malaysia from an economy primarily reliant on mineral and agricultural exports to one dominated by manufacturing and services.
Malaysia continues to lead the global market in certain commodity sectors: it is a leading producer of palm oil and a major supplier of rubber. Malaysia is also a producer and exporter of oil and gas, as well as electronics and electrical products, with the latter accounting for 47% of the total value of manufactured goods exports.
01.
Overseas Investment
The Malaysian government strongly encourages foreign investment. Since 2009, the government has implemented the liberalization of sub-sectors in the services industry, allowing foreign equity participation. This includes at least 45 sub-sectors, such as healthcare and social services, tourism, transportation, business services, and computer and related services. To promote investment, Malaysia has established a national committee to approve investments in the services sector.
02.
Tax Incentives
The Emerging Industries Status incentive includes a tax exemption of 70% of statutory income (100% for certain activities) for a period of 5 years, which can be extended to 10 years. Any unused losses from the Emerging Industries Status can be carried forward for up to 7 consecutive years after the incentive period ends. The Emerging Industries Status applies to companies engaged in "promoted activities" or producing "promoted products." Additionally, the Investment Tax Allowance provides a capital investment tax allowance of 60% to 100% on qualifying capital expenditures for up to 10 years. The Emerging Industries Status and Investment Tax Allowance cannot be applied simultaneously.
03.
Protection of Foreign Investments
Equity Ownership：At any time, a company with approved equity participation will not be required to restructure its shareholding structure. However, the company must continue to comply with the original approval conditions and maintain the initial characteristics of the project.
Investment Guarantee Agreement: Malaysia is always ready to enter into Investment Guarantee Agreements (IGAs) to demonstrate the government's intention to boost foreign investors' confidence in Malaysia.
04.
Investment Guarantee Agreements (IGAs)
• Protection against nationalization and expropriation.
• Ensure timely and adequate compensation in the event of nationalization or expropriation.
• The transfer of profits, capital, and other expenses will be exempt from charges.
• All investment disputes will be handled in accordance with the Convention on the Settlement of Investment Disputes, as Malaysia has been a member of this convention since 1966.
Steps to start a business.
Regardless of the type of business you want to start, if you’re considering doing business in Malaysia, creating a business plan is one of the key steps. A good business plan is as important as having the right ingredients when cooking; it helps you understand the market and track the movements of your competitors.
Determine the sources of company capital. Regardless of the type of business, there will be a budget, starting with a marketing budget. This is a key step to understand what type of financing solution your business needs.
- There are several types of business entities in Malaysia. Each type has different compliance requirements, tax structures, and so on.
- If you are a local entrepreneur, you can choose to register your company as a sole proprietorship, limited liability partnership (LLP), general partnership, or a company. These are common types of business entities in Malaysia.
- If you are a foreign entrepreneur, you have two business entity options: local company or foreign investment company. Foreign investors can establish a sole proprietorship or partnership in Malaysia if they have Malaysian permanent residency (“PR”). In addition to these options, foreign investors can also choose to register their company as a private limited company, a Labuan company, or a representative office.
Every company needs a name. A good business name is not just a brand name—it’s also part of your marketing strategy and brand identity. After coming up with a company name, you need to conduct a company name search:
- Fill out and submit the “Request For Availability Of Name” form to the Companies Commission of Malaysia (SSM)
- Apply for the company name, with each name requiring a RM30 fee.
After searching for the name, register it with SSM for approval to establish the company.
In Malaysia, starting a business requires providing your own company registered address
- Memorandum and Articles of Association / Company Constitution
- Formal declaration by directors or founders prior to their appointment
- Compliance declaration
- Letter from SSM – Approval of the applied company name (one copy).
- Identification documents of each director and company secretary (one copy each).
You need to submit the company registration documents to SSM within three months after the company name is approved. If you fail to submit the documents within the three months, you will need to reapply for the company name.
The registration fee for the company is RM1,000
Business grant
In addition to financing plans, the Malaysian government also offers grants to help businesses grow
Ministry of Energy, Science, Technology, Environment, and Climate Change
Bioeconomy Transformation Program (BTP) (Malaysia Biotechnology Corporation (MBC))
Business Growth Fund (Malaysia Technology Development Corporation (MTDC))
Commercialization of R&D Fund (Malaysia Technology Development Corporation (MTDC))
Ministry of Finance (MOF)
Cradle Investment Programme Catalyst (CIP 500) (Cradle Fund Sdn Bhd)
Cradle Investment Programme 300 (CIP 300) (Cradle Fund Sdn Bhd)
Cradle Seed Venture Fund 1 (CSVF1) (Cradle Fund Sdn Bhd)
Ministry of Communications and Multimedia (KKMM)
Creative Industry Development Fund (CIDF-SKMM) (provided by the Malaysian Communications and Multimedia Commission (SKMM))
Product Development and Commercialization Fund (PCF) (provided by the Multimedia Development Corporation (MDeC))
How to start a business from home?
A home-based business refers to a business whose primary office is located at the owner’s home. Many Malaysians are exploring the niche market of home-based businesses. Specifically, an increasing number of people are starting to run businesses from home.
Types of home-based businesses
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Home-based childcare services
Accounting and bookkeeping services
Consulting
Online businesses
Web design
Professional blogging
Home-based baking
Tutoring
Nail services
Tool repair services
Pet care
Virtual assistance
Laundry services
Start your business.
- You can draft a business plan, marketing strategy, and financing plan for a home-based business. Although you don't need to find an office, you will need to name and register your business.
Register your home-based business.
- In Malaysia, you can register your home-based business as a company.
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