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Establishing a Representative Office in Malaysia

Rising Global Consultants

Representative Office

The establishment of a representative office or regional office marks the early stage of a foreign company’s interest in setting up its regional business in Malaysia. During this phase, the office typically conducts information gathering and feasibility studies on local investment opportunities for its parent company, in preparation for a long-term commitment

Setting up a representative office or regional office requires approval from the Malaysian Investment Development Authority (MIDA)

A representative office is an office that allows a foreign company or group to collect information related to investment opportunities in the local market, particularly in the manufacturing and services sectors. This is beneficial for enhancing bilateral trade relations, promoting the export of Malaysian goods and services, and conducting research and development activities.

A regional office serves as a coordination center for the associated companies, subsidiaries, and agents of a foreign company or group in Southeast Asia and the Asia-Pacific region, overseeing the company’s/group’s designated activities in the area.

The initial operating period for the proposed representative office/regional office is at least two years, with the actual duration determined by the applicant’s needs.

Representative and regional offices established in Malaysia have no capital requirements and are not subject to taxation.

Establishment of a Representative Office/Regional Office

Please note that most small and medium-sized foreign companies register subsidiaries in Malaysia rather than establishing branch offices or representative offices.

Branch offices in Malaysia are considered non-resident companies for tax purposes. Non-resident companies are not eligible for tax incentives granted to startups or resident companies. Additionally, payments made to branch offices for services conducted in Malaysia are subject to a withholding tax of 10% + 3% because branch offices are considered non-residents for tax purposes. As a result, most foreign companies prefer to establish subsidiaries rather than branch offices.

Eligibility Criteria and Conditions

1. Eligible Industries:
(1) Manufacturing;
(2) Service sectors promoted by MIDA, on a case-by-case basis; or
(3) Government departments and foreign organizations.

2. Types of Applicants:
(1) Foreign government agencies;
(2) Foreign organizations, universities, and institutions; or
(3) Foreign companies (conglomerates and non-conglomerates).

3. The name of the representative office/regional office must be the same as the parent company’s name.

4. The representative office/regional office may only carry out permitted activities on behalf of its parent company at the business premises.

5. The minimum annual operating expenditure for the representative office/regional office must be at least MYR 300,000.

6. The operating funds for the representative office/regional office must come from outside Malaysia.

Permitted Activities for a Representative Office/Regional Office

1. Collecting and analyzing important information or conducting feasibility studies related to investment opportunities in Malaysia and the region;
2. Planning and coordinating business activities;
3. Identifying sources of raw materials, components, or other industrial products;
4. Conducting research work and product development;
5. Serving as a coordination center for the foreign company’s associated companies, subsidiaries, and agents in the region;
6. Engaging in other activities that do not directly involve actual commercial transactions.

Required Documents

1. Certificate of incorporation or business license of the parent company;
2. Audited financial statements of the parent company for the past two years;
3. Company profile of the parent company;
4. Background information of the parent company, including the purpose of establishing the representative office/regional office, planned activities, benefits to Malaysia, expected cash flow, human resources and/or foreign staff requirements, etc.

If applying for both the establishment of the representative office/regional office and a work visa for expatriates simultaneously, the following additional documents are required:

1. Certified passport of the expatriate;
2. Certified educational qualifications of the expatriate;
3. Resume of the expatriate.

Compliance Maintenance Responsibilities for a Representative Office/Regional Office

1. Progress Reports/Annual Activities:
The representative office/regional office must submit progress reports/annual activities to MIDA annually and when applying for an extension.

2. Extension Application:
Foreign companies intending to apply for an extension of the representative office/regional office must submit their application to MIDA at least three months before the current term expires. Approval of the application depends on whether the representative office/regional office meets the stipulated conditions.

Prohibited Activities

Approved representative offices/regional offices are not permitted to engage in the following activities:

  1. Engage in any trade (including import and export), business, or any form of commercial activity
  2. Lease storage facilities; any shipment/transshipment or storage of goods should be handled by local agents or distributors
  3. Sign commercial contracts or provide paid services on behalf of foreign companies
  4. Participate in the daily management of any of the company’s subsidiaries, affiliates, or branches in Malaysia

Qualification requirements

  • The proposed operating expenditure for RE/RO must be at least RM300,000 per year
  • The funds for the RO (Representative Office) should come from outside Malaysia

Welcome to Contact Us

Phone Number: +60 3-8682 1802 | E-mail:  officer@rising.com.my