Contact us now for more details
Setting up a foreign company in Malaysia
As one of the most dynamic countries in Southeast Asia, Malaysia offers many benefits to investors, as reflected in the country’s strong private investment growth, which reached RM146.1 billion (US$39.89 billion) in 2014, a CAGR of 13.9%, following the launch of the Economic Transformation Programme (ETP) in 2010.
From manufacturing to distribution or technical expertise in the service sector, Malaysia offers opportunities and capabilities across the entire value chain. Whether investors are looking to use Malaysia as a target market or a gateway to other markets in the Southeast Asian region, companies and their employees can find countless business opportunities here.
Basic requirements for opening a company in Malaysia
A private limited company (one that has "Sendirian Berhad" or "Sdn. Bhd." in its name) is the most common type of business entity in Malaysia.
Under the Companies Act 1965, the basic requirements for foreigners to open a company in Malaysia are the same as for Malaysians:
(i) there is at least one subscriber for the shares in the company (Section 14 of the Companies Act);
(ii) at least one local director (Section 122);
(iii) The Company Secretary may be:
A member of a professional body prescribed by the Ministry of Domestic Trade, Cooperatives and Consumerism; or
An individual authorised by the Companies Commission of Malaysia (SSM)
(iv) Minimum paid-up capital is RM1
The directors and secretary of the company should have their principal or only residence in Malaysia.
The Companies Act 1965 does not stipulate the equity ratio for companies registered in Malaysia, but in order to allow more locals to participate in business activities, the government encourages Malaysian investors to open joint ventures with foreign investors. Depending on the type of business activities, regulatory authorities/agencies may impose specific equity conditions when a company applies for approval, business license, permit or registration.
With the liberalization of equity policy, foreign investors can usually hold 100% of the shares in most industries, except for strategic industries related to national interests such as water resources, telecommunications, ports, energy, etc. However, foreigners are advised to confirm whether the proposed business activities are allowed in Malaysia and the requirements for setting up a foreign-invested company in Malaysia.
Business License
Each industry has specific regulations issued by relevant government departments, which may include restrictions on the company's foreign equity ratio, higher paid-in capital requirements, and the need to obtain regulatory approval (i.e. special approval, business license, permit or registration) before commencing operations.
Business licenses can be divided into 3 different groups, namely:
General License
Industry specific licenses
Special license for activities
Wholesale and Retail Trade (WRT) License
The most common license required by a foreign company is the WRT license.
The WRT license is applicable to distributive trade services in Malaysia with foreign participation (i.e. foreign equity is 51% and above), including wholesalers, retailers, franchisees, direct sellers, suppliers who sell goods in the domestic market, and commission agents or other representatives such as representatives of international trading companies.
The above industries must first apply for a WRT license before applying for a professional work permit. The minimum paid-up capital requirement for applying for a WRT license is RM1 million, and the company must have a complete business premises, that is, a valid lease agreement, telephone lines, etc.
Owning a company in Malaysia does not mean that foreign investors/directors can stay in Malaysia permanently. They still need to apply for a work pass.