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How to Open a Company in Malaysia

Statrys Team
Published: 05 Feb 2021

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    If you’re looking to open your company in Malaysia, this article will be a worthwhile read.

    We’ll discuss the best way to go about opening your Malaysia-based company in a comprehensive step-by-step guide.

    1. Start with a Plan

    The first thing to do when starting a business in any country is to construct a business plan. Do you already know what product or service you are going to provide the Malaysian market?

    When creating or revising your business plan, consider the following factors:

    Location: Where are you going to locate your business? Location is a very important aspect of any business. You need to consider your proximity to competitors and partners. 

    Also, it’s important to contemplate the logistics of the location you choose. For example, if you’re going to be importing/exporting raw materials via shipping, you should choose a location close to ports. 

    Additionally, there’s the aspect of talent distribution and recruitment. Is the area you are choosing near a college or university? Are there competitors there that could seep talent away from you? 

    Office space is another coordinate to consider. If you choose to do business in a highly populated region such as Kuala Lumpur, you may find it more difficult to find suitable office space for a reasonable price.

    Are you prepared to pay more and deal with scarce office space, or will you risk choosing a less popular location?

    Funding: How are you going to fund your business venture? Are there investors that you’re beholden to? Shareholders to consider? Keep these factors in mind when planning further.

    Marketing: How are you going to appeal to potential customers? It’s important to craft a thorough marketing plan especially when entering into a foreign market. Know the culture of your target demographic and make sure to appeal to it with your advertisement

    Name: You must decide on a name for your business before applying to get it established. The name should be creative and appealing to Malaysian customers.

    After addressing the items on this list and forging a quality plan, it’s time to make moves to start your business in Malaysia.

    2. Choose a Legal Entity

    The next step is to decide what type of legal entity you want to establish. There are several types of business legal entities to choose from.

    The choices are:

    • Sole Proprietorship: You own 100% of the business. The advantage is that you take 100% of the profit, however you incur 100% of the liability.
    • Partnership: You and at least one other partner split the profits and the liability equally. Many foreigners take on Malaysian citizens as their partners to have access to more Malaysian business privileges. As with sole proprietorships, you and your partner are solely liable for the business.
    • Limited Liability Partnership (LLP): This is a partnership, however it is a separate legal entity. You and your partner(s) are not personally liable. This is known as a highly affordable business model, as the cost of incorporation is low.
    • Private Limited Company (Sdn Bhd): A very common business type in Malaysia. PLCs or Sdn Bhds are seen as highly credible business entities as it is a separate legal entity that can act swiftly. Sdn Bhds are private, meaning that it is unable to sell shares of ownership to the public.
    • Public Limited Company (Berhad): The Berhad is a similar concept to the Sdn Bhd, however, the owners are able to sell their shares of ownership to the public. Due to this, these businesses are governed by the Securities Commission of Malaysia.

    As a foreign entrepreneur, your choices are a bit more limited as a non-citizen of Malaysia.

    Here are the two most common company types chosen by foreigners:

    Foreign-Owned Company: Foreign entrepreneurs can register this type of corporation in Malaysia and enjoy 100% ownership.

    As a bonus, the Malaysian government is subsidizing foreign businesses in the following industries:

    • Education
    • Energy
    • Banking & Finance
    • Agriculture
    • Tourism

    The Malaysian government is trying to encourage the growth of these types of businesses in accordance with their economic needs.

    If you’re in any of these industries, you have a large opportunity on your hands in Malaysia.

    By operating a fully foreign-owned company, you take 100% ownership while sacrificing some rights.

    For example, only Malaysian citizens are allowed to conduct certain types of business, industry, and so on. 

    You may experience higher taxation due to fees, however, you own 100% of the company and are entitled to all profits decision-making power.

    Locally Incorporated Company: If you don’t need to have full ownership of your Malaysian business, you can make a locally incorporated company. 

    You can form a corporation in Malaysia, hire executives, sell shares, and take advantage of Malaysian business rights by allowing Malaysian citizen partners to take some ownership of the business.

    While you don’t have 100% ownership of the company, you have more freedom and options concerning the type of business you wish to conduct.

    You are also more likely to be approved for loans and subsidies, depending on your industry. 

    3. Get your Licenses

    Lastly, you need to do the paperwork that will get your business officially opened. Here is a list of documents that you will need to provide in order to start your business.

    1. Articles of Association: This document will outline the purpose of your company, how it will operate, its address, and so on.
    2. Statutory Declaration: A written affidavit that affirms your honesty. 
    3. Declaration of Compliance: A promissory note confirming that you will comply with all relevant laws.
    4. Approval of Company Name: The SSM will approve or deny your proposed company’s name.
    5. Identity Card of each director and secretary of your business for record keeping purposes of the SSM.

    After filling out these documents, you can incorporate your company. It will take some time for the Companies Commision of Malaysia, or SSM, to process and approve your application. 

    Expect to wait 1-3 months for your application to go through.

    After you've approved, you will need to pay a registration fee that will vary depending on the type of business you open, where you open, etc.

    Finally, once you’ve paid your registration fee, you will receive a Certificate of Registration from the SSM.

    At this point, you have officially opened your business in Malaysia.

    🍾

    Looking for a way to help your business make smarter payments?

    Open a business account with Statrys and you'll get access to 11 currencies and a digital platform that lets you make FX-backed transfers 24 hours a day.

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