Benefits and problems

Benefits and problems of registering a company in Malaysia

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  • Benefits and problems

    Benefits of Malaysia company registration

    Malaysia business registration advantage

    1. Registering a business in Malaysia is easy because:
      • Our Clients can register a Malaysian LLC within 1 week by depositing a minimal amount of US$2 as the initial share capital. Furthermore, only 2 directors and 2 shareholders will be required;
      • Alternatively, our Clients may choose to register a Labuan company which allows them to i) rent office space in Malaysia ii) secure Malaysian visas and iii) open bank accounts in Malaysia. A Labuan company can be setup within 1 week;
    2. Our Clients often choose to start a company in Malaysia, as the country is a cheaper alternative to Singapore for the following reasons:
      • The average worker in Malaysia is more affordable than in Singapore. In 2014, the average wage in Singapore was US$2,700 (residents only) whilst the average wage in Malaysia was only US$525 (MYR2,300);
      • Malaysia’s monthly office rental space was US$17 per sqm. This is significantly lower than Singapore’s average monthly office rental space of US$68 per sqm;
      • To compete with Singapore’s manufacturing sector, Malaysia provides investment incentives such as a pioneer status, and an investment tax allowance to foreign manufacturing companies;
      • To rival the successful Singapore tourism sector, Malaysia is building hotels, amusement and theme parks, shopping malls, luxurious residential complexes, art galleries and museums. In 2014, Malaysia attracted 27.5 million tourists: more than Singapore (15 million) and generating close to US$25 billion in sales;
      • For all the reasons listed above, several companies operating in Singapore have already relocated some of their operations to Malaysia.
    3. Our Clients find also easy to communicate in Malaysia, even when they are not fluent in Bahasa/Malay:
      • English is Malaysia’s second language, and is spoken by 70% of the population. Therefore, foreign investors interested in Malaysia will easily be able to communicate with local employees, customers and suppliers;
      • Most business documents are available in English, therefore translation costs and time can be saved during business registration in Malaysia.
    4. Malaysia is a great location for members of the Islamic Community who wish to invest in South East Asia:
      • Halal Parks – These parks are designed to ease business registration procedures in Malaysia and provide incentives for all Halal-related manufacturing sectors;
      • Liberal views on Islam – Malaysia can be seen as the gateway between the “Islamic world” and the “Western world” due to their modern Islamic practices. As a result of this, Malaysia’s economy is suited for both Islamic and Western corporations;
      • Islamic Banking – Malaysia has one of the biggest sharia-compliant asset management industry. There is no restriction on repatriation between international Sharia bank accounts.
    5. Investment incentives available for entrepreneurs forming a company in Malaysia include:
      • Smaller manufacturing companies with paid-up capital below RM500,000 and manufacturing high tech products and other promoted goods are eligible for the Pioneer Status and Investment Tax Allowance incentives;
      • Those who are granted Pioneer Status enjoy a five year partial exemption from the payment of income tax; applications received from companies located in the “Eastern Corridor” of Peninsular Malaysia will enjoy a 100% tax exemption on their statutory income during their five year exemption period.

    Problems with Malaysia company registration

    1. Malaysia’s corporate tax rate is high, at a flat 25% on all corporate profits;
    2. A Malaysian LLC requires a minimum of two resident directors. Healy Consultants can provides nominee director services to support Malaysian business registration;
    3. The government’s tenders favor i) Malays (Bumiputera) and ii) companies formed and managed by Malays over other nationalities and ethnicities.
  • Best uses for a Malaysia company

    As foreign-owned companies can invest in almost every business sector without restriction, Malaysia offers many opportunities:

    1. Our Client may use their Malaysian company as their Asia Pacific regional headquarters because:
      • There is no tax payable by Malaysian companies for dividends received from foreign subsidiaries;
      • The tax efficiency of a Malaysian holding company is improved by the country’s 68 double taxation avoidance agreements, which reduce withholding taxes and therefore the overall tax burden;
      • Malaysia is also an ideal location for a regional headquarters. Located in the center of South East Asia, Malaysia is in close proximity to many leading Asian markets such as Singapore, Vietnam, Thailand, China, and India.
    2. Our Client may use their Malaysian company to offer financial and investment services because:
      • Malaysia-based fund managers are also allowed to market and trade their financial products both to corporate and retail investors in i) Singapore and ii) Thailand. To do so, they are only required to submit an application to these countries’ Security Exchange Commissions, which will approve it thanks to a fast-track procedure. This cross-border offering facility should be extended to Indonesia and Philippines by 2020;
      • In order to attract foreign investors in Malaysia investment, some laws in regards to foreign ownership are being relaxed. The foreign ownership limit of stock brokerages is to be increased to 70% from 49%. There can now be 100% foreign control in wholesale fund management companies in Malaysia. The limit for unit trust companies has also been increased to 70%.
    3. Malaysia is an excellent jurisdiction for setting up a manufacturing and distribution company because:
      • Because of the abundance of cheap raw materials and skilled labor, Malaysia has an excellent reputation as a manufacturing hub. The country is notably rich in several natural resources such as palm oil, rubber, timber, oil and tin;
      • Distribution of manufactured goods by sea is easy thanks to Malaysia’s four major ports, and an ideal location on the straits of Malacca;
      • Processing and manufacturing companies can make tax savings thanks to Malaysia’s five free zones. These offer foreign companies zero custom duties and flexible trading laws. These five export processing zones are: i) Pasir Gudang ii) Port Klang iii) Kulim Hi-Tech Park iv) Port of Tanjung Pelepas and v) Bayan Lepas;
      • Malaysia is a member of the Association of South East Asian Nations (ASEAN) and has signed over twelve free trade agreements. Companies producing manufactures and raw materials in Malaysia can thereafter export them free of custom duties to the nine other Member States of ASEAN, as well as to i) Japan ii) South Korea iii) India iv) China v) India vi) Australia and vii) New Zealand;
      • To attract foreign investors and encourage Malaysia business, the Malaysia government developed industrial parks, including free industrial zones, technology parks, and Multimedia Super Corridor (MSC). There are investment incentives such as Pioneers status, BioNexus status and Multimedia Super Corridor (MSC) status where companies can enjoy tax free for a number of years.

Contact us

For additional information on our business registration services in Malaysia, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Ms. Chrissi Zamora, directly:
client relationship officer - Chrissi
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