Malaysia free zones
Registering a Malaysian company with a free zone offers multiples tax benefits and allows foreign corporation to use such entity to export their products across South East Asian markets. Malaysia free zones are notably suitable for foreign companies intending to use Malaysia as a regional manufacturing or distribution base. Malaysia offers several free zones, the most popular being: i) Pasir Gudang free zone ii) Port Klang free zone iii) Kulim Hi-Tech Park iv) Port of Tanjung Pelepas free zone and v) Bayan Lepas free zone.
Free zone company formation considerations
- Tax free environments including tax exemptions, on custom duties, taxable services, and imports/exports on selected equipment and raw materials;
- Free ports in Malaysia are in close proximity to deep sea ports, airports, highways, and railways. Therefore, companies can enjoy an efficient and extensive transport network, as free zones serve as a nodal point for land, air, and sea transport;
- No limits on the repatriation of earnings.
- Companies must rent a physical office space within a free zone;
Table comparing different Malaysian industrial free trade zones (FTZs)
Summary at a Glance
Port Tanjung Pelepas
|Average annual Industrial space rent per 1000 sq ft||US$84,000||US$60,000||US$84,000||US$72,000|
|How long to set the company up?||3 weeks||3 weeks||3 weeks||3 weeks|
|How long to open corporate bank account?||2 weeks||2 weeks||2 weeks||2 weeks|
|Quality of Utilities||Excellent||Good||Average||Average|
|Allowed to sign sales contracts with Malaysian Clients?||Yes||Yes||Yes||Yes|
|Allowed to invoice Malaysian Clients?||Yes||Yes||Yes||Yes|
|Corporate tax payable in Malaysia||Dependent on activity||Dependent on activity||Dependent on activity||Dependent on activity|
|Corporate bank account||SCB or HSBC||SCB or HSBC||SCB or HSBC||SCB or HSBC|
|Physical office space required?||Yes||Yes||Yes||Yes|
|Industrial space availability||Many||Many||Many||Limited|
|Allowed to import raw materials?||Yes||Yes||Yes||Yes|
|Allowed to export goods?||Yes||Yes||Yes||Yes|
|Wholly foreign owned?||Yes||Yes||Yes||Yes|
|Can the entity hire expatriate staff in Malaysia?||Yes||Yes||Yes||Yes|
|Do you visit Malaysia for company incorporation?||No||No||No||No|
|Minimum number of directors||2||2||2||2|
|Minimum number of shareholders||2||2||2||2|
|Tax registration certificate required?||Yes||Yes||Yes||Yes|
|Individual shareholders allowed?||Yes||Yes||Yes||Yes|
|Corporate shareholders allowed?||No||No||No||No|
|Corporate director(s) allowed?||Yes||Yes||Yes||Yes|
|Public register of shareholders and directors?||Yes||Yes||Yes||Yes|
|LLC company allowed?||Yes||Yes||Yes||Yes|
|Can apply for immigration visas?||Yes||Yes||Yes||Yes|
|Annual audited financial statements?||Yes||Yes||Yes||Yes|
|Annual tax return to be submitted?||Yes||Yes||Yes||Yes|
|Access to Malaysia double tax treaties?||Yes||Yes||Yes||Yes|
Pasir Gudang free trade zone
Located 35km east of Johor Bahru, Pasir Gudang Freeport is in an ideal location to conduct business with Singapore and Johor Bahru. The free zone has plenty of logistics options as it is located near Johor Bahru airport, the Pasir Gudang 4 lane highway, and Kampung Air Biru port. This free zone is particularly popular with multinationals running electronics, petrochemicals, food products, plastics, and palm oil storage operations.
Bayan Lepas free industrial zone
Located in the North of Malaysia, Bayan Lepas is the main industrial hub of Penang and export processing zone of Malaysia. The logistics options for this free zone are the Penang international airport, and the Bayan Lepas expressway. This free zones is specialized into electronic components, medical equipment, and general assembly industries.
Port Tanjung Pelepas free zone (PFZ)
Located in southern Johor near Singapore, this Freeport is one of the largest container ports in Malaysia with a 1.2 million meter square container port. This Freeport offers logistic options, by sea, highway, and rail. This free zone invites multinationals from the businesses sectors of sea freight distribution and logistics.
Port Klang free zone (PKFZ)
Directly located on the straits of Malacca, Port Klang is one of the largest industrial parks in Malaysia occupying 1,000acres of land. All forms of transport, land, air, and sea are available here, therefore making it one of the best free zones in terms of logistics. This free zone invites multinationals from the businesses sectors of international cargo distribution (logistics), and export operated manufacturing businesses.
Frequently asked questions
What will be the benefits if I start a free zone company in Malaysia?Free zone companies offer several benefits including i) low land and utility costs ii) exemptions from customs duties and import/export taxes on select equipment iii) tax free movement between select regions in the ASEAN and iv) no limits on repatriation of funds.
How many directors will I be required to appoint in order to register in Malaysia free zone?2 directors are required for Malaysia free zone company formation.
How many shareholders are required to incorporate in Malaysia free zone?2 shareholder is required for starting a free zone company in Malaysia.