Malaysia free zones
- A Malaysian free zone company is a gift for foreign companies using Malaysia as a gateway to South East Asia. With Malaysia being a member of the ASEAN, companies get to enjoy membership benefits with this Malaysia company setup;
- Malaysia free zones are suitable for foreign companies intending to use Malaysia as a regional manufacturing or distribution base, with the bulk of their business conducted outside of Malaysia;
- Malaysia boasts many free zones. Popular free zones in Malaysia are: Pasir Gudang, Port Klang, Kulim Hi-Tech Park, Port of Tanjung Pelepas, and Bayan Lepas.
Advantages of free zone company formation
- Low land and utility costs, therefore business operating costs can be optimized;
- 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;
- Tax free movement between selected free zones in the ASEAN region;
- No limits on the repatriation of funds.
Disadvantages of free zone company formation
- Companies must rent a physical office space within a free zone;
- The Malaysian government plays a big part in daily business, therefore there are many legal and administrative barriers when conducting business. You will need professional help to navigate the Malaysian free zone administration, therefore Healy Consultants will be happy to help you handle your administrative requirements;
- Many free zone activities are subjected to Malaysian government approval, therefore there are restrictions on certain activities;
- Port Authorities often take advantage of their position to satisfy their personal interests. Consequently, foreign business entities cannot rely on port authorities to protect their business interests as corruption is rife, and contracts are arbitrary.
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 zones invites multinationals from the businesses sectors of electronics, petrochemicals, food products, plastics, and palm oil storage.
Bayan Lepas free industrial zone
Located in the North of Malaysia, Bayan Lepas is the main industrial hub of Penang. The logistics options for this free zone are the Penang international airport, and the Bayan Lepas expressway.
This free zones invites multinationals from the businesses sectors of 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 mainly 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.