Business entities in Malaysia

Business entities in Malaysia

Malaysia business entity setup requirementsHealy Consultants will be pleased to assist our Clients with Malaysia company setup. There are several ways of doing business in Malaysia, the most common being the setting up of a limited liability company. Foreign companies can also register a branch in Malaysia, or a representative office if they plan to run only marketing operations in this country.

The Malaysia Limited liability company (SDN BHD)

  • The Malaysia limited liability company (locally known as a sendirian berhad or SDN BHD) is the type of business entity most commonly formed by foreign entrepreneurs starting a business in Malaysia. Malaysian business setup requires: i) two shareholders ii) a minimum investment of USD2 (MYR2) iii) one resident company secretary and iv) two directors. While there are no restriction on the nationality of the directors, at least two of them must be ordinarily residing the country. If needed, Healy Consultants can provide our Clients with nominee services for resident directors in Malaysia;
  • After incorporation of the company, Healy Consultants will assist our Clients to register the company with the Inland Revenue Department for corporate tax and employer registration. If needed, we can also register the company for GST. All Malaysian companies must submit audited financial statements every year.

The Bumiputera company

Entrepreneurs establishing a limited liability company in Malaysia can apply for Bumiputera status if at least 30% of the shares are held by native Malays individuals or other Bumiputera corporations. If this requirement is met, the company is then eligible for special grants, discounts, and incentives such as cheaper business licenses, special bank agreements, native reservation of land, and discounts when purchasing or renting land.

The Malaysia branch office

Another option available foreign corporations is a branch office in Malaysia. Company law dictates that all branch offices must conduct business within the scope set by the parent company. However, this office can engage in business activities, which involve trade, invoicing, and signing contracts. The foreign company will also have to appoint two resident representatives in Malaysia.

The Malaysia representative office

This Malaysia business setup is only allowed to engage in business activities including market research and promoting the business of the parent company. Consequently, a representative office cannot sign contracts or conduct business in Malaysia.

Table of comparison between Malaysia business entities

Summary at a Glance
Limited Liability Company (LLC)
Bumiputera
Branch Office
Representative Office
Offshore Labuan
Total company set up costsUS$9,630US$8,850US$14,500US$10,965US$9,350
Subsequent annual costs (incl accounting and tax fee)US$4,915US$6,820US$8,450US$3,650US$5,370
How long to set the company up?4 weeks2 weeks6 weeks5 weeks1 week
How long to open company bank account?4 weeks2 weeks2 weeks2 weeks2 weeks
Issued share capital requiredRM2RM2NoneNoneUS$1
Types of business permittedNo restrictionNo restrictionNo restrictionOnly researchNo business in M’sia
Allowed to sign sales contracts with Malaysian Clients?YesYesYesNoNo
Allowed to invoice Malaysian Clients?YesYesYesNoNo
Resident company for local tax purposes?YesYesNoNoNo
Corporate tax payable in Malaysia25%25%25%None3%
Withholding tax payable15%15%15%NoNo
Corporate bank account locationSCB KLBNMHSBC JBSCB JBHSBC KL
Can rent office premises in Malaysia?YesYesYesYesYes
Tenancy agreement required before company setup?NoNoNoNoNo
Allowed to import raw materials?YesYesYesNoNo
Allowed to export goods?YesYesYesNoNo
Can the entity hire expatriate staff in Malaysia?YesYesYesYesYes
Do you visit Malaysia for company setup?NoNoNoNoNo
Resident director required?YesYesYesNoNo
Resident shareholder required?NoYesNoNoNo
Minimum number of directors22111
Minimum number of shareholders22111
Malaysia resident company secretary?YesYesYesNoYes
Tax registration certificate required?YesYesYesN/ANo
Individual shareholders allowed?YesYesYesN/AYes
Corporate shareholders allowed?YesYesYesN/AYes
Corporate director(s) allowed?NoNoNoN/ANo
Public register of shareholders and directors?YesYesYesN/ANo
Malaysian employment visa feesUS$7,950US$7,950US$7,950US$7,950US$7,950
How long to get work permit approved?3 months3 months3 months3 months3 months
Statutory audit required?YesYesYesN/AYes
Annual tax return to be submitted?YesYesYesN/AYes
Access to how many double tax treaties?707070N/AN/A
Average monthly salary of skilled labourUS$2,500US$2,500US$2,500US$2,500US$2,500
Average monthly salary of unskilled labourUS$350US$350US$350US$350US$350
Pension and other monthly employee contribution %23%23%23%23%23%
English spoken by what % of the people?70%70%70%70%70%
Literacy rate %92%92%92%92%92%
Computer literacy rate %75%75%75%75%75%
Office rental per square meter per monthUS$23US$23US$23US$23US$23
Warehouse rental per square meter per monthUS$1US$1US$1US$1US$1
Free Zone namePasir Gudang,
Port Klang,
Bayan Lepas
Pasir Gudang,
Port Klang,
Bayan Lepas
Pasir Gudang,
Port Klang,
Bayan Lepas
Pasir Gudang,
Port Klang,
Bayan Lepas
Pasir Gudang,
Port Klang,
Bayan Lepas
Country rating6666666666
Internet connectivity ratingGoodGoodGoodGoodGood
GDP per capita10,38110,38110,38110,38110,381
Government liberal or controlling of daily businessLiberalLiberalLiberalLiberalLiberal
Population % with degrees3.5%3.5%3.5%3.5%3.5%
Global business efficiency index score6666666666
Ease of doing business global ranking1212121212
Population30,476,00030,476,00030,476,00030,476,00030,476,000
Unemployment rate3%3%3%3%3%
Inflation rate1.9%1.9%1.9%1.9%1.9%
GDP 2012303,526303,526303,526303,526303,526
Average annual growth since 20005.1%5.1%5.1%5.1%5.1%
Estimate of engagement costsUS$US$US$US$US$
Healy Consultants engagement fees4,8305,2008,6806,2003,900
Company secretary and legal registered office fees1,1001,1001,5001,1001,100
Corporate bank account opening2,9502,5502,9502,5503,950
Estimate of total outgoings in Year 19,6308,85014,50010,9659,350
Draft invoice

Frequently asked questions

Contact us

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