Business entities in Malaysia

Business entities in Malaysia

Limited liability company (LLC)

Malaysia business entity setup requirements
An LLC is commonly incorporated by entrepreneurs when starting a business in Malaysia. The liability of the shareholders is limited to the extent of their capital investment, while stock transfer requires the decision of the majority of members.

Bumiputera company

Entrepreneurs can establish this Malaysia business setup with at least 30% native Malay ownership. If this requirement is met, the organisation can enjoy special grants, discounts, and incentives such as cheaper business licenses, special bank agreements, native reservation of land, and discounts when purchasing or renting land.

Branch office

Another option for business setup in Malaysia is establishing the branch office. 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.

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$16,500US$10,965US$8,950
Subsequent annual costs (incl accounting and tax fee)US$4,915US$6,820US$8,450US$5,950US$6,300
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 fees4,8305,2008,6806,2004,900
Company secretary and legal registered office fees1,5001,1001,5001,1001,100
Corporate bank account opening2,9502,5504,9502,5502,950
Estimate of total outgoings in Year 114,0308,85016,50010,9658,950
Draft invoice

Doing business in Malaysia through a Labuan Company

For over a decade, Healy Consultants efficiently and effectively assists our Clients with cost-efficient Labuan business registration.

  1. Labuan is an excellent low tax jurisdiction which allows you to i) establish a Marketing Office in Malaysia, specifically Johor Bahru and Kuala Lumpur and ii) hire local or expatriate staff to work in Malaysia;
  2. 4 steps to do business in Malaysia through a Labuan company:
    No.
    Step
    When
    1.Incorporate a Labuan companyMonth 1
    2.Corporate bank account opening in Johor BahruMonth 2
    3.Office lease agreementMonth 3
    4.Secure employee visasMonth 4

Eligibility

  1. A Labuan company set up, even if it is licensed under the laws relating to financial services in the IBFC may apply to set up a Marketing Office in Kuala Lumpur and/or Iskandar Malaysia, Johor Bahru;
  2. No trading activities shall be done through, from or in the Marketing Office;
  3. The number of staff in each of the Marketing Office should not exceed four.

Company incorporation requirements

  1. There is no minimum share capital requirement for such a Labuan company;
  2. A Labuan company must pay either a 3% tax on net audited profits, or a fixed sum of US$6,515. A Labuan offshore company which does not trade is not required to pay tax;
  3. The Marketing Office must be segregated and independent from office of other entity/company and has its own phone line, fax machine and computer terminal separate from other entity/company;
  4. The name of the Labuan Company must be easily legible in Romanised characters, printed on a signboard affixed at the entrance of the Marketing Office;
  5. In addition to the annual Labuan Government fees, an annual fee of RM7,500 will be imposed for each Marketing Office in Kuala Lumpur and/or Iskandar Malaysia.

Work permit eligibility

  1. To be eligible for Malaysia work permit,
    • The applicant must be one of the following:
      • Top managerial capacity e.g. Managing Director, Principal Officer, Chief Executive Officer, Chief Financial Officer, Chief Operating Officer;
      • Middle management e.g. Manager, Assistant Manager;
      • Professional e.g. Accountant, Lawyer, Consultant, Underwriter;
      • Technical expert e.g. IT Specialist or other specialist related to Labuan trading activity.

    • The applicant must have a valid residential address in Malaysia;
    • The applicant must have the technical and academic qualification, professional certificate or relevant working experience related to the position applied.

  2. After Malaysia work permit approval, our Client must travel to Labuan for one hour as the visa will be endorsed onto the passport;
  3. Our Client can only fly into Labuan through 3 cities in Malaysia, there are Kota Kinabalu, Kuala Lumpur and Miri;
  4. Labuan is about 92 square kilometers in size and one can drive from one end of the island to another in less than 15 minutes;
  5. Labuan is a duty-free island so many tourists purchase alcohol, perfume, chocolates and cigarettes. Click to find available activities in Labuan.

Frequently asked questions

  • How long does it take to set up a small business in Malaysia?

    It takes on average 14 weeks to complete Malaysia business setup.
  • Do I need a resident director to establish a company in Malaysia?

    Yes, 2 resident directors are mandatory for Malaysia business set up. Healy Consultants can provide nominee resident director services for our Clients.
  • Why should I setup a company in Malaysia?

    There are several advantages of setting up a business in Malaysia, because the country i) is an industrial hub ii) is a cheaper alternative to Singapore iii) uses English as the second language and iv) has great provisions for the Islamic community.

Contact us

For additional information on our business setup services in Malaysia, please email us at email@healyconsultants.com or phone us at (+64) 4831 8737. Address: 85-1B, Jalan bentara 20, Taman Ungku Tun Aminah, 81300 Skudai, J.B, Johor. Alternatively please contact our in-house country expert, Ms. Karen Lee, directly: