A Promising Launchpad to Southeast Asia and Islamic Trade Destination
Malaysia is one of Southeast Asia’s fastest-growing investor-centric, business-friendly, state-oriented, newly-industrialised, mixed economies, which is averaging a growth rate of just under 6 percent over the last decade.
Politically, it is a federation with 13 states and three federal territories of Kuala Lumpur, Putrajaya, and Labuan. The currency is Ringgit Malaysia (RM), and its four languages include Bahasa Malaysia (official language), English, Mandarin, and Tamil.
Historically, Malaysia was a commodities-led economy where manufacturing and export of petroleum, palm oil, natural rubber, and timber dominated. But in recent years, services have contributed to the country’s economic growth and are now the largest sector of the economy. The country has made huge strides in the IT sector as well as starting early 2000s. Foreign investors, entrepreneurs, and multinational companies have shown particular interest in investing in the insurance, finance, mining, manufacturing, and distribution sectors in the country.
Moreover, the country’s recent focus on R&D, design, innovation, logistics, advanced electronics manufacturing, biotechnology, photonics, and automation in the manufacturing sector, has propelled Malaysia to be counted into one of the most dynamic corporate environments in South-east Asia.
Now with a new government in place, the country, which is strategically located in South East Asia (read Strait of Malacca, which is one of the busiest shipping lanes in the world), is fast becoming a prime destination in Asia for Malaysia companies registration.
Easy to Do Business
So much so that while the World Bank ranked Malaysia 12th in its Ease of Doing Business rankings last year, the country was crowned in 2020 as the best in the world to invest in or do business, by the CEOWorld magazine. Its rankings were based on 11 different factors including quality of life, red tape, investor and IP protection, quality and availability of local workforce, infrastructure, technological readiness, corporate and personal taxation, corruption, as well as all kinds of freedoms including personal, trade, and monetary; with each category getting equal weight-age.
Finance and Banking Sector
The financial and banking sector in Malaysia is also well-developed, with the Labuan International Business and Financial Centre another example, which offers an attractive offshore location for multinational companies dealing in financial services.
Along with the presence of several local financing options including local and international financial institutions (commercial and investment banks), development finance, export credit, refinancing, private debt securities and venture capital; Malaysia has a strong Islamic banking sector and Islamic Capital Market, offering a range of Islamic banking products and services based on Shariah principles.
Special Economic Zones
In fact, industries in Malaysia are predominantly located in over 500 industrial estates and Free Zones developed throughout the country. These zones are categorized as export processing zones, which cater to the requirements of export-oriented industries. There are also specialized parks that have been developed to cater to the needs of specific industries.
Some examples of growth corridors in Malaysia include Iskandar Malaysia, Southern Johor, Northern Corridor Economic Region (NCER), East Coast Economic Region (ECER), Sabah Development Corridor, and Sarawak Corridor of Renewable Energy.
World-Class Infrastructure and Tax Exemptions
Malaysia’s other major advantages are relatively-lower wage costs, highly-skilled young and productive local workforce, highly-developed telecommunications, IT and public infrastructure, fully-developed industrial parks, free economic or industrial zones (with years of tax-free clauses), technology parks, Multimedia Super Corridor programme (leading to the development of cyber-centres and cyber-cities), and tax exemptions for “pioneer” and “priority” companies.
The country is well-served by digital and fiber optics technology, has eight international airports with air-cargo facilities, well-maintained super-express highways, and seven international seaports.
Robust IPR Regime and Liberal Foreign Exchange Controls
The country has liberal foreign exchange controls and robust Intellectual Property Rights (IPR) regime. Moreover, the Government has initiated a “New Economic Model”, which identified eight Strategic Reform Initiatives (SRIs) to create an efficient, competitive, and business-friendly environment that attracts valued foreign investment.
The country has no restrictions on the repatriation of dividends, interest, capital, and profits.
Malaysia is also a signatory to several Investment Guarantee Agreements (IGAs), it has an avoidance of double taxation treaties with 68 other countries and regions, and it doesn’t levy any capital gains tax on investments or capital assets.
Many Have Already Done So
To put this in perspective, to date, over 5,000 foreign companies from more than 40 countries have established their operations in Malaysia in the last few years. Some have even diversified their operations in Malaysia, as a testimony to the Government’s efforts in making the country more attractive to foreign entrepreneurs and companies.
How We Can Help
So to take advantage of Asia’s growth story, Malaysia must also be on every foreign entrepreneur and company’s radar, as it is an ideal gateway for companies to the ASEAN region, which houses over 630 million people (almost double the population of the US).
And while doing so, you should be mindful of the distinctive regulatory and legal requirements – both pre-and post-incorporation, that Malaysia imposes. This is where we can help, as InCorp Global is undoubtedly the leading corporate services provider in Singapore and South-east Asia, with over two decades of experience in providing such services as a group.
- When you engage us, our domain experts and a team of highly-qualified professionals advise you on the type of business entity most suited to your business.
- We also make sure that you are able to take advantage of all the tax incentive schemes prevalent in Malaysia, avoid penalties by fulfilling all filing requirements on your behalf, as well as avoid double taxation by taking advantage of the 60-plus cross-border taxation treaties the country has signed with other jurisdiction.
- With us, you will never have any surprises as we will let you know the cost of all our corporate services in advance, depending upon what you choose to engage us for.
For the registration of all businesses – including foreign companies – in Malaysia, the process of setting up a business entity is governed by the registrar of business commonly known as the Suruhanjaya Syarikat Malaysia (SSM) or Companies Commission of Malaysia.
Compliance and Corporate Secretarial Services
Despite Malaysia becoming increasingly business-friendly over the last few years, the registrar of business in Malaysia, the Suruhanjaya Syarikat Malaysia (SSM) or Companies Commission of Malaysia, and the Inland Revenue Board of Malaysia (IRBM).
Since all companies registered in Malaysia must keep proper books of accounts as stipulated by the country’s Companies Act 2016, engaging the leading company registration specialist of the region, InCorp Global, is a good idea.
The standard rate of corporate taxation in Malaysia is 24% for a resident company.
All expatriates who wish to work legally in Malaysia are required to obtain an employment pass first. To obtain this pass, you will need to find a Malaysian company that is willing to hire you and subsequently apply for the employment pass on your behalf.
Contact Our Malaysia Team
Head of Corporate Secretarial & Financial Advisory
Lim Pei Hau
Head of Accounting & Business Advisory