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Malaysia comprises many states and federal territories and is broadly divided into West (aka Peninsular Malaysia) and East Malaysia (aka Malaysian Borneo.) The Eastern part of Malaysia is made up of states like Sarawak and Sabah, and the federal territory of Labuan. These states had joined Malaysia in 1963 and have retained administrative autonomy as far as immigration goes. In other words, there are four jurisdictions in Malaysia that adjudicate immigration matters based on the work location – West Malaysia, Sabah and Sarawak , and the federal territory of Labuan.

All four immigration processes are distinct and separate from each other. For example, most applications for immigration in West Malaysia are submitted electronically while the ones in East Malaysia are submitted manually.

Interestingly, the citizens of Malaysia who are not born in East Malaysia have to present their passports upon arrival at the East Malaysian state. However, in the federal territory of Labuan, Malaysian citizens can work freely without the requirement of any Labuan work permit.

It may be possible that the varied immigration processes in four jurisdictions are difficult to navigate, especially for people who would seek work permits or authorizations in more than one jurisdiction. It is advisable for any person or group looking to obtain a work permit in Malaysia to ascertain whether the move is to East Malaysia, West Malaysia, or all the four jurisdictions. And if there be any doubt it is always better to discuss with any immigration consultant.

Changes to work authorization rules in the federal territory of Labuan

In the past few years, there have been some changes in rules pertaining to the Labuan work permit. Effective April 2019, the changes have been made to the 2 years’ work permits for any Labuan company.  

Changes with regards to renewing a 2-year visa

Every work permit holder in the federal territory of Labuan needs to submit the application at least six months before the expiry of the present work permit. The application should be accompanied by the following documents: Current EA income tax form for the expatriate

Copy of the personal tax payment receipt

Current payslips of 3 months and their payment proof in bank statements of a minimum of RM10,000 per month

Financial reports of the current year pertaining to the company registered in Labuan

Current business plans showing projections for the coming 3 years

Current business contracts or invoices

Renewal of tenancy contract for offices in Labuan

Changes with regard to the Labuan work permit

There are four major changes as mentioned below:

Need to declare a minimum monthly income of RM10, 000. The income is taxable with the tax rate ranging from 0 – 28% depending on the residency status

Business plan showing the objectives of the business, target market, services and products offered, 3 years’ financial projection, and organization chart

The company should have an operational office in Labuan prior to applying for a Labuan work permit

Each person seeking renewal of his or her work permit is needed to submit letters from two individuals who are known in their respective domains.

Conclusion

Post COVID induced lockdowns the global business landscape looks dismal with economies trying to come to grips with the situation and governments offering sops and incentives to businesses to set the ball rolling. Although returning to a semblance of normalcy may take some time given the magnitude of the pandemic-driven economic slowdown, there are a few destinations global businesses can consider to expand their footprints. Malaysia happens to be one such country in Asia with an impressive reputation of being business-friendly. It continues to remain one of the favourite destinations for high-value manufacturing and services. So, if a business looks to go for company incorporation in Malaysia and leverage its myriad benefits, then the country will not disappoint.

Statistically speaking, the high levels of gross FDI to Malaysia for the period of January to September 2020 were pegged at RM 108.2 billion, according to the data released by the Department of Statistics Malaysia (DOSM). Interestingly, this is in sharp contrast to the flow of gross FDI at RM 102.3 billion during a similar period in 2019. In other words, even during the lockdown when an overall gloomy scenario prevailed over the world, Malaysia saw an increase in its gross FDI to the tune of 5.8 percent. This reflects on the maturity of the country’s monetary policy that allows the repatriation of interests, profits, capital, and dividends. Such measures have consolidated the position of Malaysia as a regional hub of the global supply chain – all the more reason for businesses to apply for company registration in Malaysia and earn profits.

Positives for Malaysia as an investment destination

The confidence of global investors remains bullish and there is no dearth of businesses opting for company registration in Malaysia for foreigner. In fact, the country remains a major supply chain hub for a variety of industries such as ICE, technology, electric and electronics, medical devices, machinery and equipment, automotive, and aerospace, among others. According to Straits Times, the CEO of Eurocham (EU- Malaysia Chamber of Commerce and Industry) seems to have conveyed his bullishness on the prospects of Malaysia as a thriving business destination.

It should be worth mentioning that during the first nine months of 2020, the period battered by COVID the world over, Malaysia received approved investments in a host of sectors, namely, services, manufacturing, and primary sectors, to the tune of RM 109.8 billion. In the same year, Malaysia received a fair share of companies, mostly MNCs including many from the Fortune 500 list, in the high-end technology sectors. These developments are the positives for any new company registration in Malaysia.  

Some of the factors (among many others) responsible for making the island nation into an attractive business destination, especially for SDN BHD registration Malaysia include the following:

Excellent infrastructure

Robust telecommunication services

A strong presence of banking and financial services

Availability of a skilled workforce

Presence of ancillary industries

Conclusion

Known as one of the premier and fastest-growing economies in Asia, Malaysia is known for being a favourable business destination for global companies. Apart from the business-friendly initiatives offered by the government, the country has plenty to offer in terms of tourist attractions, a low corruption index, less red tape, different ethnicities, an educated and skilled workforce, and political stability, among others. For company incorporation in Malaysia, certain types can make the cut straight away. Let us know about the types of companies that can register in the country and benefit.

Types of business entities to register in Malaysia

For any new company registration in Malaysia, the first step is to register with the Companies Commission of Malaysia (SSM), the overarching body regulating and overseeing the process. Registration per se is categorized into Registration of Business (ROB), Registration of Company (ROC), and Limited Liability of Partnership (LLP). Since these registrations are governed by different laws, 8 types of business entities are there.  

Sole Proprietorship: Arguably the simplest of businesses to register at a small scale by mentioning the owner’s name at RM30 or trade name at RM60. Here, the new company registration in Malaysia needs to be executed by the proprietor only instead of engaging a third party. This is due to the fact that the business owner has to bear all liabilities in his or her personal capacity and pay taxes in the form of income tax. A sole proprietorship can be registered by Malaysians or those with a permanent residency in the country.

Partnership: Here, a business entity can be registered with a minimum of two and a maximum of twenty partners. The partners will have to share the liabilities towards the business and pay personal income taxes. In the event of a customer suing such an entity, every partner will be responsible to pay the damages awarded by a court. This type of business entity is mostly established by professionals such as doctors, lawyers, company secretaries, and accountants, among others. A partnership firm can be started by Malaysians or those having permanent residency in Malaysia.

Sendirian Berhad (SDN BHD) or Private Limited Company: This type is a common business entity in Malaysia limited by shares where the ownership can be 100% foreign. So, for any SME company registration in Malaysia for a foreigner, at least one of the directors has to reside in Malaysia. Moreover, the company can be scaled up by increasing the paid-up capital and distributing shares to investors (a maximum of 50.) Interestingly, post the Companies Act of 2016, SDN BHD registration in Malaysia can be done by a single director and shareholder without the requirement of other business partners.

Company Limited by Guarantee (CLG): Here, a public company can be established for non-profit purposes without any share capital to be paid. The company has only members who act as guarantors to run operations. Even though the owner or other members do not pay the capital, they are responsible to pay debts based on the amount promised as a guarantee in the event of the company closing down. This precludes the use of profits for other purposes not stated in the company’s charter. Usually, non-profit organizations fall under this category.

Foreign Company: This business entity is for non-Malaysians with businesses in other parts of the globe, and who want to establish a branch in Malaysia. After executing company registration in Malaysia for foreigner, the company can be run from outside Malaysia without the need for the director to reside in the country.

Conclusion

Malaysia is a leading country in South East Asia and a member of the politico-economic-trade bloc called ASEAN. It is a gateway for investors dabbling in Export and Import to get into the lucrative South East Asian markets comprising Indonesia, Vietnam, Thailand, Singapore, and the Philippines, among others. However, to be a successful export import business, it is important to have an understanding of the local markets and consumers. Among the first steps, you have to take to kick-start your business is to acquire an import export license in Malaysia. 

Gains from investing in Malaysia as a trading company

Strategically located on the Malacca Straits, which happens to connect the Indian and the Pacific Oceans and a busy trade route, Malaysia offers great trade benefits for trading companies. Also, being a multi-cultural country with a large English speaking people, people coming from outside do not have any issues with communication. The consumers in Malaysia are open to new brands and products provided they have the right price and quality. So, as an export import company, you can easily reach out to the consumers with your brand and products. 

Top export import products of Malaysia

The island nation’s goods for import and export are electrical machinery, oil and mineral fuels, industrial machinery, fats and oils, precision instruments, motor vehicles, and plastics, among others. This list does not mean that you should stick to these but can bring products that are innovative, qualitatively superior, and cost-effective. 

Export Import policies in Malaysia 

Before starting any export import business, it is important that you have a thorough knowledge of the relevant regulations and guidelines. Again, it is better to apply import export license before venturing into the world of trade driven by a plethora of challenges and successes. Certain goods are strongly regulated by the government including motor vehicles, food and agricultural products, and steel products, among others. For example, importing drugs is strictly prohibited unless you have the import export license in Malaysia from the Ministry of Health. Generally, most goods invite a customs duty ranging from 0% to 50%, and stuff like raw materials, foodstuff, and pharmaceutical products do not attract heavy taxes or duties. To export or import foodstuff, you have to check whether it complies with the local regulations. Also, for certain regulated items like military uniforms, agricultural products, arms and ammunition, and wildlife, a trader would need a special license to export. 

Start an export import business in Malaysia

Starting an export import business in Malaysia would require you to follow certain procedures as mentioned below: 

License: Take the first step by applying for an import export license in Malaysia from the concerned authorities and get registered. Besides, obtain permits to import/export certain products that are regulated by the government. For example, export licenses can be used to restrict the sale of textiles outside the country to comply with bilateral restrictions. Also, meat products like pork need the grant of import permit by the Department of Veterinary Services. 

Customs: Malaysia follows a Harmonized Tariff System (HTS) and any queries related to the classification of export and import of goods must be put to the appropriate customs stations. It is important that your business files proper custom paperwork for clearance or else, an error can cost your business a lot in penalties. The documents required by the customs include a bill of landing, letter of shipment, letter of credit (if any), certificate of insurance, license or certificate, payment proof, and a customs declaration form, among others. 

Conclusion

Companies the world over are looking at attractive investment destinations to make profits, raise brand equity, deliver value to their shareholders, and remain competitive. However, high tax rates, red tape, excessive control, inflexibility in policies, and corruption in business dealings are considered a red-rag for businesses. Among many investment destinations available for businesses to choose from, Malaysia is certainly one among the top. Let us understand why foreigners should head for company registration in Malaysia. 

Benefits for new company registration in Malaysia

In the Asia-Pacific region, the economy of Malaysia has been performing consistently well for many years. This has created a high degree of optimism for investors, especially foreigners. The other benefits a foreigner can get upon investing in this island nation are as follows:

Ease of doing business: According to the World Bank data, Malaysia is ranked 12th among the list of countries when it comes to the ease of doing business. And according to the 2017 report, Malaysia had been ranked 2nd among the ASEAN countries for pursuing business-friendly policies. This is certainly a shot in the arm for the country as investors generally need to follow only three procedures and around 5.5 days to complete company registration in Malaysia for foreigner. The simple registration process and less turnaround time are plusses that any foreigner can look out for. 

Location: Malaysia is located near the global business hubs of Tokyo, Hong Kong, Singapore, Seoul, and Shanghai, and can be reached from these centres in a matter of hours. The strategic location is highly suitable for investors to leverage and add value to their organizations. Besides, the country is gateway to a vast regional market comprising 600 million people. 

Political stability: Malaysia follows a democratic form of government and has witnessed political stability for many years. The government has initiated the Economic Transformation Programme (ETP) backed by favourable business policies to create a conducive environment for investment. 

Legal framework: Among the many worries global investors have before putting their money in a foreign destination is a weak legal framework. What happens if the company gets into a legal battle with a local entity? What if the legal framework is highly biased in favour of the home-grown entity and gives a raw deal to the foreign-owned company? These possibilities or worries can be put to rest while doing SDN BHD registration in Malaysia as the country has a robust legal framework and good arbitration set up in Kuala Lumpur to deal with disputes related to trade, investment, and commerce. Again, according to the World Bank’s Doing Business Report in 2017, Malaysia is ranked third in protecting small investors. 

Incentives: High tax rates have been the bane of businesses as they can pull away liquidity and reduce profitability. However, the Malaysian government offers several incentives to the private sector companies in the form of expatriate employment opportunities, tax incentives, grants, and funds. 

Skilled workforce: In order to succeed in a competitive business environment, companies need to invest in a skilled workforce. Malaysia can be considered a favourable country to get a skilled workforce that is well versed in the English language and other skills. After completing SDN BHD registration in Malaysia, private companies can get access to a large pool of talented and efficient workforce.

Conclusion