Starting a Business in Malaysia Guide 2026

Malaysia offers an attractive environment for entrepreneurs and businesses, with a strategic location, business-friendly policies, and access to the ASEAN market of 650+ million people. The country consistently ranks among the easiest places to do business in Asia.

Why Start a Business in Malaysia?

Business Environment Statistics

• GDP: ~USD 400 billion
• GDP Growth: 4-5% annually
• Ease of Doing Business: Top 15 globally
• Starting a Business: 2-3 days
• Corporate Tax: 24% (17% for SMEs)
• Foreign Ownership: 100% allowed in most sectors

Types of Business Entities

Key Government Agencies

• SSM - Companies Commission (registration)
• MIDA - Investment promotion
• MDEC - Digital economy
• MATRADE - Trade promotion
• IRB (LHDN) - Inland Revenue (tax)
• EPF - Employees Provident Fund
• SOCSO - Social Security

Registering a Company in Malaysia

The Companies Commission of Malaysia (SSM - Suruhanjaya Syarikat Malaysia) handles all company registrations. The process is straightforward and can be completed in 2-3 days.

Sdn Bhd (Private Limited Company)

Most common structure for foreign businesses.

Requirements:

Registration Process

Step 1: Name Search & Reservation

• Search for name availability on SSM portal
• Reserve name (valid 30 days)
• Fee: RM50
• Processing: Same day

Step 2: Prepare Documents

• Memorandum & Articles of Association (M&A)
• Form 48A (Director's statutory declaration)
• Form 49 (Particulars of directors, managers, secretaries)
• Identity documents of directors/shareholders

Step 3: Submit Application

• Submit through MyCoID portal
• Pay registration fee
• Processing: 1-3 days

Step 4: Receive Certificate

• Certificate of Incorporation
• Company registration number
• Can commence business

Registration Fees

Post-Registration Requirements

Within 30 Days:

• Open company bank account
• Register for tax (IRB/LHDN)
• Register for SST (if applicable)
• Register for EPF and SOCSO (if hiring)

Ongoing Compliance:

• Annual return filing
• Financial statements
• Tax returns
• Statutory records maintenance

Company Secretary

Requirements:

• Must be Malaysian citizen or PR
• Must be SSM-licensed
• Responsible for compliance

Responsibilities:

• Maintain statutory records
• File annual returns
• Ensure compliance
• Advise directors

Registered Office

Requirements:

• Physical address in Malaysia
• Accessible during business hours
• Where statutory records kept
• Can use virtual office services

Timeline Summary

Choosing the Right Structure

1. Sdn Bhd (Private Limited Company)

Most popular structure for foreign businesses.

Advantages:

• Limited liability protection
• 100% foreign ownership allowed
• Professional image
• Easier to raise capital
• Tax planning opportunities

Disadvantages:

• Higher compliance requirements
• Annual audit required (above threshold)
• More complex setup

2. LLP (Limited Liability Partnership)

Hybrid structure combining partnership flexibility with limited liability.

Advantages:

• Limited liability
• Tax transparency
• Flexible management
• Lower compliance than Sdn Bhd

Disadvantages:

• Less familiar structure
• Limited financing options
• Minimum 2 partners required

3. Branch Office

Extension of foreign parent company.

Advantages:

• No separate legal entity
• Easier profit repatriation
• Parent company support

Disadvantages:

• Parent company liability
• Higher compliance
• Less local credibility

4. Representative Office

For market research and liaison only.

Allowed Activities:

• Market research
• Feasibility studies
• Liaison with customers
• Coordination

Not Allowed:

• Trading
• Signing contracts
• Generating revenue
• Hiring local staff (limited)

5. Sole Proprietorship

For Malaysian citizens/PRs only.

6. Partnership

For Malaysian citizens/PRs only.

Comparison Table

Foreign Investment in Malaysia

Malaysia generally welcomes foreign investment, with 100% foreign ownership allowed in most sectors. However, some sectors have restrictions.

Sectors with 100% Foreign Ownership

Fully Open Sectors:

• Manufacturing (most sub-sectors)
• Information Technology
• E-commerce
• Professional services (most)
• Wholesale and retail (above threshold)
• Education (private)
• Healthcare (private)
• Tourism and hospitality
• Construction (most projects)

Sectors with Restrictions

Telecommunications:

• Maximum 49% foreign ownership
• Special approval for higher stakes

Banking & Finance:

• Maximum 30% foreign ownership (conventional)
• Islamic banking: Case by case
• Insurance: Maximum 70%

Media & Broadcasting:

• Maximum 20% foreign ownership
• Content restrictions apply

Oil & Gas:

• PETRONAS involvement required
• Production sharing contracts

Utilities:

• Government-linked companies dominant
• Limited foreign participation

Agriculture:

• Some restrictions on land ownership
• Bumiputera participation may be required

Equity Requirements by Sector

MIDA Approval

Some investments require MIDA (Malaysian Investment Development Authority) approval:

When Required:

• Manufacturing projects
• Large service projects
• Projects seeking incentives
• Certain regulated sectors

Application Process:

1. Submit application to MIDA
2. Provide business plan
3. Detail investment amount
4. Specify employment creation
5. Wait for approval (4-8 weeks)

Investment Incentives

Pioneer Status:

• 70-100% tax exemption
• 5-10 years duration
• For promoted activities

Investment Tax Allowance:

• 60-100% of qualifying capital expenditure
• Against 70% of statutory income
• 5 years duration

MSC Malaysia Status:

• For tech companies
• Tax exemption up to 10 years
• Multimedia equipment import duty exemption
• Unrestricted employment of foreign knowledge workers

Principal Hub:

• For regional headquarters
• 0-10% tax rate
• 5-10 years duration

Labuan IBFC:

• Offshore financial center
• 3% tax or RM20,000 flat
• For international business

WRT (Wholesale, Retail, Trade) License

Foreign companies in retail/wholesale need WRT license:

Requirements:

• Minimum paid-up capital RM1 million
• Minimum 30% Bumiputera equity (some cases)
• Specific business activities

Exemptions:

• Hypermarkets
• Department stores
• Specialty stores (above threshold)
• Franchise operations

Corporate Taxation

Corporate Tax Rates

SME Definition:

• Paid-up capital ≤ RM2.5 million
• Gross income ≤ RM50 million
• Not controlled by company exceeding thresholds

Tax Incentives

Sales and Service Tax (SST)

Replaced GST in 2018.

Sales Tax:

• Rate: 5% or 10%
• On manufactured goods
• Threshold: RM500,000 annual turnover

Service Tax:

• Rate: 6% (8% for some services)
• On prescribed services
• Threshold: RM500,000 annual turnover

Exempt Services:

• Financial services (most)
• Healthcare
• Education
• Public transport

Withholding Tax

Double Tax Agreements

Malaysia has DTAs with 70+ countries including:

• USA, UK, Australia, Canada
• China, Japan, South Korea
• Singapore, Indonesia, Thailand
• Germany, France, Netherlands
• India, UAE, Saudi Arabia

Tax Filing Requirements

Corporate Tax:

• Financial year end: Company chooses
• Filing deadline: 7 months after year end
• Estimated tax: Monthly installments
• Final tax: Within 7 months

SST:

• Bi-monthly filing
• Due: Last day of following month
• Online submission required

Employer Obligations:

• Monthly tax deduction (MTD/PCB)
• EPF contributions
• SOCSO contributions
• EIS contributions

Tax Compliance Calendar

Penalties

Transfer Pricing

Requirements:

• Arm's length pricing
• Documentation required
• Country-by-country reporting (large MNCs)
• Advance pricing arrangements available

Opening a Business Bank Account

Requirements

Major Banks for Business

Local Banks:

Maybank

• Largest bank in Malaysia
• Extensive branch network
• Good SME services
• Online banking platform

CIMB

• Strong digital banking
• Regional presence
• SME-focused products
• Trade finance

Public Bank

• Conservative, stable
• Good for SMEs
• Competitive rates
• Efficient service

Hong Leong Bank

• Digital-forward
• SME banking
• Trade services

International Banks:

HSBC

• International connectivity
• Trade finance expertise
• Multi-currency accounts
• Premium services

Standard Chartered

• International business focus
• Trade finance
• Treasury services

Citibank

• Corporate banking
• Cash management
• International transfers

Account Types

Business Banking Services

Cash Management:

• Online banking
• Bulk payments
• Collections
• Cash pooling

Trade Finance:

• Letters of credit
• Bank guarantees
• Trade loans
• Export financing

Lending:

• Working capital loans
• Term loans
• Equipment financing
• Property loans

Treasury:

• Foreign exchange
• Hedging
• Investments

Opening Process

Step 1: Choose Bank

• Compare services and fees
• Consider branch locations
• Check online capabilities

Step 2: Prepare Documents

• Company registration documents
• Director identification
• Board resolution
• Business plan (sometimes)

Step 3: Submit Application

• Visit branch or apply online
• Complete application forms
• Provide all documents

Step 4: Verification

• Bank verifies documents
• May visit business premises
• Background checks

Step 5: Account Activation

• Receive account details
• Set up online banking
• Order checkbook

Timeline: 1-3 weeks typically

Banking Fees

Tips for Business Banking

1. Compare options - Different banks suit different needs
2. Negotiate fees - Especially for larger businesses
3. Use online banking - More efficient and cheaper
4. Maintain good relationship - Helps with future financing
5. Keep records - Important for tax and compliance

Employment Regulations

Employment Act 1955

Applies to:

• Employees earning ≤RM4,000/month (manual workers: all)
• Peninsular Malaysia and Labuan
• Sabah and Sarawak have separate ordinances

Key Provisions:

Minimum Wage

Hiring Process

Step 1: Job Posting

• Job portals (JobStreet, LinkedIn)
• Company website
• Recruitment agencies
• Employee referrals

Step 2: Selection

• Resume screening
• Interviews
• Skills assessment
• Reference checks

Step 3: Offer

• Employment contract
• Terms and conditions
• Start date
• Probation period (typically 3-6 months)

Step 4: Onboarding

• Documentation
• EPF and SOCSO registration
• Tax registration
• Company orientation

Employment Contract

Must Include:

• Job title and description
• Salary and benefits
• Working hours
• Leave entitlements
• Notice period
• Probation terms
• Termination conditions

Statutory Contributions

EPF (Employees Provident Fund)

SOCSO (Social Security)

EIS (Employment Insurance)

Hiring Foreign Workers

Employment Pass (Skilled):

• Minimum salary RM5,000
• Relevant qualifications
• Company quota applies

Temporary Employment Pass (Semi-skilled):

• Specific sectors only
• Quota system
• Lower salary threshold

Process:

1. Obtain quota approval
2. Recruit worker
3. Apply for pass through ESD
4. Medical examination
5. Pass endorsement

Termination

Notice Period:

Termination Benefits:

Unfair Dismissal:

• Can be challenged at Industrial Court
• Reinstatement or compensation possible
• 60 days to file complaint

HR Best Practices

1. Clear contracts - Document everything
2. Fair treatment - Consistent policies
3. Proper records - Attendance, leave, performance
4. Compliance - Follow all regulations
5. Communication - Regular feedback

Common Business Licenses

Business Premise License

Required for physical business premises.

Requirements:

• SSM registration
• Tenancy agreement
• Fire safety certificate
• Health certificate (F&B)
• Signboard license

Industry-Specific Licenses

Food & Beverage:

Retail & Wholesale:

Manufacturing:

Professional Services:

Technology & Digital:

Import/Export:

License Application Process

General Steps:

1. Identify required licenses
2. Prepare documentation
3. Submit applications
4. Pay fees
5. Inspections (if required)
6. Receive licenses

Timeline:

• Simple licenses: 1-2 weeks
• Complex licenses: 4-12 weeks
• Industry-specific: Varies

Compliance Requirements

Annual Renewals:

• Business premise license
• Professional licenses
• Industry permits

Ongoing Compliance:

• Display licenses prominently
• Maintain required standards
• Report changes
• Keep records

Penalties for Non-Compliance

Tips for License Management

1. Identify early - Know what you need before starting
2. Apply in advance - Allow processing time
3. Keep records - Track all licenses and renewals
4. Stay compliant - Follow all conditions
5. Seek help - Use consultants for complex cases

High-Growth Sectors

1. Digital Economy

Opportunities:

• E-commerce platforms
• Fintech solutions
• Digital marketing
• Software development
• Cybersecurity
• Cloud services

Government Support:

• MSC Malaysia status
• Digital free trade zone
• MDEC programs
• Tax incentives

Market Size: RM300+ billion

2. Manufacturing

Sub-sectors:

• Electronics & semiconductors
• Automotive
• Aerospace
• Medical devices
• Halal products
• Chemicals

Incentives:

• Pioneer status
• Investment tax allowance
• Customs exemptions
• Training grants

3. Healthcare & Life Sciences

Opportunities:

• Private hospitals
• Medical tourism
• Pharmaceuticals
• Biotechnology
• Medical devices
• Telemedicine

Market Drivers:

• Aging population
• Rising middle class
• Medical tourism growth
• Government healthcare spending

4. Renewable Energy

Opportunities:

• Solar power
• Biomass
• Biogas
• Energy efficiency
• Green technology

Incentives:

• Green Investment Tax Allowance
• Feed-in tariffs
• Net energy metering
• Green financing

5. Halal Industry

Opportunities:

• Halal food production
• Halal cosmetics
• Halal pharmaceuticals
• Halal logistics
• Halal certification services

Malaysia's Position:

• Global halal hub
• JAKIM certification recognized worldwide
• Halal parks and zones
• Export facilitation

Market Size: RM50+ billion (Malaysia), USD 2+ trillion (global)

6. Tourism & Hospitality

Opportunities:

• Hotels and resorts
• Tour operations
• F&B establishments
• MICE (Meetings, Incentives, Conferences, Exhibitions)
• Ecotourism

Recovery & Growth:

• Post-pandemic recovery
• Visit Malaysia campaigns
• Infrastructure development
• New attractions

7. Education

Opportunities:

• International schools
• Private universities
• Vocational training
• EdTech
• Corporate training

Market Drivers:

• Growing middle class
• International student hub
• Lifelong learning trend
• Digital education growth

8. Financial Services

Opportunities:

• Islamic finance
• Fintech
• Wealth management
• Insurance
• Payment solutions

Malaysia's Position:

• Islamic finance hub
• Fintech sandbox
• Regional financial center
• Growing wealth management

Emerging Opportunities

Industry 4.0:

• Automation
• IoT solutions
• AI applications
• Smart manufacturing

Shared Services:

• Regional shared services centers
• BPO operations
• IT services
• Finance & accounting

Logistics & Supply Chain:

• E-commerce logistics
• Cold chain
• Warehousing
• Last-mile delivery

AgriTech:

• Smart farming
• Food technology
• Vertical farming
• Agricultural automation

Investment Incentives

Pioneer Status (PS)

Qualifying Activities:

• High-tech manufacturing
• Strategic industries
• R&D activities
• Green technology
• Halal industry

Investment Tax Allowance (ITA)

Reinvestment Allowance (RA)

MSC Malaysia Status

For technology companies:

Benefits:

• 100% tax exemption (5-10 years)
• Multimedia equipment duty exemption
• Unrestricted foreign knowledge workers
• No foreign ownership restrictions
• R&D grants access

Eligibility:

• Technology-based business
• Significant use of multimedia/IT
• Transfer of technology
• Employ knowledge workers

Principal Hub Incentive

For regional headquarters:

Requirements:

• Annual business spending RM3-15 million
• High-value jobs (15-50)
• Use local ancillary services

Green Technology Incentives

Green Investment Tax Allowance:

• 100% of qualifying capital expenditure
• Against 70% of statutory income
• For green technology projects

Green Income Tax Exemption:

• 70% of statutory income
• For green technology services

SME Incentives

SME Corporation Programs:

• Soft loans
• Grants
• Training subsidies
• Market access support

Bank Negara Funds:

• SME automation fund
• Green technology fund
• Microenterprise fund

MDEC Programs:

• Digital transformation grants
• E-commerce enablement
• Tech startup support

R&D Incentives

Export Incentives

How to Apply

MIDA Applications:

1. Prepare business plan
2. Complete application forms
3. Submit supporting documents
4. MIDA evaluation
5. Approval/conditions

Timeline: 4-12 weeks

Tips:

• Engage early with MIDA
• Prepare comprehensive documentation
• Highlight job creation and technology transfer
• Consider using consultants

Starting Your Business

Planning Phase

Market Research:

• Understand local market
• Identify competitors
• Assess demand
• Study regulations
• Plan entry strategy

Business Plan:

• Executive summary
• Market analysis
• Operations plan
• Financial projections
• Risk assessment

Legal Setup:

• Choose right structure
• Register company
• Obtain licenses
• Set up banking
• Establish compliance

Operational Considerations

Location:

• Consider target market
• Assess infrastructure
• Evaluate costs
• Check zoning regulations
• Plan for growth

Staffing:

• Understand labor market
• Plan recruitment
• Budget for statutory costs
• Consider training needs
• Build company culture

Technology:

• Invest in systems
• Consider cloud solutions
• Plan for cybersecurity
• Enable remote work
• Automate where possible

Financial Management

Cash Flow:

• Maintain reserves
• Monitor receivables
• Manage payables
• Plan for seasonality
• Have credit facilities

Accounting:

• Use proper software
• Maintain accurate records
• Comply with standards
• Plan for audits
• Engage professionals

Tax Planning:

• Understand obligations
• Claim all deductions
• Use incentives
• Plan structure efficiently
• Seek professional advice

Building Relationships

Government:

• Engage with agencies (MIDA, MDEC)
• Attend industry events
• Join trade associations
• Understand policies
• Seek available support

Business Partners:

• Build local network
• Join chambers of commerce
• Attend trade shows
• Develop supplier relationships
• Consider joint ventures

Customers:

• Understand local preferences
• Adapt products/services
• Build trust
• Provide excellent service
• Gather feedback

Common Challenges

Bureaucracy:

• Multiple agencies involved
• Documentation requirements
• Processing times
• Solution: Use consultants, plan ahead

Talent:

• Competition for skilled workers
• Salary expectations
• Retention challenges
• Solution: Competitive packages, training

Cultural Differences:

• Business practices
• Communication styles
• Decision-making
• Solution: Learn and adapt

Competition:

• Established players
• Price competition
• Market access
• Solution: Differentiation, niche focus

Success Factors

1. Local Knowledge - Understand the market
2. Right Partners - Build strong relationships
3. Compliance - Follow all regulations
4. Adaptability - Be flexible and responsive
5. Long-term View - Build for sustainability
6. Quality Focus - Deliver excellence
7. Innovation - Stay ahead of trends
8. People - Invest in your team

Government Agencies

SSM (Companies Commission)

• Website: www.ssm.com.my
• MyCoID Portal: www.mycoid.gov.my
• Company registration
• Business name search

MIDA (Investment Authority)

• Website: www.mida.gov.my
• Investment promotion
• Incentive applications
• Industry information

MDEC (Digital Economy)

• Website: www.mdec.my
• MSC Malaysia status
• Digital initiatives
• Tech startup support

IRB/LHDN (Tax Authority)

• Website: www.hasil.gov.my
• Tax registration
• Filing and payment
• Tax information

EPF (Provident Fund)

• Website: www.kwsp.gov.my
• Employer registration
• Contribution management

SOCSO (Social Security)

• Website: www.perkeso.gov.my
• Employer registration
• Claims management

Professional Services

Company Secretaries:

• Required for Sdn Bhd
• Compliance management
• SSM filings

Accountants:

• MIA-registered
• Audit services
• Tax advisory

Lawyers:

• Corporate law
• Employment law
• Commercial contracts

Business Consultants:

• Market entry
• Business setup
• Incentive applications

Business Associations

Chambers of Commerce:

• AMCHAM (American)
• BMCC (British)
• EUROCHAM (European)
• AustCham (Australian)
• MICCI (Malaysian International)

Industry Associations:

• FMM (Federation of Malaysian Manufacturers)
• SME Association
• Various industry-specific bodies

Useful Resources

Information:

• MIDA industry guides
• SSM company search
• IRB tax guides
• Bank Negara statistics

Funding:

• SME Corp programs
• Bank Negara funds
• MDEC grants
• MIDA incentives

Networking:

• Chamber events
• Trade shows
• Industry conferences
• Business matchmaking

Emergency Contacts

Checklist Summary

Before Starting:

• [ ] Research market
• [ ] Develop business plan
• [ ] Choose business structure
• [ ] Identify required licenses
• [ ] Plan financing

Registration:

• [ ] Reserve company name
• [ ] Register with SSM
• [ ] Open bank account
• [ ] Register for tax
• [ ] Obtain licenses

Operations:

• [ ] Set up premises
• [ ] Hire staff
• [ ] Implement systems
• [ ] Establish compliance
• [ ] Launch business

Ongoing:

• [ ] File annual returns
• [ ] Pay taxes
• [ ] Renew licenses
• [ ] Maintain compliance
• [ ] Grow business