Problems of starting a business in Malaysia
Problems of starting a business in Malaysia
There is no doubt that Malaysia is a great country for tons of business opportunity. However, deciding to starting a business in Malaysia may sound like a piece of cake, however there are a lot of procedures that needs to be completed in order for the business to operate legally. Below is the list of problems of starting a business in Malaysia that foreigners may encounter during the business set up.
|Rejection by immigration (As problems of starting a business in Malaysia)
- The usual case that happens to foreign investors is that they get rejection by the immigration for visas.
- An example of a scenario is Mrs. Hannah came to Malaysia as a tourist to explore business opportunity. After doing her research, she has decided to open up a business here in Malaysia. After investing not only her time but money to start up the business, she got rejected.
- The reason behind this is because the company or business is new and it has no profile and any transaction flowing within the company.
|Unable to open Bank Account (As problems of starting a business in Malaysia)
- For the past few months, the policies and procedures in the banking sector has changed. Many investors faced the same issue with the banking sector.
- An example of a scenario is Mr. Tony came to Malaysia on a tourist visa. He intends to explore business opportunity in Malaysia. When he decided to open up an import and export business which is 100 percent foreign ownership, he is required to prepare an Authorized Capital of RM1 million. This is one of the requirements by the Ministry of Trade Consumerism in order to obtain the WRT license. Once this license is approved, he will be able to apply for a 2 years’ work permit at the immigration department. However, since the policy and procedure has changed in the bank, Mr. Tony is not able to deposit the capital investment in the bank.
- As it is required in the bank that they have a company bank account.
- In conclusion, without having the company bank account, it is not possible for Mr. Tony to deposit the capital. In addition, without the work permit, there would be no bank account, and since there is no ban account, there will be no WRT license. Without the WRT license, it is not possible to obtain a work permit.
|Wrong type of Visa(As problems of starting a business in Malaysia)
- Using the wrong type of visa to open a business can surely waste an investor’s time and money.
- Below are the lists of visa’s which are not eligible to open a company bank account :
1. Student Visa
2. Guardian Visa
3. Professional Visa which is not issued by the company
4. MM2H Visa
5. Malaysian who are offenders of bad cheque
6. Name which are blacklisted in the Central Bank System (This applies to both Malaysian &foreigners)
7. Malaysians who are declared bankrupt .
|WRT License rejected (As problems of starting a business in Malaysia)
- When an investor does not have a WRT License, then the Malaysian SDN BHD company is not entitled to apply for their work permit application to the immigration department.
|Wrong Company Structure (As problems of starting a business in Malaysia)
- It is important to have the right company structure before deciding to start a business. Foreign investors are often confused or were not fully aware of authorized capital and paid up capital. Therefore it is very important to assign or choose the right and legal agent to advice pertaining to the company structure.
- Authorized capital is the limit of capital which is allowed to be injected into the company. There are ways where an investor may increase their paid-up capital. Below is the process needed to increase the paid-up capital :
1. Do a change on the authorized capital to higher limit
2. Deposit real “cash” into the company’s bank account as “Share Application Monies” as paid up capital.
3. Request company secretary to prepare the necessary documents (resolutions and lodgment forms)
4. All directors and shareholders must approve and sign all documents
5. After signing and payment of fee, your company secretary will lodge the documents to CCM for registration.
(process taken from Malaysia business advisory)
|Unable to get renewal of visa
- There are various reasons on why the visa cannot be renewed. The immigration department will not renew the visa if the annual turnover is too low. The annual turnover can be determined in the audit account.
- Will i be guaranteed that I will be able to obtain all necessary approvals for trade licenses and work permit right after i register the company?
No. At the end, it all still depends on the ministry and immigration whether to grant you the license and work permit. However, it is advisable to ensure all necessary documents are prepared to avoid rejection.
- How long is the process to increase the paid-up capital?
Between 5 to 7 days
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