Doing Business in Malaysia as Foreigners - 7 Steps Required

We have been doing business in Malaysia since 2012 and sharing difficulties and benefits from practical knowledge. Doing business: Almost 7 steps to meet full requirement of starting a business in Malaysia, they are:

Disadvantage of visa: Registration of a company with ESD takes a long time (around 6-8 months) and the foreign staff hiring process is complex as foreign Registration of a company in Malaysia.

Specially investors who are from Bangladesh, Pakistan, Iran, Indonesia etc are ignored or delayed or neglected by government to provide right service, although most of the labor force are supplied from those countries in Malaysia.

Still investors from those countries are doing business taking risks and challenges to overcome any situation.

It’s a psychology problem by government officers for those countries considering labor country! Businessmen from those countries have to face unnecessary  problem doing business in Malaysia.

Cost and time of company formation

Require liquid asset to apply for visa/ work permit

Manpower Hire (local and foreign import)

Hiring local staff (s) is not a problem as law. But pick the right one is challenging. For foreign staff hire is not allowed unless company is permitted by government.

The process of hiring foreign staffs are 1) company incorporation 2) sign board and premise 3) WRT 4) ESD Registration

Problems: JobStreet is a popular job advertisement site in Malaysia. Cost around Ringgit 500 for each posting, valid 1 month. Hiring local Malaysian and Indian Malay sometimes be careful so that do not take opportunity.

Advantage: Salary structure of staffs are not expensive.

Place of office/ factory

Yes, search the right place to setup factory and/ or office considering convenience of staffs and raw materials. Rental cost vary area to area. If the place is convenience of staffs like MRT, LRT and easy public transport bring comfortable and satisfactory.

Advantage: If the office/ factory is situated in convenience location is right choice.

Disadvantage: Transport cost might be higher is office/ factory is not well located.

Cost of doing business

As employer bear fixed cost, operational and variable cost. Ensure office location where supporting materials, raw goods, transport and labor are available.

Let office rent Ringgit 2000 (500-600 sft), factory rental cost is Ringgit 10,000 or above. Labor cost is around Ringgit 2000 to 4000 for 1 (one) employee.

Advantage: Being available of transport, manpower, electricity etc doing business in Malaysia is easier than other country.

Disadvantage: Skill staffs might have chance to switch the job any time as regular practice.

Banking

All banks are not friendly with foreign employers, so select right bank to engage. Bank loan is easier who is eligible (huge investment, doing business more than 3 years successfully, directors have employment pass etc).

Advantage: Banking with some international banks are better than local banks.

Disadvantage: Loan facilities from international banks are not easier. Besides, if shareholder of company is at least 1 (one) local feel comfortable by bank.

Tax, accounting and return submission

Corporate tax rate is 24% to 28% normally, company can enjoy local tax rate if the director stays in Malaysia more than 300 days continuously. Prepare loss and profit accounting and submit to government after audit as regular company.

Average cost of preparing accounting is Ringgit 2000-3000 if total transactions are within Ringgit 500,000 to 1 million. Every company will submit yearly return of company to be clear itself, if any changes of directors, investment capital or constitution.