Malaysia is one of the major business hubs in Southeast Asia and the country got the liberal market system, a strong economic outlook, and strong infrastructure among the neighboring countries.
So, it is very hard to resist the temptation of not to begin a business in the country. Therefore, in this article, we are going to discuss the insights for foreign investors about the business environment in Malaysia and talk about why set up your business in Malaysia.
Business Environment in Malaysia
Malaysia got multi-ethnic and multilingual culture and the country got fast-growing industrial based economy with very liberal market policy. The aim of the business-friendly government in Malaysia is to promote trade and economic development.
In recent times, the government took several initiatives for developing the investor-centric friendly business environment for the purpose of market developments. These steps help Malaysia to develop one of the major dynamic business structures.
The primary business activities in Malaysia is the manufacturing, export, import, services, tourism and also to export commodities such as palm oil, petroleum, timber and rubber collected from the agro-industries.
Additionally, the information technology sector is very developed in Malaysia and this sector has an average growth rate of 5.7 percents in recent years.
Major business partners of Malaysia comes from the United States, Singapore, Japan, People’s Republic of China, Thailand, Hong Kong, South Korea, Germany, and Indonesia.
Benefits of setting up your business in Malaysia
There are few major benefits in why set up your business in Malaysia. The country offers many competitive advantages to potential investors in the country.
In below the list shows some of the benefits of setting up business in Malaysia.
- Malaysia offers a number of liberalization programs that attract foreign investors around the globe.
- The country got highly developed infrastructures, communication, and transportation systems.
- Malaysia got a number of skilled labor forces with relatively low wages compared to the surrounding countries.
- Malaysia offers fully developed economic zones, industrial zones, technology parks and the supports for the multimedia corridor.
Business Structures in Malaysia
- Potential business investors got several options for setting us business in Malaysia. These options include a company, which is a legal entity and limited by the shares.
- Limited liability partnership.
- Setup a branch of the company.
- Setup a regional or representative office.
The incorporation process in Malaysia regulated by the Malaysian company’s act 1965 and according to the law, the foreign investors in Malaysia not allowed to a partnership or sole proprietorship business in Malaysia.
How they may do so if they have the permanent residency status. The common business structure, which the foreign investors may follow, is the private limited company. These types of business require a form of legal entity and this business structure is more favorable to the business.
With this business vehicle, the foreigners allowed to set up 100% fully foreign-owned business in Malaysia.
The government of Malaysia encourages foreigners to invest in manufacturing, healthcare, ICT, tourism, hotel sectors. However, a restriction applies to some specific industries such as oil and gas-based companies.
If the foreigner wishes to set up a company that is limited by share then the members of the company got limited liability to the amount paid on their shares. However, this may not the commercial undertaking in Malaysia rather almost all companies with foreign investors in the country are limited by shares.
Additionally, the companies in Malaysia may be in private or public format. The private companies not allowed issuing the public shares or debenture to the public. These types of companies not also allowed to issue shares to more than fifty shareholders and restricted to the right to transfer their shares.
On another hand the public companies in Malaysia allowed to offer public shares and debenture. Usually, these types of companies allowed listing their names with Malaysian stock exchange.
Few reasons why set up your business in Malaysia
The business environment of Malaysia is very competitive and the economic growth of the country is getting higher in recent years. One may set up business in Malaysia without facing any major difficulty. Although, you should have the proper knowledge about the process and procedures of the business.
In Malaysia, one may incorporate any business with a minimum number of two shares, two directors and one secretary. The directors of the company do not have to be a citizen of Malaysia.
The company may have one foreign director in addition with two resident directors. The resident directors of the country should reside in the country principally.
Additionally, the authorized capital requirement for setting up a company is not high as well. Usually, the minimum authorized capital amount is RM 400,000.
However, for some specific business cases, one should fulfill the threshold amount before he begins the business. The incorporation takes around two working days to complete in Malaysia.