Top benefits of registering a company in Malaysia

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Thinking of starting a business in Malaysia? Among the most dynamic business hubs in the South East Asian region, Malaysia is one of the leading choices among foreign investors to kickstart their entrepreneur journey. The Malaysian government highly values foreign direct investments and has provided foreign investors with a business-friendly environment in Malaysia. Therefore, whether you are an aspiring entrepreneur or an experienced business owner, here are 9 benefits of registering a company in Malaysia.

Types of business entities in Malaysia

Malaysia offers different types of business entities for you to choose from, where each business entity caters to different types of business activities. Foreigners who wish to register business in Malaysia can choose between these 6 business entities, which includes:

  1. Sole Proprietorship 
  2. Partnership
  3. Limited Liability Partnership (LLP)
  4. Sendirian Berhad (Sdn Bhd) / Private Limited Company
  5. Berhad (Bhd) / Public Limited Company
  6. Branch Office

Before you register a business in Malaysia, it is crucial to fully understand your business model before choosing the most suitable business entity. Some considerations you should take into account include the type of business activity, tax obligations as well as potential personal liability. 

Benefits of registering a company in Malaysia 

Before you begin to register a company in Malaysia, it is imperative to understand the business landscape of the jurisdiction. This is to ensure that your newly established entity will be able to safely and legally conduct business while striving towards your long-term business goals. 

1. Favourable tax laws

In comparison with other countries, Malaysia’s corporate tax is relatively low. Businesses in Malaysia are subject to a corporate income tax rate of 24%. If structured properly, the profits of your Malaysia business can be legally tax-exempt. The maximum individual income tax rate is 30%.

There are no withholding taxes levied on dividends made abroad by Malaysia businesses. Moreover, businesses in Malaysia face no restrictions on repatriation of profits, capital, royalties and dividends.

Malaysia has an extensive number of double tax treaties available for the avoidance of double taxation.

2. Ease of doing business

According to the World Bank’s report on Ease of Doing Business in 2020, Malaysia is the 12th easiest country to start a business. Business set up in Malaysia can be completed as quickly as a week if all the paperwork is in order. Foreign investors who are looking to start an offshore company in Malaysia can consider Labuan which is a highly regarded offshore company jurisdiction. The Labuan International Business and Financial Centre provides a plethora of attractive offshore company benefits to foreign investors. As a result, more foreign investors are choosing to set up manufacturing companies in Malaysia or offshore companies in Labuan. 

3. Strategic location 

Located at the heart of Southeast Asia, Malaysia is a member of ASEAN and has solidified its position as the springboard for many businesses’ regional expansion in the ASEAN countries. As an ASEAN member, businesses registered in Malaysia stand to benefit from the free trade agreements which exist between the member states. With Kuala Lumpur being a central hub for financial institutions, Malaysia also prides itself in being an economically and politically stable country. 

Over the years, the country has diversified its economy from commodities exporter into financial services, information and communications technology and logistics. As such, numerous foreign investors view Malaysia as the ideal jurisdiction to penetrate the large Southeast Asian market.

4. Educated and skilled workforce

Malaysia boasts an educated and skilled workforce, which can be attributed to Malaysia’s highly reputable public and private educational institutions which caters to a wide range of business needs. With Malaysians possessing the acquired skills which business organisations require to function efficiently, this allows Malaysia to have a competitive advantage over other jurisdictions. 

5. Cheap labour costs

The labour market conditions in Malaysia are favourable. As compared to neighbouring Singapore, Malaysia is a much more cost effective alternative. Despite its low labour costs, Malaysia’s productivity levels still remain high as compared with other industrialised countries. Moreover, wages of employees are lower as the average wages are $2.31 USD per hour, which is far less when compared with other countries. 

6. Language

While the official language in Malaysia is Bahasa Melayu, most business documents are available in English. This will help businesses save on time and costs during company registration procedures and when conducting business.

According to the EF English Proficiency Index, Malaysia has high proficiency in English and is ranked third in Asia. As English is Malaysia’s second language and over 70% of its population speaks English, businesses will not have to worry about communicating with local government authorities and bankers.

7. Government incentives

In efforts to encourage business formation and capital investment from foreign investors, the Malaysian government rolled out numerous incentives. One such example is the development of industrial parks, which includes free industrial zones, technology parks and Multimedia Super Corridor (MSC). Businesses that set up within them are able to enjoy a wide range of tax benefits such as exemption from custom duties and excise duties for most goods and services.

Moreover, investment incentives such as BioNexus status, Pioneers status, and Multimedia Super Corridor (MSC) status allow businesses in Malaysia to enjoy tax free for several years.  

8. Minimum ownership requirements 

The most common business entity for Malaysia company registration is the Sendirian Berhad, which is the equivalent of a Limited Liability Company (LLC) in other countries. According to the Companies Commission of Malaysia, the minimum requirements for a Limited Liability Company are 1 shareholder of any nationality, 1 Malaysia resident director, 1 Malaysia company secretary, a Malaysia registered office address and no minimum paid-up capital.

9. Flexible banking system

Opening a corporate bank account in Malaysia is a straightforward process. Some of the reputable banks in Malaysia you can open a corporate bank account with include CIMB Bank, RHB Bank and Maybank. 

Due to the flexible banking infrastructure Malaysia has to offer, foreigners are able to own more than one foreign currency account. In addition, banks in Malaysia are well equipped with banking facilities which allow users to manage their bank accounts via the internet. Labuan entrepreneurs who have a current residence visa are also able to access personal banking in different currencies. 

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