FAQ

Pre Incorporation

The cost of setting up a Private Limited Company (Sdn Bhd) in Malaysia are relatively affordable. Please refer to Company Formation section for the pricing or speak to our Japanese Guest Relation (JGR) for more information on latest promotion available.

  1. Educated Workforce – Malaysia offers educated and productive workers. English is widely spoken as business language, therefore communicating locally is not a problem. Higher Education and training are regarded as high priority in Malaysia, which has resulted in better workforce quality.
  2. Strategic Location – Malaysia is well connected as most of APEC countries can be reached within 6-8 hours flights. It also has little time difference with 2 of worlds most active economies which is China and India. Besides that, Malaysia is located next to the world’s busiest shipping lanes i.e. Straits of Malacca. Port Klang and Port of Tanjung Pelepas ranked top 20 container ports in the world. As it is centre of Southeast Asia, it serve a market combined of 649 million population with combined GDP of USD$4.6 trillion.
  3. Good Infrastructure and Telecommunications – The good infrastructure of the country with its well-maintained networks of highways, efficient seaport and Central International Airports within ASEAN region. Malaysia also has developed hundreds of industrial parks which is known as Free Industrial Zones (FIZs) that businesses can take advantage of duty-free imports.
  4. Supportive Government Policy – Businesses in Malaysia will have the benefit from 6 Regional Trade Agreement (FTA) with ASEAN, China, Korea, Japan, Australia, New Zealand and India to enable them to expand to other markets easily. In encouraging foreign investment into Malaysia, the government also has number of incentives scheme in place. Example:
  • No withholding tax on dividends paid by Malaysia Companies.
  • No restrictions when it comes to repatriation of profits, capital, dividends and royalties to origin country.
  • Company also leverage from Double Tax Treaties with 72 countries which in turn help minimize withholding tax.

Quality Lifestyle – Malaysia is a friendly and hospitable country to live in. The total number of Japanese populations in Malaysia certainly has grown throughout the years. According to Global Peace Index, Malaysia ranked 16th most peaceful country in the world.

Tax Incentives

Tax incentives are generally applicable to investors who establish a tax resident company in Malaysia. The policy is set to encourage foreign companies wishing to engage in continuing operations in Malaysia to incorporate local subsidiary company.

Generally these tax incentives are in the form of tax exemptions on profit, capital based incentives (form of allowances or deductions based on capital expenditure incurred). The three (3) main tax incentives are:

  1. Pioneer Status (PS) or Investment Tax Allowance (ITA)
  2. Reinvestment Allowance (RA)
  3. Tax Incentives on Exports Promotion

Infrastructure

Foreign investors may leverage on vast infrastructure available in Malaysia as these infrastructure has ready available facilities, and additional tax incentives offered within the area. These are:

  1. Free trade Zone (FZ)
  2. Licensed Manufacturing Warehouse (LMW)
  3. Digital Free Trade Zone (DFTZ)
  4. Economic Corridor Regions – Iskandar Region Economic Corridor (IRDA), Northern Corridor (NCIA), East Coast Economic Region (ECER), Sabah Economic Development Corridor (SDC), Sarawak Economic Development Corridor (SCORE).
  1. Malaysia highly welcome foreign investors to set up business in Malaysia. Among key consideration that every investors should make aware of before setting up a Company are
    • Is your business permissible by Malaysia Authorities for 100% foreign owned?
    • What is the minimum paid up capital required for your business nature (if any)?
    • What are the minimum paid up capital for foreigner able to apply for expatriate visa/ pass in Malaysia?

At this moment, unfortunately we do not provide any market research services for businesses.

Malaysia is a safe country to live in. According to Global Peace Index, Malaysia ranked 16th most peaceful country in the world.

Malaysia is an affordable country to live in. As compared to the neighbor country, Singapore, investor has a cost advantage by setting up business in Malaysia. For example meal in an inexpensive restaurants in Malaysia cost RM10 (¥254) as compared to Japan at RM33 (¥850) or Singapore at RM45 (¥1,164).

Malaysia welcome investors to set up Companies in various industries. We have shortlist the top 10 industries Japanese businesses that previously set up in Malaysia are manufacturing (auto, electrical parts, aviation, halal food products and many more), foreign trade and commerce, services, construction and engineering, transportation and warehousing, exclusive restaurants, banking and finance, tourism, insurance and other non-manufacturing.

The National Language of Malaysia is Malay. However, English is widely understood and spoken at workplace and is a compulsory subject in schools. Investors can take advantage of multi-cultural society in Malaysia which is Malay, Chinese and India. Thus languages like Mandarin and Tamil are widely used by the locals as well.

Malaysia is a country blessed with natural resources such as crude oil, natural gas, tin, timber, palm oil and rubber. It has achieved economic growth through exports and domestic demand from agriculture and high-tech industries

The Gross Domestic Product (GDP) in Malaysia was worth 364.7 billion US dollars in 2019 and represents 0.30 percent of the world economy. Malaysia strong economic growth has been coupled with low inflation between 1.5% to 2.5% in year 2018 and 2.1% in 2019.

Despite the current economic downturn due to COVID19 pandemic, RHB Investment Bank Bhd (RHB IB) has upgraded its 2021 real gross domestic product (GDP) growth projection for Malaysia to 7% year-on-year (y-o-y) from 4% y-o-y earlier. This follows forecast by the Asian Development Bank (ADB) that Malaysia gross domestic product (GDP) forecast of 6.5 per cent and at growth at 6.9% by the World Bank as the outbreak eases.

Company Formation

Once the required documents submitted to OCS, it takes about 7-9 working days to complete the incorporation process. However, it is subject to availability and stability of SSM MyCoID system (system under Suruhanjaya Syarikat Malaysia/ Companies Commission of Malaysia; the body governs the incorporation of businesses in Malaysia)

Yes. You may incorporate private limited Company in Malaysia from your home. All the signing of documents will be done through online. However, keep in mind that you are required to have at least one (1) Malaysia resident director. OCS offers nominee director service for investors who does not have any local resident director. Thus, it will make it easier for you to set up your private limited company.

Yes our Japanese Guest Relation (JGR) will update you from time to time on the status of the application.

Restrictions on foreign investment (i.e. limits on foreign equity ownership) have been progressively reduced for sectors such as business services, departmental and specialty stores, healthcare, technology and tourism. However, there are still limits placed on foreign ownership in number of key areas where foreign ownership limits remain, such as in telecommunications, oil and gas, and financial services.

Foreign investors are free to remit out investment proceeds, profit, dividends or any income arising from investment in Malaysia. However it must be made in foreign currency before remitting out these proceeds.

Advantages

  • Limited liability feature – shareholders not personally liable for debts and losses of the Company. Shareholders’ liability are limited to the amount of shares subscribed.
  • Shares are transferable – transfer is easy through sale of shares
  • Separate legal entity – A company does not cease to exist if one or more of its shareholders die.
  • Easier Access to funding – it added business credibility and good image. Thus, increase potential of loans from financial institution.
  • Tax advantage – profits tax at corporate tax rate i.e. lower bracket

 

Disadvantages:

  • Compliance Requirement – governed by rules and regulations stipulated in Companies Act 2016. Violation of the rules will result to penalties.
  • Yearly Statutory Submission to SSM – Annual returns and financial statements are required to filed, thus the Company must have at least one director and one company secretary.
  • Greater disclosure and administration requirements, thus operating cost are generally higher.
  1. Minimum 1 shareholder with RM1 minimum paid up capital
  2. Minimum 1 Malaysia resident director
  3. Minimum 1 local company secretary
  1. Three (3) Proposed Company Name – supporting documents (if any) for special cases. Please refer to Company Formation section
  2. Business nature/ activities – maximum 3
  3. Director’s Information (example: Name, ID No, Residential Address, Email address, contact no) and copy of identification
  4. Shareholder (members) Individual type – particular information (eg: Name, ID No, Residential Address, Email address, contact no), no of share, value of shares and copy of identification
  5. Shareholders (members) of body corporate type – Particular of body corporate (eg: name, registration no, no of share and value of shares)
  • Particular of appointed representative (individual) and copy of identification
  • Copy of certificate of incorporation of body corporate
  • Consent letter/ resolution on the appointment of the representative (need to be in English)

It is required for investor to fill in the company incorporation form in Romanised language. As for supporting documents, only supporting documents for Proposed Name (if any) or resolution on the appointment of the representative (if any) need to be translated in English language. Other supporting documents provided does not require translation in English. However, on some cases, for the purpose of Know Your Client process, our local Japan representative might request for further documentation if necessary.

  • All Private Limited (Sdn Bhd) Company is to be registered with Companies Commission of Malaysia (CCM) known as Suruhanjaya Syarikat Malaysia (SSM) in Malay Language.
  • SSM is a statutory body which regulates companies and businesses in Malaysia.
  • You may engage OCS; that provides company secretarial service to assist on the whole registration and company formation process in Malaysia.
  1. Contact our Japanese Guest Relation team at HIS Co Ltd.
  2. We will define on your business nature and activities to match your objective in Malaysia
  3. Decide your shareholding structure with minimum one Shareholder
  4. Decide the key positions of Directors with minimum one Director
  5. Fill in our Incorporation Form and provide the required documents
  6. Sign our Client Service Agreement and make payment

After Company Formation

Malaysia is a large country consist of 13 states and 3 Federal Territories. Each state has its own advantages. Malaysia offers economic corridor where different region has their own industry specialised within that region. Pricing for rental are higher in central location compared to other states.

As for services, if you are looking to set up business at a high traffic location, Kuala Lumpur Federal Territories and Selangor are the main central for services companies to set up.

  • Appointment of Company Secretary

The Board must appoint one resident Company Secretary within 30 days from the date of incorporation. The company secretary shall be natural person and a person licensed by SSM.

*OCS incorporation service has included the appointment of First Company Secretary during incorporation process. (S235 of CA2016)

  • Appointment of Auditor

The Board must appoint an auditor who is a licensed practitioner in Malaysia at least 30 days before the end of the period of submission of the first financial statements to the Registrar (SSM). (S267 of CA2016)

  • Open Bank Account
  • Register of Company Tax and Employer Tax
  • Registration of Employees Provident Fund (“EPF”)
  • Registration of Social Security Organization (“SOCSO”)
  • Registration of Employment Insurance System (“EIS”)
  • Registeration of Human Resources Development Fund (“HRDF”) (if any)
  • Registration of Sales and Service Tax (“SST”)
  • Apply for Business License

In Malaysia, different bank has different requirement and documentations required. You are advise to speak to the respective bank for opening of local bank account.

Yes, you are allowed to open a Japanese bank account in Malaysia. In Malaysia, we have Sumitomo Mitsui Banking Corporation, Mizuho Bank and MUFG Bank (Malaysia) Berhad that are currently have local presence in Malaysia. OCS provides additional services in assistance of opening bank account from Japan with Japanese banks.

The next step after registering with above bodies, the Company may proceed with business license application. It is essential for every business to have a valid license to start a business in Malaysia. Generally there are 3 different group of license involved, namely:

  1. Business Premise and Signboard Licenses
  2. Industry/ Sector – Specific Licenses
  3. Activity – Specific Licenses

Please refer to our customer booklet on further details regarding the above.

Generally, Companies who wants to apply for foreign expatriates visa need to go through with Immigration Department of Malaysia. The Company must be registered under the Companies Act 2016 and meet the minimum paid up requirement set based on percentage of foreign equity. For more information, please refer to our customer booklet.

GST has been set at zero from 1 June 2018, to be replaced by a Sales Tax on 1 September 2018. Malaysia reintroduced its sales and service tax (SST) indirect sales tax from 1 September 2018. The rates for the standard sales tax are 10% or 6% for service tax.

Resident Company are being taxed at 24%. For Companies with paid-up capital of RM2.5 million or less, and with annual sales of not more than RM50 million, it will be taxed at 17% for the first RM500,000 and 24% for amount in excess.

Excise duties are imposed on selected range of goods manufactured in Malaysia or imported into Malaysia.

Example of the goods are beer/stout, cider and Perry, rice wine, indentured ethyl alcohol, brandy, whisky, rum and other spirits obtained by distilling fermented sugar-cane products, gin and Geneva, cigarettes containing tobacco, motor vehicles, motorcycles, playing cards and mahjong tiles.

No excise duties on export goods.

Yes, OCS provides one stop solution for tax consultation, audit and legal services.

Yes, our Japanese Relationship Manager in Japan and in Malaysia able to assist you with your needs and inquiry.