Malaysia is an open and diverse economy that enjoyed an average growth of 5.4% between 2010 and 2020.
40% of jobs in Malaysia are linked to export activities and the country comes an impressive 12th place in the World Bank’s Ease of Doing Business rankings.
For businesses looking to establish themselves in Malaysia, there are a number of options in terms of business structure and type of company. While for some businesses the process of opening a company may vary, these are the five basic steps you will need to take:
- Type of business – First, you will need to decide what type of business structure suits your needs. There are a number of company types in Malaysia including Sole Proprietor, Limited Liability Partnership (LLP), General Partnership, Private Limited Company (Sdn. Bhd.) and Public Limited Company (Bhd.), among others. For most entrepreneurs and businesses, the ‘Private Limited’ company (known as a ‘Sendirian Berhad’, or ‘Sdn. Bhd.’) is the most commonly used company type.
- Think of and apply for company name – Once you understand the company structure, the next step will be to submit your proposed company name to Suruhanjaya Syarikat Malaysia (SSM, Malaysian Company Commission) for reservation. The name must not be ‘undesirable’ per the standards of SSM, should not be identical to an existing company or identical to one that has been reserved. Once the Registrar has accepted the name and the fee is paid, the name will be confirmed, and you may proceed to use it. Note that a name can be reserved for a period of 30 days from the date of lodgement
- Prepare the relevant documents – There are a number of documents that need to be prepared beforehand. These include the Memorandum and Article of Association / Constitution, the Statuary Declaration by a Director or Promoter before appointment, the Declaration of Compliance, the Company name’s approval letter from SSM (one copy) and the identity card(s) of every director and company secretary (one copy each), consent to act as director, consent to act as Company Secretary. These will be prepared or requested by the company secretary.
- Incorporate the company – You are now ready to incorporate your company in Malaysia. The company secretary will submit all the above documents to SSM and pay the registration fees. After this is done you will receive your Certificate of Registration
- Income Tax Number, Auditing and Bank Account – By this stage, you’re almost there! You will be required to register with the Inland Revenue Board of Malaysia (Lembaga Hasil Dalam Negeri Malaysia, or LHDNM) to obtain an Income Tax File Number. All Private Limited companies in Malaysia are required to have their accounting records audited. New companies have up to 18 months to close their financial accounts, thereafter they must generally be audited every 12 months. Lastly, you may wish to open a bank account. You will need your registration documents, constitution, a resolution from the Board of Directors approving the bank account opening as well as IDs and other relevant documentations.
These are five basic steps and there may be additional steps depending on the industry and company type. Ultimately, Malaysia is very open to international and local business and has made great strides over the years to reduce regulation and encourage business activity across multiple sectors. A large part of the reason Malaysia does so well in the Ease of Doing Business rankings is thanks to its consistently improving business climate which fosters entrepreneurship, investments and job creation. The country also benefits from a well-educated, multi-lingual and multicultural society as well as a relatively low cost of living and openness to foreign talents.
For more information and assistance setting up a business in Malaysia, contact Alpadis Group