How a Foreigner Can Register a Company in Malaysia?

Malaysia is an attractive destination for foreign entrepreneurs looking to establish a business due to its strategic location, business-friendly policies, and competitive costs. However, understanding the regulatory framework and registration process is crucial to ensure a smooth incorporation. This guide provides an in-depth, step-by-step breakdown of how foreigners can successfully register and operate a business in Malaysia.

Why Register a Business in Malaysia?

Before diving into the incorporation process, it’s essential to understand why Malaysia is an excellent choice for foreign entrepreneurs:

1. Business-Friendly Policies

Malaysia has one of the easiest company registration processes in Asia, supported by digital services and government incentives to encourage foreign investment.

2. Strategic Location in Southeast Asia

Situated at the heart of ASEAN, Malaysia offers easy access to markets like Singapore, Indonesia, Thailand, Vietnam, and China. This makes it an ideal hub for regional business expansion.

3. Competitive Operating Costs

Compared to neighboring countries like Singapore and Hong Kong, Malaysia offers lower business setup costs, rental fees, and operational expenses while maintaining a high standard of infrastructure and connectivity.

4. Government Incentives & Tax Benefits

Foreign investors can enjoy various tax incentives, including:

• Pioneer Status (PS) – Grants a 5-year tax exemption for eligible businesses.
• Investment Tax Allowance (ITA) – Offers tax relief on capital expenditures.
• Double Taxation Agreements (DTA) – Malaysia has DTAs with 70+ countries, preventing double taxation on foreign income.
• MSC Malaysia Status – Provides tax breaks for IT and tech-related companies.

5. Robust Infrastructure & Skilled Workforce

Malaysia boasts world-class logistics, highways, ports, and a highly skilled bilingual workforce fluent in English, Malay, and Mandarin, making business communication seamless for foreign investors.

6. Free Trade Agreements (FTAs) & ASEAN Access

Malaysia is part of several FTAs, including:

• ASEAN Free Trade Area (AFTA)
• Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)
• Regional Comprehensive Economic Partnership (RCEP) These agreements provide tariff reductions and preferential access to key international markets.

Understanding SSM: The Companies Commission of Malaysia

The Suruhanjaya Syarikat Malaysia (SSM), also known as the Companies Commission of Malaysia, is the statutory body responsible for regulating and overseeing company incorporation in Malaysia.

SSM’s Role in Business Registration

SSM ensures compliance with Malaysia’s Companies Act 2016, which mandates:

• Transparent business operations
• Proper corporate governance
• Timely financial reporting

Every company registered in Malaysia must be compliant with SSM regulations to maintain legal status and avoid penalties.

Business Structures Available for Foreigners

Foreign investors can choose from different business structures based on their industry, scale, and operational needs.

1. Private Limited Company (Sdn. Bhd.) – Most Preferred

• Limited liability protection (Directors’ personal assets are safeguarded)
• 100% foreign ownership allowed in most sectors
• Can conduct business transactions, sign contracts, hire employees, and open bank accounts
• Most scalable and flexible business structure

2. Representative Office (RO) – For Market Research

• No income-generating activities allowed
• Used for market exploration and business feasibility studies
• Cannot sign contracts or conduct trade

3. Branch Office – Extension of a Foreign Company

• Not a separate legal entity from its parent company
• Parent company is liable for all branch operations
• Ideal for foreign firms looking to expand without setting up a local entity

4. Labuan Company – Offshore Business Model

• Lower tax rates (3%) on international trade
• Suitable for holding companies, fintech, and trading businesses
• Not ideal for domestic business activities

Choosing the right business structure depends on your operational scope, liability concerns, and long-term business goals.

Requirements to Incorporate/Register a Company in Malaysia

Registering a company in Malaysia requires compliance with the Companies Act 2016 and regulations set by the Suruhanjaya Syarikat Malaysia (SSM), also known as the Companies Commission of Malaysia. Below is a detailed breakdown of the key requirements for incorporating a business in Malaysia.

Business Structure Selection

Before incorporation, you must choose the appropriate business entity type based on your operational needs and ownership structure. The most common choices include:

• Private Limited Company (Sdn. Bhd.) – Ideal for startups and SMEs; allows 100% foreign ownership in permitted industries.
• Public Limited Company (Berhad) – Suitable for companies planning to raise capital through public investments.
• Sole Proprietorship – Only available for Malaysian citizens and permanent residents (PRs).
• Partnership – Limited to local entrepreneurs and PRs.
• Limited Liability Partnership (LLP) – A hybrid model combining partnership flexibility with corporate protection.

Minimum Requirements for Company Registration

To register a Private Limited Company (Sdn. Bhd.), which is the most common entity type for foreigners, the following must be met:

Company Name Approval

• The proposed company name must be unique, available, and compliant with SSM guidelines.
• Name reservation can be done via the MyCoID SSM Portal and is valid for 30 days.

Shareholders

• Minimum one (1) shareholder.
• Shareholders can be individuals or corporate entities.
• 100% foreign ownership is allowed in most industries, but some sectors require a local partner.

Directors

• Minimum one (1) director who must be:
  • At least 18 years old.
  • A resident of Malaysia (holding a Malaysian address).
  • Not disqualified under the Companies Act 2016.
• Foreign investors must appoint a local director if they do not reside in Malaysia.

Company Secretary

• The company must appoint a qualified company secretary within 30 days of incorporation.
• The secretary must be licensed by SSM or a member of a recognized professional body.

Paid-Up Capital

• Minimum RM1 paid-up capital.
• Some industries, such as foreign trading, logistics, and education, require higher capital (e.g., RM500,000 – RM1,000,000 for visa eligibility).

Registered Business Address

• A physical office address in Malaysia is required.
• Virtual office addresses may be acceptable for certain business types but not for regulated industries.

Required Documents for Incorporation

The following documents must be prepared and submitted to SSM via the MyCoID portal:

• Company Name Approval Letter from SSM.
• Superform (Section 14) – Application for company registration.
• Declaration of Compliance (Section 15) – Confirmation of compliance with the Companies Act 2016.
• Declaration of Appointment (Section 201) – Details of directors and shareholders.
• Copy of Passport for foreign shareholders and directors.
• Local Business Address Proof (Tenancy Agreement or Utility Bill).
• Company Constitution (if applicable).
• Payment of Registration Fees (RM1,010 for a standard Sdn. Bhd.).

Tax and Business Compliance Registration

Once the company is incorporated, additional registrations may be required:

• Corporate Tax Registration – Register with the Inland Revenue Board of Malaysia (LHDN).
• Goods and Services Tax (GST) / Sales & Service Tax (SST) – If the annual revenue exceeds RM500,000.
• Employees Provident Fund (EPF) & Social Security (SOCSO) – If hiring local employees.
• Business Licenses & Industry-Specific Approvals – Required for certain sectors (e.g., food & beverage, construction, education).

Special Considerations for Foreigners

Foreign business owners must also consider:

• Visa & Work Permit – A foreign director intending to operate the business in Malaysia needs an Employment Pass (EP) or Investor Visa.
• Regulated Sectors – Some industries (e.g., oil & gas, banking, telecommunications) require local equity participation.
• Engaging a Local Service Provider – Many foreigners appoint a corporate service provider to handle incorporation, compliance, and visa processing.

Cost Estimates for Company Registration & Operations

Understanding the costs involved in registering and running a business in Malaysia is essential for budgeting and planning.

1. Incorporation Costs

• SSM Company Registration Fee: RM1,010 (standard Sdn. Bhd.)
• Company Secretary Fees: RM600 – RM1,500 annually
• Business License Fees: RM300 – RM3,000 (varies by industry)

2. Operational Costs

• Office Rental: RM2,000 – RM10,000/month (varies by location and size)
• Payroll Costs: RM3,000 – RM8,000/month per employee (for managerial roles)
• Taxation: Corporate tax rate is 24%

Banking Options for Foreign Business Owners

Opening a corporate bank account is a key step after incorporation. Here are some of the top banks in Malaysia for foreign entrepreneurs:

Visa & Work Permit Processing Times

Foreign business owners planning to relocate to Malaysia must obtain an Employment Pass (EP) or Investor Visa.

1. Employment Pass (EP) Processing Time

• Application submission: 2-3 weeks
• Approval by Immigration Department: 1-2 months

2. Investor Visa (for foreign business owners)

• Application submission: 1 month
• Approval process: 2-3 months

3. Dependent Pass (for family members)

• Processing time: 1-2 months

It’s advisable to work with a registered immigration consultant to avoid delays.

Conclusion

Registering a business as a foreigner in Malaysia is straightforward with the right knowledge and preparation. By choosing the right business structure, meeting legal requirements, and working with a professional incorporation specialist, you can successfully establish a business in Malaysia and leverage the country’s vast opportunities.