Investing in Malaysia 2023

A guidebook to investing in Malaysia

Crowe Global

Welcome to the Crowe Global Investing in Malaysia 2023 Guidebook.

This guide forms a part of the Investing in Asia Pacific 2023 series and provides a quick reference for those interested in investing in Malaysia. While it is not exhaustive, this guide aims to answer some of the key questions that may arise. When specific issues arise in practice, it will often be necessary to consider the relevant laws and regulations and to obtain appropriate professional advice.

The guidebook will cover five main topics as follows:

Establishing the business entity
Tax information
IPO quick facts
Human resource requirements
Withdrawal procedures

Establishing the business entity

Formation and costs

Company / Branch

Company registration takes about three (3) to ten (10) days while its formation may take up to one (1) month. There are no special licences or approvals required except for certain sensitive industries e.g. financial institutions, telecommunications, etc.

The application cost of forming a company is in the region of MYR 3,000, while registration fees for foreign companies shall be payable in accordance to the share capital as set by the Company Commission of Malaysia not exceeding MYR 70,000. Annual maintenance fees for secretarial, tax and audit services for a dormant company are in the region of MYR 6,000.

Representative Office

A representative office requires registration with the Malaysian Industrial Development Authority (“MIDA”) and/or Ministry of International Trade and Industry (“MITI”) and takes approximately two (2) months. The cost of registering a representative office is in the region of MYR 5,000. Annual maintenance fees are minimal as a representative office does not require secretarial, tax or audit services.

Investment incentives

Company

Reinvestment allowance – no prior approval required.
Pioneer status or Investment Tax Allowance for promoted products or promoted industries – prior approval required from the MIDA and takes to six (6) weeks from the date of complete information received.
MSC Malaysia (formerly Multimedia Super Corridor) status – prior approval required from the Malaysian Digital Economy Corporation [formerly Multimedia Development Corporation (“MDeC”)] and takes about (3) to six (6) months.

Branch

Reinvestment allowance – no prior approval required.

Representative Office

Representative Office (“RO”) will be given expatriate post and the number allowed depends on the function and activities of the RO.
Minimum establishment of two (2) years (depends on the merit of the case).
Expatriate will only be considered for managerial and technical posts. Total number of employees should reflect the ideal composition of two (2) expatriates to one (1) Malaysian.

Foreign ownership restrictions

Company

Generally, no foreign ownership restriction except for certain sectors e.g. financial services, wholesale and distributive trade, education, communications and multimedia, and energy supply, etc.

Branch / Representative Office

No restriction on foreign ownership.

Work permits and visas

Company
Work permits are allowed for key posts in companies approved by the MIDA. The application takes about three (3) months.

Branch
Work permits are only allowed if the foreign company can prove that local staff are not able to perform the work of the foreigner.

Representative Office
Work permits are only allowed if the foreign company can prove that local staff are not able to perform the work of the foreigner. For rep office, at least one (1) work permit will usually be allowed.

Accounting standards and audit requirements

Company

Companies have to follow either one (1) of the two (2) accounting frameworks in Malaysia; Malaysian Financial Reporting Standards (“MFRSs”) or Malaysian Private Entities Reporting Standard (“MPERS”). MFRSs are equivalent to IFRSs in all material aspects.
All companies incorporated under the Malaysian Companies Act require an annual audit except for private companies with revenue less than MYR 100,000 and total assets value less than MYR 300,000 and not more than five (5) employees in the current and the past two (2) financial years.

Branch

Branches have to follow either MFRSs or MPERS.
All branches require an annual audit with similar audit exemption criteria of private companies as stated above.

Representative Office

Representative offices are not required by law to be audited.

Residential directors / promoters requirements

Company / Branch / Representative Office
Minimum of one (1) director for private company or two (2) directors for public company who are residents in Malaysia.

Foreign ownership over tangible assets

Company / Branch / Representative Office

Foreign owned companies are not allowed to own certain properties such as those built on Malay Reserve Land.
Acquisition of property by foreign interests has to be registered under a local company and will be subjected to conditions pertaining to equity, employment, capital and land redevelopment.
Acquisition of agricultural land is only allowed under certain conditions.
Companies that own properties which are worth more than MYR 20 mil will be subject to a 30% Bumiputera shareholding requirement.

Country quirks

Companies are the most common form of entity for doing business in Malaysia.