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There are basically two main ways to set-up a business in Malaysia: either to set up an offshore company which is proper for international business, or a private limited company. A third way would be, for a foreign company, to open a Branch office, which is somehow an intermediate solution.
A representative or a Regional office is a cost center that entitles any foreign company to prospect the Malaysian or the regional market. A representative or a regional office is not allowed to conduct business and invoice for product or service in Malaysia. On the other hand, it allows a foreign company to have a legal entity in Malaysia and obtain a work permit for its representative without having a paid-up capital and pay corporate tax in Malaysia. Each application for the set-up has to be approved by the MIDA, a division from the Ministry of International Trade &Industry, which also gives the approval for the work permit of the representative and its dependents. The approval is granted for two years and can be renewed for up to eight years, as the logic, from the Malaysian Authorities point of view, is to maximize the chances that the office will be upgraded to a private limited. Each application, whether the first one or the renewal, must justify the objectives to be in Malaysia and show that there is potential of further investment. As for most of the communications with the Malaysian Administration, you may do it yourself, however the process can be time-consuming and there are good consultants familiar with how to present your case and ensure a speedy approval from the Authorities – It generally takes between 3 to 6 weeks to get the status and work permit approved.
The set-up of a private limited (Sdn. Bhd.) Is quite simple. You just fill up an application form with three proposed names for your company. The validation with the Company Commission of Malaysia (C.C.M.) will take about a 1-2 days. You will then have to have at least two directors with each having a share of at least 1 Ringgit and your company is registered. This first step is quite simple however and depending on your intended activities, your company set up will need to respect certain criteria. The Foreign Investment Committee guidelines might impose restrictions on shareholding and the directorship of your company might need to involve local Bumiputera partners if your company’s capital investment is less than RM500,000. But more than that amount, local director is no more required.
Companies with foreign ownership that are engaged in distributive trade are required to obtain a wholesale and retail trade (WRT) license from the Malaysian Ministry of Domestic Trade and Consumer Affairs (MDTCA) before they can apply for an Employment Pass or VPTE. “Distributive trade” refers to wholesale and retail trade of goods and services. Other companies with foreign ownership that are not engaged in distributive trade do not require a WRT license but must obtain an approval or support letter from MDTCA before they can apply for an Employment Pass or VPTE. This is where consultants come into the picture, helping you to choose the best set-up depending on your intended objectives.
A person who intends to do business in Malaysia must first register a business firm or incorporate a company with Suruhanjaya Syarikat Malaysia. The registrations for the company only can be done by a licensed Company Secretary. The incorporation and registrations was governed by the jurisdiction of the Ministry of Domestic Trade And Consumer Affairs and Companies Act.
We also provide other services such as Immigration Malaysia, Malaysia My Second Home, Accounting Malaysia, Company Registration Malaysia, Business Registration Malaysia, Payroll in Malaysia. Call us now +603-20789990 or visit our website www.BeyondCorporateGroup.com for more information!