How to start a business in Malaysia
Once you have decided that you will be investing your hard earned money into starting a business in Malaysia, you will need to get down working on making that decision come to life. Over the past several years the economy of Malaysia has seen a steady boost. It is fast becoming one of the most preferred destinations for foreigners to invest in and conduct their businesses while the local entrepreneurs are also making quite a name for themselves. Despite the number of new businesses opening up in this great country, people are still confused as to how to start their company. With that in mind, we have decided to clear out some of the confusion surrounding the procedure and requirements of starting a business in Malaysia.
Our article will focus on the frequently asked questions by most first time entrepreneurs in Malaysia and will try to explain points such as the different factors needed to start the business including bank accounts, share capital, and the issue of directors and licensing.
The first step of starting your business in Malaysia is to find a name for your company. Once you find a name, you will need to head over to the Companies Commission of Malaysia where you will have to register your name and company. While it’s a very straightforward method, the problem arises with the availability of your name. There are certain restricted words which you cannot use as a company name. You cannot use a name which is already in use and every name you choose should end with Shn Bhd which is basically the Malayan term for Limited Company.
Bank Accounts: Whenever you are starting a business, the first thing you should check out is the banking conditions of that country. It does not matter where you are operating in, the banks are key to running a successful business because they will determine how much capital you can loan. In Malaysia, this is actually a very big problem. Most of the local banks will discourage you from opening a bank account with them because they will not allow you to borrow any money to finance your start up. In fact, only a handful of the international banks will allow you to borrow your initial capital. So it is best to have a backup plan in terms of financing your company.
Local Directors: All private limited companies in Malaysia are required to have two directors and at least two shareholders in the company. Now before you can start your business in the country, you need to ensure that at least one of your directors is from Malaysia. In other words, make sure he or she has a permanent residency in Malaysia otherwise you will not be given the license to start your operations nor will you be able to register your business. The sole purpose of these local directors is so that they can handle all the local problems for the foreign investors.
Do I need a remittance of RM 500, 000? : A very common misconception regarding the starting of a business in Malaysia is that one has to remit a total of RM 500,000 before they can carry on with their operations. Without the amount being remitted the company will not be incorporated in Malaysia. To make things clear, there is no rule such as this that exists. In fact, according to the Company Act 1965, there is no mentioning of remitting RM 500,000. There can be certain immigration issues prior to starting your business but that can be easily dealt with by obtaining the proper visa, as well as the correct business permit or licenses.
The minimum amount of share capital: If somebody has told you that there is a certain amount required as your share capital to start your business in Malaysia then they are wrong. There is no limit for your share capital in this country. However, for safety measures and the smooth operations of your business, it is wise to have a share capital of RM 500,000. The amount is only kept in mind if the business is on a large scale.
Address: It is often said that a permanent address is needed before you can start incorporating your business in Malaysia. While this is partially true, it is not often the case especially if your business is actually a small medium sized enterprise or SME. However, it is best and advisable to have a permanent address for your business before you go to register it or even start your business. This is because you will need a business license to start any sort of operations and in order to obtain the license, government officials will come and inspect your ground, So if you do not have an address then the officials will not be able to check out your place of operations and won’t be able to give the go-ahead to issue you a permit.
Conclusion: Some other information should discuss for the foreign investors who are planning to start a new business in Malaysia. Key notes of how to start a business in Malaysia as foreigner: Company Registration: SDN BHD, appoint company secretary, fix paid up capital, location, local residence address, appoint nominee director, share holding position, bank account, income tax certificate & appoint auditor. Staff Hiring: You may publish circular in popular online job site to hire man power. As our experience minimum remuneration should NOT be lesser than RM 2000 as fresher, in case of hiring experienced staff have to offer RM 3500 to RM 5000 or even more. Rent Office: As our idea office rent cost may start from RM 2000 to above that vary area of business.