Investing in Asia Pacific 2020:

Malaysia Guidebook

Crowe Global

2020 Investing in AP Guide

Welcome to the Crowe Global Investing in Asia Pacific 2020: Malaysia guidebook.

This guide forms a part of the Investing in Asia Pacific 2020 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

Introduction to Crowe Global

Ranked the eighth largest accounting network in the world, Crowe Global has over 200 independent accounting and advisory firms in more than 130 countries.

For over 100 years, Crowe has helped make smart decisions for multinational clients working across borders. Crowe’s leaders work with governments, regulatory bodies and industry groups to shape the future of the profession worldwide. Their exceptional knowledge of business, local laws and customs provide lasting value to clients undertaking international projects.

Crowe provides global reach on a personal scale. Firms are focused on the future and the client experience, working with clients to build something valuable, substantial, and enduring. Close working relationships are at the heart of our effective service delivery.

At Crowe, our professionals all share one commitment, to deliver excellence

Establishing the business entity

Formation and costs Company

Company registration takes about a week while its formation may take up to one month. There are no special licences or approvals required except for certain sensitive industries e.g. financial institutions, telecommunications, etc.

The cost of forming a company is in the region of MYR 3,000 excluding the cost of obtaining business premise license. Annual maintenance fees for secretarial, tax and audit services for a dormant company are in the region of MYR 6,000.

Branch
Same as for company.

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. There are no special licences or approvals required except for certain sensitive industries. 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 about three (3) to six (6) months.
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 offices are not allowed to do business in Malaysia.

Foreign ownership restrictions Company

Generally, no foreign ownership restriction except for certain industries e.g. banks, certain hotels that enjoy tax incentives, agriculture, property owning companies that own more than MYR 20 million of properties from the Bumiputera, etc.

Branch
No restriction on foreign ownership.

Representative Office
Same as for branch.

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 of the two 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 RM100,000 and total assets value less than RM300,000 and not more than 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

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

Branch
Same as for company

Representative Office
Same as for company.

Foreign ownership over tangible assets Company

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 percent Bumiputera shareholding requirement.

Branch
Same as for company.

Representative Office
Same as for company.

Country quirks

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

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