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Doing Business In Malaysia - How Do We Compare With Other Asean Countries From a Legal Point of View

Malaysia do has a lot to offer to business owners, be it resident or foreigner who intend to expand their business and to explore the Malaysian market.

Article contribution by Akmal SK (Corporate Lawyer | Serial Entrepreneurs)

Picture: Ariff Rijal and SM Azrul Nasimuddin (credit: Joy Design Studio Sdn. Bhd.)

Since its independence in 1957, the landscape of the Malaysian economy has evolved and successfully diversified from one which was initially agriculture and commodity-based to a predominantly manufacturing and services sector.

In 1970, the Malaysian Government initiated the New Economic Policy (NEP) which aimed to eradicate poverty and correct racial economic imbalance by introducing new portions for capital ownership structures among the indigenous population (Bumiputeras), non-Bumiputeras and foreign interests.

In 2020, the Malaysian Government introduced the Malaysia Digital Economy Blueprint (Blueprint) and established MyDIGITAL, demonstrating the government aspirations to successfully transform Malaysia into a digitally-driven, high income nation and a regional leader in the digital economy.

Now, Malaysia is a thriving business hub within the ASEAN region. The religious and cultural diversity of Malaysia makes it an attractive country for businesses seeking to expand internationally. Malaysia’s easy company formation requirements have let it take advantage of worldwide trends and become a top country for business.

As Malaysia transitions to the endemic phase and economic activities continue to normalise, sentiments around growth are relatively optimistic. Business optimism has been underlined by strong private consumption, robust foreign direct investment, and improved availability of financing. The recovery momentum is expected to be buoyed by the reopening of international borders and structural reforms, in line with the Twelfth Malaysia Plan 2021-2025, which reflects the government’s commitment to boost the country’s economic resilience, help businesses grow and achieve sustainability.

The question now is that, how Malaysia compares with the other ASEAN member countries, with regards to the setting-up business, and actually running the business? From a legal standpoint, how sustainable and easy a business can be set-up and operated in Malaysia? We may analyze this from a few points such as:

(i) ease of business registration,

(ii) low corporate taxes,

(iii) educated labour, and

(iv) Free Trade Agreements.

NAZA Group unveiled the company's new venture in Musang King durian plantation business via its subsidiary NAZA Agro Plantation in Raub, Pahang. (credit: NAZA Group)

Ease of Business Registration

With the new Companies Act 2016, registering a company in Malaysia is easier and more cost-effective. Not only is the registration process more convenient, but there are also other changes that apply to companies in Malaysia. Some of the changes that we have seen under the new Companies Act 2016 are:

(i) Incorporating a company with only 1 shareholder and 1 director (for a Sdn Bhd or Pte Ltd company);

(ii) Audit exemption for dormant companies, zero-revenue companies and threshold qualified companies;

(iii) No Annual General Meeting (AGM) for private companies;

(iv) Easier passing off written resolutions for private companies.

Business registration and company formation can also be done within 2-5 working days in Malaysia. We may fell a bit short behind Singapore in this aspect, where in Singapore, company formation can be done within 1 day, but it is still decently fast to form a corporation in Malaysia, taking into accounts the size of population of Malaysia and the numbers of company formation that takes place everyday in Malaysia.

Low Corporate Taxes

Malaysia’s corporate tax rate is lower than most other countries in Asia, where mostly the tax rate is at 24%. However, if a company is resident, and fulfill the requirements such as (i) paid-up capital less than RM2.5 million, and income of less than RM50 million, (ii) does not own other companies with paid-up capital of more than RM2.5 million, and (iii) it is not controlled by another company which has paid-up capital of more than RM2.5 million, then the corporate tax rate is at a low rate of 17%. In this aspect, Malaysia ranked average within the ASEAN countries, where Singapore offers the lowest corporate tax rate at 17%, while Philippines has the highest corporate tax rate at 30%.

There are also some tax exemptions and incentives offers by Malaysia to business owners. For example, Pioneer Status in Malaysia is a form of tax exemption (up to 70% of statutory income) that is granted to companies participating in promoted activities or producing promoted products for a period of 5 to 10 years. Another incentive is the Investment Tax Allowance, which is granted based on the capital expenditure incurred on acquiring industrial buildings or plant and machinery for the purpose of the above activities and products.

Educated Labor

Malaysia has a fairly large population of 33 million, where it does translate to the size of workforce available in Malaysia. Most of the workers in Malaysia are highly educated as the government supports the development of human resource in every sector. Malaysia puts a lot of importance on education and training, and there has been an increase in the number of public training institutions such as technical schools, polytechnics, industrial training institutes and skill development centers to meet the growing demand and qualifications of the industry.

The workforce has all the required skills to operate a business correctly and are also some of the most productive people. Its legal practices are also based on the British system, giving companies excellent protection.

In term of minimum wages for the workforce, upon the implementation of the new amendments of the Employment Act 1955 in January 2023, the new minimum wage for Malaysia is RM1,500 per month. This is still lower than the minimum wages in Singapore at SGD1,750 per month. However, it is still higher than other ASEAN countries, such as Thailand and Indonesia.

Free Trade Agreements

Malaysia has entered several free trade agreements, such as Malaysia-Japan Economic Partnership Agreement (MJEPA), Malaysia-New Zealand Free Trade Agreement (MNZFTA), Malaysia-Australia Free Trade Agreement (MAFTA) and Malaysia-Turkey Free Trade Agreement (MTFTA). Malaysia is also part of the ASEAN Free Trade Agreement (AFTA). The benefits of these agreements are: (i) Lower of offers zero tariff on import and export goods under the FTA; (ii) Removes and modifies import restrictions; (iii) Allows easier entry for investors; (iv) Less complicated customs procedures; and (v) Improves the market access for different services. Apart from the above aspects, there are a few other notable aspects that should be considered in doing business in Malaysia too, in which I believe that it has the same importance, relevance and also weight for us to decide to do business in Malaysia.

Ease of Doing Business

Malaysia ranked 12th place in the World Bank’s Ease of Doing Business report in 2020. Malaysia has been increasingly developing to make establishing businesses for residents and non-residents easier. Between ASEAN countries, Malaysia placed at 2nd, after Singapore, which ranked at 2 nd place in the World Bank’s Ease of Doing Business, after New Zealand which in the 1 st place.

No Language Barrier

Malaysia is a multilingual country. The official language of Malaysia is Bahasa Malaysia or Malay, but other common languages are English, Mandarin and Tamil. Many Malaysians are also well verse in Arabic language. Most Malaysians, especially the younger generation, are able to speak several languages fluently.

Strategic Location

Malaysia is located in the Asia Pacific rim and in the heart of the ASEAN Community, which consists of Brunei, Cambodia, Indonesia, Laos, Myanmar, Philippines, Singapore, Thailand and Vietnam. Malaysia’s strategic location is the gateway to a huge ASEAN population of 667.3 million people. Malaysia is also ideal for sea route trading businesses as Malaysia is home to four seaports which are Port Klang, Johor Port, Port of Tanjung Pelepas, Kuantan Port, Penang Port, Bintulu Port and Kemaman Port.


As a business owner myself, I have experienced and have my fair share in the industry, and able to capitalise the opportunity given by the Malaysian government for the business owners. Malaysia is not perfect, but no other country nonetheless. However, Malaysia do has a lot to offer to business owners, be it resident or foreigner who intend to expand their business and to explore the Malaysian market.

I believe that the business landscape in Malaysia is thriving moving forward. From a legal point of view, Malaysia do offers great flexibility to the business owners, to ensure that your business flourish, as compares to other ASEAN countries.


The views are exclusively writer's own and do not necessarily represent the views of GC.





About Akmal SK

Meet Muhamad Akmal Arif Shamsul Kahar (Akmal SK) - The Legal Mastermind Behind Corporate Law.

As the Leading Partner of Messrs. Akmal Shamsul Kahar & Co., Mr. Akmal has made a name for himself as a legal expert in corporate practice, IPO and Listing Public Companies,specializing in mergers and acquisitions, share sales, and other complex transactions.

With extensive experience in the field, Mr. Akmal has earned a reputation as a trusted advisor to many SMEs and big corporations, guiding them through million-dollar deals with ease. The legal firm led by En. Akmal boasts an impressive client list, including both local and international clients from countries such as the UK, Singapore, Dubai, China, and more.

Mr. Akmal's expertise extends beyond just corporate practice. He is a recognized legal expert in corporate exercise and governance, having been appointed as a legal advisor to numerous organizations, including limited companies and GLCs. His knowledge and experience have led him to acquire multiple panel ships, cementing his position as one of the top legal minds in the industry.

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