Doing Business in Malaysia: What to Look Out For

In the evolving business landscape, going global and investing in foreign markets is the way to go.  There are many advantages for businesses in expanding into overseas markets which we’ve mentioned in previous articles. From extending the life cycle of existing products, spreading stakes, to capitalising on the different demand cycles, it all boils down to the best use of available resources to produce the best results.

In recent years, the Asia Pacific market has been gaining traction as different foreign businesses and investors pour in.

According to PWC’s APEC CEO Survey 2018, CEOs view Singapore, Japan, and Hong Kong as being the most likely for fast tracked success beyond the US and China, seeing it with the strongest “unicorn potential” outside of US and China.

While Singapore is an attractive market for many foreign businesses, especially with its governance and transparency in regulations, this all comes at a cost. Ranked as the most expensive city in the world to live in by the Economist Intelligence Unit has swayed many foreign investors to consider neighbouring locations such as Malaysia.

For example, the salary requirements for an employment pass for foreigners in Singapore and Malaysia are quite different. In Malaysia, the monthly salary for an employment pass is above RM 5,000/month, while  for Singapore it is above SG $3,600/month according to the Ministry’s official guideline, however common practices may be even higher, which communicates the costs and requirements for business to invest.

Business Opportunities in Malaysia

Malaysia, with a population of  32.37million (Worldometers & World Population Review) and a large middle class, Malaysia serves as an attractive market of opportunity for many international businesses.

International businesses like Sogo has it’s eye on the sizable consumerism market as it’s announced that the department store will be launching at the Central I-City shopping centre in Shah Alam, Selangor. Taking up 18,581sqm of retail space and featuring over 400 brands, this new four-storey store demonstrates the interest and potential that is present in the Malaysian consumer and retail market.

Other thriving business opportunities are present in the F&B industries as depicted by the nation’s oldest food chain, A&W Malaysia. Inter Mark Resources, having acquired A&W Malaysia back in September 2018 is looking to further expand the business. George Ang, owner of Inter Mark Resources disclosed plans to expand the number of A&W Malaysia location, targeting to grow from the current 47 stores to 100 stores by 2021.

All this indicates a genuine market opportunity present in Malaysia, especially for international businesses looking for growth.

Challenges of Doing Business in Malaysia

Exciting as it may be, it is important that businesses are aware of the real challenges in doing business in Malaysia. It can be relatively challenging for businesses to secure the proper licenses due to regulatory environment, which requires different levels of approvals.

While there are ways to get around registering your own business, such as using secondment services, for businesses which are looking to establish a presence in the long run, the legal barrier, less than friendly foreign business policies such as the high income tax rate and investment capital requirements may be somewhat of a challenge for businesses looking to venture into Malaysia.

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Prepare your business for success
Despite the challenging business environment, one cannot deny that Malaysia as a market still stands as a great prospect and business opportunity.

For businesses looking to expand into APAC, it is important to properly examine the market needs, is Malaysia the right market for your business? What is the local competition? Does the market have a need for your product/ service?

Also make sure to evaluate the business landscape to accurately determine the amount of investment required so you can prepare yourself for business.

Know the legislation
The next step to doing business in Malaysia is through researching the relevant business legislation. Arming yourself with the relevant legislation knowledge allows you to better navigate the landscape as well as ensure a smoother business expansion process.

To help others like you who are looking into growing their business empire, we’ve put together a series of location legislation summaries. Inside, we’ve included the most relevant business legislation aimed to help business owners and leaders get a better idea of the key markets around Asia Pacific.

Don’t forget to check out the Malaysia legislation page for the latest regulation updates!

Have people on the ground
Secure your business by having people you trust on the ground. A simple way to do this is through PEO/ EOR secondment which allows you to set up a presence without setting up a legal entity. By parking your employees with an EOR secondment service provider, you can more efficiently set up your base in Malaysia.

Want to learn more about how your can save time and money with EOR services? Read this article on expanding into Asia under a headcount freeze, or get in touch with one of our representatives for more information.

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Business Legislation Summaries:

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