Doing business

Malaysia

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Setting up a company | FDI in figures | Why you should choose to invest | Procedures relative to foreign investment | Finding assistance for further information

Setting up a company

Types of companies and capital (max/min)	Number of partners/shareholders and liability
Private Berhad is a Private Limited Company. Minimum two ordinary shares of MYR 1 each	Minimum: 2 Maximum: 50 Liability is limited to the nominal value of the subscribed shares.
Public Berhad is a Public Limited Company. Minimum two ordinary shares of MYR 1 each	Minimum: 2 Maximum: No limit Liability is limited to the nominal value of subscribed shares.
General Partnership No minimum	Maximum 2 to 20 partners. Partners' liability is joint and several.

Business setup procedures

Setting up a company	Malaysia	East Asia & Pacific
Procedures (number)	9.0	7.8
Time (days)	17.0	39.0

Source: Doing Business.

For further information: Consult Doing Business Website, to know about procedures to start a Business in Malaysia.
Companies Commission of Malaysia
The competent organization: The Companies Commission of Malaysia (SSM) has the power, as the representative of the Ministry of Domestic Trade and Consumer Affairs, to register, form and strike off Malaysian companies and enterprises. Its main functions are administration and implementation of the applicable laws, registering of companies and enterprises, keeping official company and enterprise dossiers, and making company directors aware of ethical rules. The SSM is also a watchdog organization.

FDI in figures

Foreign Direct Investment	2008	2009	2010
FDI inward flow (millions USD)	7,318	1,430	9,103
FDI stock (millions USD)	73,262.1	78,894.7	101,339.1
Performance Index*, ranking on 141 economies	79	123	-
Potential Index**, ranking on 141 economies	37	-	-
Number of Greenfield investments***	212	158	-
FDI inwards (in % of GFCF****)	16.8	2.8	-
FDI stock (in % of GDP)	33.1	39.0	-

Source:

Note: * The UNCTAD Inward FDI Performance index is based on a ratio of the country's share in global FDI inflows and its share in global GDP. ** The UNCTAD Inward FDI Potential index is based on 12 economic and structural variables such as GDP, foreign trade, FDI, infrastructures, energy use, R&D, education, country risk. *** Green field investments are a form of foreign direct investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up. **** Gross fixed capital formation (GFCF) measures the value of additions to fixed assets purchased by business, government and households less disposals of fixed assets sold off or scrapped.

Why you should choose to invest Malaysia

Strong points

The main factors that make FDI attractive are:
- A liberal and transparent investment policy;
- Competitive costs;
- Rationalization of public services;
- Attractive investment incentives;
- Developed infrastructures;
- A strategic location linked to the proximity of the main Asian markets;
- Significant resources;
- Growing spending power.

Weak points

Malaysia's weak points are red tape and a shortage of qualified worker.

Government measures to motivate or restrict FDI

The Malaysian governement encourages FDI by a number of incentive mesures particularly towards industries exporting "high-tech" products and back office operations services. In 2003, the government launched a program to boost the economy, which extended the total number of years of tax exemption from 10 to 15 for "pioneer" companies and from 5 to 10 years for priority companies. Firms which benefit from the "Multimedia Super Corridor" (MSC) program have easy taxes and regulations terms.

In order to face the crisis, the government adopted different mesures: supporting company balance-sheets, maintaining the redistribution of the oil annuities (subsidies for basic products and the education and hospital systems, and major construction policies), strengthening of the financial system and economic liberalization. At the same time, in order to favor the transfer of technology and facilitate the influx, into the country, of qualified staff, Malaysia is looking to liberalize the expatriate employment regime in the manufacturing sector.

Bilateral investment conventions signed by Malaysia

Malaysia has negotiated bilateral FTAs at the same time as the negotiations within the framework of ASEAN, and is in talks with Japan, India, Korea, Australia, New Zealand and Pakistan. It has signed a framework agreement on trade and investment with the United States.

Procedures relative to foreign investment

Freedom of establishment: Guaranteed.
Acquisition of holdings: A majority holding interest in the capital of a company in Malaysia is legal. It is authorised up to 51% for projects exporting between 51% and 79 % of the production. Between 30% and 51% for projects exporting 20% to 50% of the production.
Obligation to declare: The agency for the promotion of foreign investment in the country allows you to find out about the authorizations needed to set up business.
Competent organization for the declaration: Companies Commission of Malaysia (SSM)
Requests for specific authorizations: Foreign holdings are limited in radio/television broadcasting, distribution of water and electricity, banks, healthcare, hydrocarbons, the automobile industry, Stock Exchange and leasing companies. In the health sector, private hospital services require a joint venture and holdings in equity capital have a 30% ceiling.

Finding assistance for further information

Investment aid agency: Malaysian Industrial Development Authority (MIDA)
Other useful resources: National Chamber of Commerce and Industry of Malaysia
SME Info
Companies Commission of Malaysia (SSM)