Doing business in Malaysia: view from the 5th CFO Innovation Forum
Opinion

Doing business in Malaysia: view from the 5th CFO Innovation Forum

06 November 2017

TMF Group joined CFOs and other senior finance professionals at the 5th CFO Innovation Forum in Kuala Lumpur, Malaysia in October to discuss policy, regulation and legislation changes impacting institutions in Malaysia.

Our own Director of Client Services Loke Chee Kien contributed to the agenda by speaking about navigating financial complexity and compliance, highlighting results from the Financial Complexity Index 2017, in which Malaysia came 59th out of 94 jurisdictions ranked according their tax and accounting complexity.

The event’s opening keynote was delivered by Rajiv Biswas, Senior Director and Asia Chief Economist at IHS MARKIT. During his address, he noted that while the Malaysian economy has shown resilience in a challenging global environment, there are external dampeners. These include the USA’s proposed policies for higher trade tariffs, tax cuts for its citizens and corporations, and its withdrawal from the Trans-Pacific Partnership – all factors that impact on Malaysia’s ability to easily do business with the powerhouse.

China’s policies are also having an impact on Malaysia – although in a more positive way. The country’s One Belt One Road initiative aims to increase the economic focus within Asia, and to boost key infrastructure and cross border trade. Agreements such as AFTA (the ASEAN Free Trade Area) increase member countries’ - including Malaysia’s - competitive edge by eliminating tariffs between members and improving FDI flow into ASEAN.

And Malaysia is enjoying an increase in digital business, with disruptive technologies in particular challenging conventional business models and raising the bar, for both established companies and new market entrants.

Legislation impact

A key topic of discussion at the CFO Forum was Malaysia’s Companies Act 2016, which saw key changes including:

  • The minimum number of shareholders reduced from two to just one
  • Minimum resident directors reduced from two to one
  • The abolishment of authorised capital
  • No more AGMs required for private companies.

These and other measures to relax statutory requirements and reduce the compliance burden, have had the positive effect of making Malaysia more attractive and affordable for those looking to set up or expand their business operations.

Despite the abovementioned positive moves to foster increased business activity in the country, meeting local compliance and reporting requirements does remain a challenge – particularly for multinationals making their first move into Malaysia. Following TMF Group’s ‘financial complexity’ presentation at the CFO Forum, we fielded a number of enquiries with regard to GST compliance and how to comply with the OECD’S Common Reporting Standard (CRS) and BEPS (Base Erosion and Profit Shifting) requirements while operating in Malaysia.

There was also considerable interest from Malaysian operators in how business service providers such as TMF Group can support their expansion plans into jurisdictions such as Thailand, the Philippines, Indonesia and the Middle East region.

The Forum closed with a look forward to Malaysia’s Budget 2018 which was to be released two days after the event. Discussion specifically focussed on anticipated initiatives designed to further promote the local economy.

Now confirmed in the subsequent Budget announcement, these initiatives include:

  • Promotion of private investment through various incentives including RM1 billion allocated for the Five Main Corridors development, and close to RM11 billion allocated to support the SME industry
  • A slight reduction to personal income tax rates to help boost domestic spending
  • Malaysia’s commitment to exchange CRS information from 2018, and support BEPS initiatives
  • Initiatives to support the digital economy, such as a capital allowance for ICT equipment for assessment year 2018-2020, and an increase in the minimum value for import - to RM800 – in order to establish Malaysia as regional e-commerce hub.

I’ll provide a full summary of Malaysia’s 2018 Budget announcement in a forthcoming article. You can subscribe to our free eAlert service to receive it straight to your inbox.

The 5th CFO Innovation Forum provided attendees with invaluable insight – from a financial perspective – into the current business challenges and opportunities in today’s fast-paced cross-border business environment.

Talk to us

TMF Malaysia – part of TMF Group’s network of over 120 offices in more than 80 countries globally, can help clients to realise their global business ambitions with our range of support services.

Have questions? Make an enquiry with our team today.

Find out how our accounting and tax, HR, payroll and other administrative services can drive efficiency in your business.

Written by

Calvin Chan

Business Development Associate Director, TMF Malaysia

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