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Managing Director
17 June 2019
Read time
3 minutes

Why licensing is a complex business in Malaysia

Kuala Lumpur city centre

All businesses in Malaysia require the right business licences to start their operations but sectoral and state differences can make this a more complicated process than may be obvious.

Starting a business in Malaysia can be a complicated affair, with multiple government agencies responsible for the administration and enforcement of rules and regulations affecting business. Rules regarding the business licensing of foreign-invested firms and for firms intending to operate in specific areas of trade, require that they obtain additional licences before commencing business and these may be required at the federal or state level.

General business licences 

The first step is to register your business, which for foreign investors means deciding whether the business will be:

  • a company limited by shares; 
  • a company limited by guarantee;
  • a limited liability partnership;
  • a foreign branch; or
  • a representative/regional office. 

Business registration in Malaysia is handled by Suruhanjaya Syarikat Malaysia (SSM) or local authorities. Once you have registered your business, you can apply for your licences.

The primary licence relates to business premises, with or without a signboard licence. These are issued by the council local to your intended place of business. The details of the application vary from state to state, so you cannot assume that if you are simply expanding your business to additional premises that the application process will be the same. You may require a signboard notice for each display at the business premises, for which separate applications and fees may apply.

Once your business premises are approved, you will need to register:

  • for employers’ and employees’ Income Tax Registration;
  • with the Employees’ Provident Fund (EPF);
  • with the Social Security Organisation (SOCSO); and
  • for the Employee Insurance Scheme.

With premises and staff ready to start your business, you may need to consider further licensing for the trade you will undertake.

Trade-related licensing

Any foreign invested company intending to conduct distributive business activities, such as retail, import and export, restaurants, franchise business and services and consultancy, will need to apply for a distributive trade licence or approval from the Ministry of Domestic Trade and Consumer Affairs. This is how the government protects local business development. The licence or approval is needed before a company can apply for work permits for any expatriate staff they intend to employ locally.

Additional business licences are required for key industry sectors, including manufacturing, construction, banking and finance, communications, insurance, health, education, transportation, tourism and hospitality and real estate. Some are provided through specific industry bodies and local authorities, making the whole process subject to specific local complexities.

Complexity can be managed

Starting a business in Malaysia or investing into existing businesses is complicated by the multiplicity of licences and approvals that may apply, centrally and at the state level. The whole process can take considerable time and mistakes in the applications can delay the start to trading or completing an investment. However, complexity can be managed, with local professional assistance to navigate the complex procedure of doing business in Malaysia.

Talk to us

TMF Malaysia constantly monitors the local rules and regulations that facilitate business operations. We can provide assistance with all corporate secretarial matters, smoothing and speeding the process of gaining the right government approvals needed for your company so that you can focus your own efforts on the broader business strategy. To learn more about TMF Group and our services. Talk to us.

Discover where Malaysia ranks among 76 jurisdictions for business complexity – download the free report.

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