Malaysia has emerged as a compelling destination for businesses seeking to expand their operations or establish a new presence in Southeast Asia. With its strategic location, robust economy, and favourable business environment, doing business in Malaysia offers numerous advantages for companies looking to capitalise on regional growth opportunities.
10 Reasons for Doing Business in Malaysia
1. New Companies Act
Malaysia has introduced significant reforms to its company laws through the Companies Act 2016, creating a more investor-friendly business environment. This legislation has simplified the company incorporation process, making it easier and more cost-effective to establish a business in the country.
The Act has relaxed ownership and management requirements, allowing companies to operate with just one shareholder and one director. Additionally, it has reduced compliance burdens by exempting certain types of companies from mandatory audits.
These changes, coupled with greater flexibility in company operations, such as the ability to hold meetings and pass resolutions electronically, have made doing business in Malaysia an attractive destination for businesses of all sizes.
2. A Strategic Hub for Business
Situated at the heart of the Association of Southeast Asian Nations (ASEAN), the country offers unparalleled access to a massive consumer base of over 667 million people. This strategic positioning makes it an ideal springboard for companies looking to expand their regional footprint.
Beyond its proximity to a vast market, Malaysia boasts a robust infrastructure that supports trade and commerce. Its extensive network of seaports, including major hubs like Port Klang and Tanjung Pelepas, facilitates efficient shipping and logistics operations. These world-class ports serve as gateways for international trade, connecting Malaysia to global supply chains and enabling businesses to reach customers worldwide.
By doing business in Malaysia, companies can leverage the country’s strategic location to optimise their supply chain, reduce costs, and gain a competitive edge in the highly competitive Asian market.
3. A Business-Friendly Destination
Malaysia has established itself as a premier location for businesses to thrive.
Recognized globally for its ease of doing business, the country has implemented a series of reforms to create a conducive environment for both domestic and foreign investors to do business in Malaysia.
Malaysia’s commitment to economic liberalisation is evident in its ranking as the 24th freest economy worldwide, according to the Heritage Foundation’s Index of Economic Freedom.
Furthermore, the World Bank’s Ease of Doing Business report placed Malaysia in the top 12 economies, highlighting its efficient business regulations. The World Economic Forum also acknowledges Malaysia’s competitiveness, ranking it 27th globally.
Setting up a business in Malaysia is a straightforward process. Entrepreneurs can establish a company by following these simple steps for doing business in Malaysia:
- Registration Preparation: Choose a suitable business structure and name, and appoint company officers.
- Company Registration: Submit the necessary documents to the Companies Commission of Malaysia.
- Ongoing Compliance: Adhere to statutory requirements such as annual returns, tax filings, and obtaining relevant business permits.
Malaysia’s reputation for protecting minority shareholders, ranking second globally, underscores its commitment to fair business practices, making it a secure and reliable investment destination.
4. A Multilingual Business Hub
Malaysia’s diverse cultural landscape is reflected in its linguistic richness.
While Bahasa Malaysia is the official language, English is widely spoken and understood, particularly in business and government circles. This linguistic proficiency is a significant advantage for foreign investors and entrepreneurs, as it eliminates language barriers that can often hinder business operations.
Beyond English and Malay, Mandarin and Tamil are also prevalent, especially in certain regions and communities. This multilingual environment fosters effective communication and collaboration among a diverse workforce.
Malaysia’s linguistic diversity creates a conducive environment for businesses to operate seamlessly and build strong relationships with both local and international stakeholders.
5. Your Gateway to Asian Talent and Trade
Malaysia offers a skilled yet affordable workforce. The government’s focus on education has created a pool of talented professionals in various sectors.
This, coupled with lower living costs compared to other Asian nations, makes Malaysia attractive for outsourcing and offshoring. To further enhance this advantage, the government has invested in technical and vocational training programs.
6. A Tax-Competitive Business Haven
Malaysia offers a competitive corporate tax landscape compared to many other Asian nations. Resident companies can enjoy a preferential tax rate of 17% under specific conditions:
- Paid-up capital below RM 2.5 million
- Annual income not exceeding RM 50 million
- No majority ownership or control over companies with a paid-up capital exceeding RM 2.5 million
For larger companies, the corporate tax rate is 24%. While non-resident companies are subject to a 24% tax, there’s no tax on income earned outside Malaysia.
These tax incentives make Malaysia an attractive destination for businesses seeking to optimise their tax liabilities while tapping into the region’s growth opportunities.
7. A Solid Infrastructure for Business
Malaysia’s well-developed infrastructure provides a strong foundation for business success. The country boasts a robust transportation network, including modern seaports, international airports, and an extensive road system. This facilitates efficient logistics and distribution, both domestically and globally.
Complementing this physical infrastructure is a sophisticated telecommunications network that supports seamless communication and data transfer, essential for today’s businesses.
8. Free Trade Agreements
Malaysia is actively involved in numerous free trade agreements (FTAs), both at the bilateral and regional levels. Currently, the country has established seven bilateral FTAs and seven regional FTAs.
| Type | Free Trade Agreement | Description |
| Bilateral | Malaysia-Japan Economic Partnership Agreement (MJEPA) | Enhances economic cooperation between Malaysia and Japan, promoting trade and investment. |
| Bilateral | Malaysia-Pakistan Closer Economic Partnership Agreement (MPCEPA) | Strengthens economic ties between Malaysia and Pakistan, encouraging trade and collaboration. |
| Bilateral | Malaysia-New Zealand Free Trade Agreement (MNZFTA) | Aims to boost economic relations between Malaysia and New Zealand by facilitating trade exchanges. |
| Bilateral | Malaysia-India Comprehensive Economic Cooperation Agreement (MICECA) | Seeks to deepen economic cooperation and trade between Malaysia and India. |
| Bilateral | Malaysia-Chile Free Trade Agreement (MCFTA) | Promotes trade liberalisation and economic interaction between Malaysia and Chile. |
| Bilateral | Malaysia-Australia Free Trade Agreement (MAFTA) | Focuses on enhancing economic ties between Malaysia and Australia through trade and investment. |
| Bilateral | Malaysia-Turkey Free Trade Agreement (MTFTA) | Encourages trade and economic cooperation between Malaysia and Turkey. |
| Regional | ASEAN Free Trade Agreement (AFTA) | Strengthens regional economic integration among ASEAN members, simplifying trade by reducing barriers. |
| Regional | ASEAN-Australia-New Zealand Free Trade Area (AANZFTA) | ASEAN’s trade agreement with Australia and New Zealand. |
| Regional | ASEAN-China Free Trade Agreement (ACFTA) | ASEAN’s trade agreement with China. |
| Regional | ASEAN-India Free Trade Area (AIFTA) | ASEAN’s trade agreement with India. |
| Regional | ASEAN-Japan Free Trade Area (AJFTA) | ASEAN’s trade agreement with Japan. |
| Regional | ASEAN-Korea Free Trade Area (AKFTA) | ASEAN’s trade agreement with South Korea. |
| Regional | ASEAN-Hong Kong, China Free Trade Agreement (AHKFTA) | ASEAN’s trade agreement with Hong Kong, China. |
Benefits of AFTA:
- Reduced or zero tariffs on goods traded within the FTA.
- Simplified customs procedures.
- Removal or modification of import restrictions.
- Improved market access for telecommunication services.
- Easier entry for investors.
- Malaysia’s Investment Guarantee Agreement
Malaysia is committed to creating a secure and conducive environment for foreign investment to begin doing business in Malaysia. The Investment Guarantee Agreement offers investors robust protection and peace of mind.
This legal framework safeguards your assets and provides a clear path for dispute resolution, ensuring that your investment is secure. By fostering trust and reliability, Malaysia invites global businesses to partner with local enterprises and contribute to the nation’s economic growth.
9. Affordable Cost of Living and Operating
Malaysia offers a cost-effective environment for living and business operations.
According to a global survey by Numbeo, Malaysia ranks 101st out of 140 countries in the cost of living index, significantly lower than Singapore (7th) and Hong Kong (12th). This makes Malaysia an attractive destination for foreigners looking to establish businesses in Asia, as they can enjoy the advantages of a strategic business centre without the burden of high living and operating costs.
The country’s affordability is further enhanced by its robust infrastructure, which includes ample office space, a skilled workforce, and readily available raw materials. Outside of Kuala Lumpur, which already ranks favourably in Numbeo’s index, entrepreneurs can find even more cost-effective business hubs in cities like Penang and Petaling Jaya.
10. Opportunities in Key Industries
Malaysia presents a wide range of opportunities across various industries for foreign entrepreneurs, spanning sectors such as manufacturing, services, agriculture, and technology.
The table below highlights key industries in Malaysia and their respective areas of opportunity:
| Industry | Areas of Opportunity |
| Manufacturing | Electronic components, machinery, transportation equipment |
| Services | E-commerce, fintech, tourism, healthcare |
| Agriculture | Palm oil, rubber, cocoa, tropical fruits |
| Technology | Software development, artificial intelligence, cybersecurity |
Malaysia’s extensive network of free trade agreements and strong government support for foreign investment make it an attractive destination for business. Additionally, its strategic location offers easy access to the ASEAN market, further enhancing its appeal for foreign entrepreneurs for doing business in Malaysia.
Conclusion
Malaysia stands out as a compelling destination for businesses seeking to thrive in Southeast Asia. The country’s favourable business environment, characterised by strategic location, robust infrastructure, skilled workforce, and supportive government policies, creates a conducive ecosystem for doing business in Malaysia. As the region continues to prosper, Malaysia’s strategic positioning and commitment to economic growth make it an ideal platform for businesses to expand their market reach and achieve long-term success.
