An Insight on Prohibited and Restricted Businesses in Malaysia
Malaysia is the land of opportunity with a dynamic manufacturing and services sector. The Government is also keen to transform the country into a digital-first economy via the MyDIGITAL initiative. These, and more, make Malaysia highly attractive to both local and foreign investors alike. However, entrepreneurs need to be aware of prohibited and restricted businesses in Malaysia before venturing forth.
Prior to getting an incorporated company set up in Malaysia, it’s good to do some due diligence. Check out the Royal Malaysian Customs Department and the MalaysiaBiz portals for lists of businesses and licences. The Ministry of International Trade and Industry (MITI) is another good resource to read up.
Here, 3E Accounting curates a short and incisive list of restrictive trade activities to take note of. Do get in touch with us to explore more business avenues in Malaysia.
Understanding the Need for Restrictions
Business and trade restrictions are generally minimal in Malaysia. Further, foreign investors can now own 100% equity investments in specific projects. However, sectoral regulations prohibit or restrict trade, depending on the type of business entity and industry.
When it comes to import and export activities, Malaysia classifies its goods by adopting the Harmonised Tariff System. The Malaysian Customs specifies a list of tariff numbers that all categories of goods must adhere to. In Malaysia, import restrictions are in place to ensure protection towards strategic local industries. They are also there for security reasons, primarily to safeguard import-sensitive trades.
A Summary of Restricted Business Activities in Malaysia
Malaysia’s Strategic Trade Act provides a list of countries and types of activities that fall under the restrictive category. Essentially, Malaysian companies can’t do business with countries such as North Korea, Rwanda, Iraq, etc.
If you’re a foreign engineering or architectural firm seeking to do business in Malaysia, there’re special rules to note. Other industries such as oil and gas, banking, educational institutions, or network facilities are subject to local equity requirements.
All require some form of special licencing requirements, subject to qualifications as set by the Malaysian licencing board. It is highly advisable to engage reliable business solution providers to handle Malaysian business licences for a seamless experience.
Other prohibitive or restricted businesses in Malaysia include the following non-exhaustive list:
- Trade that adversely affects market competition
- Activities relating to weapons
- General trade embargo against Israel
- Hypermarket, petrol stations, etc. (for foreign ownership)
Commerce in Malaysia certainly holds exciting prospects for entrepreneurs but starting on the right foot is essential. Becoming familiar with prohibitive or restricted businesses in Malaysia is merely the first step. It’s also crucial to engage professional help to navigate the business environment successfully.
As a proven business solution provider, 3E Accounting is the ideal partner for the discerning entrepreneur. Our award-winning services are a testament to our impeccable business practices and professional team of talents. We offer the most cutting-edge solutions which are comprehensive and customisable. Contact 3E Accounting Malaysia today to experience future-forward business outcomes.