What Is the Process for Setting Up a Small Business in Malaysia?
Do you have a burning desire within you to break free and start something new? Starting a new business is something many people have considered; some have taken the leap, while others have chosen to remain in their jobs due to the stability and sense of security that come with a steady paycheck each month. But if you have a passion, desire, and drive to sell a product or service you know is going to make a difference in the lives of others in a beneficial way, starting a business could be the answer you’ve been searching for all along.
Malaysia is a prime destination that has attracted corporate interest throughout the years, with demand steadily growing. Malaysia has consistently been in high demand due to its strategic location at the crossroads of trade between the East and the West. Over the years, Malaysia has transformed its business landscape with new pro-business initiatives, leading to booming business opportunities and the liberalisation of the services sector.
If you would like to know how to start a business in Malaysia, here is what you need to do:
Why Start a Business in Malaysia in 2025?
- Strategic Geographic Location in Asia
Malaysia is centrally located in Southeast Asia, offering easy access to major economies like China, India, Singapore, Thailand, and Indonesia. With six international airports and globally connected ports, such as Port Klang and the Port of Tanjung Pelepas, Malaysia serves as a vital gateway for regional and global trade. - Strong Regional and Global Trade Integration
As a member of ASEAN and a participant in various Free Trade Agreements (FTAs) with countries such as Japan, Australia, New Zealand, and India, Malaysia offers businesses preferential tariff access to over 660 million consumers in the ASEAN bloc. Initiatives such as the ASEAN Free Trade Area (AFTA) and the ASEAN Economic Community (AEC) promote cross-border trade and labour mobility. - Fast and Business-Friendly Company Setup
Registering a business with the Companies Commission of Malaysia (SSM) is a straightforward process that can be completed within a few days. Malaysia supports both local and foreign business structures, making incorporation seamless for entrepreneurs worldwide. - Competitive Tax Regime and Incentives
Malaysia’s corporate tax rate stands at 24%, with SMEs enjoying a reduced rate of 17% for annual income below MYR 50 million. Industry-specific tax incentives, capital allowances, and exemptions are widely available, particularly in high-priority sectors such as technology, green energy, and manufacturing. - Government Commitment to Economic Transformation
Malaysia’s “Madani Economy” framework aims to position the country among the world’s top 30 economies. This initiative prioritises competitiveness, digital transformation, and sustainable development, creating new opportunities for businesses in emerging industries. - Strong Legal Protection for Foreign Investors
Malaysia has signed over 60 Investment Guarantee Agreements (IGAs) with countries including the US, UK, China, and Germany. These treaties protect foreign investments from expropriation, ensure fair compensation, and uphold the rights of investors under international law. - Multilingual and Skilled Workforce
With a multilingual population fluent in English, Malay, Mandarin, and Tamil, businesses can communicate effectively across diverse markets. The talent pool is skilled, adaptable, and cost-effective, making it ideal for companies seeking operational efficiency. - Affordable Business Operating Costs
Compared to regional peers like Singapore, Malaysia offers lower operational costs, especially for labour, rent, and utilities. This cost advantage allows businesses to scale efficiently without compromising on talent or infrastructure.
How to Start a Small Business in Malaysia?
Starting a business in the right way is one of the most important things you can do. When you start on the right foot, everything else will eventually fall into place. Want to know how to start a business in Malaysia? Follow this simple guide and do it right:
- Always Prepare a Business Plan – Never begin a business, big or small, without a business plan in place. A business plan is the foundation upon which all businesses are built, and the better the plan that you have, the better the chances your business will succeed.
- Pick the Right Business Entity – It is best to research the types of business entities available, exploring all options so you can make an informed decision about which would be the better choice for your business. In Malaysia, you will have the option of choosing from a Private Limited Company (Sdn Bhd), Partnership or Sole Proprietorship as your choice of business entities.
- Plan Your Budget – When mapping out your budget and projections before starting a business in Malaysia, always plan for a budget of at least three years that covers all possible business inflows, outflows, your personal needs, and commitments. Remember to set realistic goals in your budget.
- Selecting Your Business Name – Your company’s name is going to be the way your clients associate your business image, and it is the entry point of your business. A good name will make you instantly stand out amongst your competitors, so spend time choosing a name wisely.
- How Will You Finance Your Business? – This is a fundamental question you are going to need to address. Your options for financing your business may include personal savings, debt financing using personal assets, government grants, friends and family, angel investors, venture capitalists, and other sources.
- Does Your Business Need Licenses and Permits? – When researching how to start a business in Malaysia, don’t forget to look up a list of federal, state and local licenses or permits which you will need to operate your business legally.
How to Incorporate a Company in Malaysia?
Malaysia remains a strategic hub for businesses seeking to expand into Southeast Asia, thanks to its investor-friendly policies, skilled workforce, and cost-effective environment. If you’re planning to incorporate a company in Malaysia in 2025, here’s a streamlined guide to help you navigate the process smoothly:
Step 1: Select the Appropriate Business Entity
The most common and preferred structure for both local and foreign entrepreneurs is the Sendirian Berhad (Sdn. Bhd.). This private limited company offers limited liability protection, flexible ownership, and simplified compliance procedures.
Step 2: Fulfil the Statutory Requirements
To register a company in Malaysia, the following statutory conditions must be met:
- At least one director who is a resident of Malaysia
- A minimum of one shareholder (can be an individual or corporate entity)
- Appointment of a licensed company secretary (registered with SSM)
- A registered local office address
- Minimum paid-up capital of RM 1
These requirements are essential and must be satisfied before incorporation.
Step 3: Reserve Your Company Name
Use the MyCoID 2.0 portal to submit your proposed company name for approval. Ensure the name complies with SSM guidelines—avoiding prohibited terms or existing registered names. Name approval typically takes 1–3 business days.
Step 4: Submit Incorporation Documents
Once the name is approved, prepare and submit the incorporation application with the following:
- Identity documents of directors and shareholders
- Statutory declarations and consent forms
- Registered business address
- Optional company constitution
- Shareholding structure and capital details
After successful submission, the Certificate of Incorporation (Form 9) will be issued by the Companies Commission of Malaysia (SSM).
Step 5: Complete Post-Incorporation Compliance
After incorporation, the following steps are required to operate your business legally:
- Register with the Inland Revenue Board (LHDN) for tax purposes.
- Open a corporate bank account with a local financial institution.
- Obtain necessary business licenses or permits (industry-dependent)
- Register for Sales and Service Tax (SST) if applicable.
- Appoint a licensed aud.
These actions ensure that your company remains fully compliant with Malaysian corporate and tax regulations.
More Information About How to Start a Business in Malaysia
For more useful information about starting a business in Malaysia:
You may refer to the Malaysia Company Incorporation FAQ for Frequently Asked Questions Regarding Malaysia Company SDN BHD Form Incorporation.
You may refer to the Guide to Malaysia Company Registration for more information about Business Registration / How to forming a business.
You may refer to Corporate Compliance Requirement to understand more about Compliance Requirement in Malaysia, such as Corporate Tax, GST, EPd, etc.
Ready to Set Up Your Small Business in Malaysia?
Frequently Asked Questions
An Enterprise (sole proprietorship/partnership) offers easier setup but no limited liability protection, while a Sdn. Bhd. (private limited company) offers liability protection, credibility, and scalability—ideal for SMEs.
You’ll typically need the Certificate of Incorporation, board resolution, business profile, director/shareholder IDs, and sometimes a physical presence for due diligence.
You must register for Sales and Service Tax (SST) if your annual taxable turnover exceeds RM500,000. Some industries are exempt, so it’s best to check based on your business type.
Once approved by SSM, your company name is protected under Malaysian law. For added protection, you can register it as a trademark with MyIPO (Intellectual Property Corporation of Malaysia).
Yes, every Sdn. Bhd. company must appoint a qualified company secretary licensed by the SSM within 30 days of incorporation.
Schemes like TEKUN Nasional, SME Bank financing, and MDEC grants support startups in key industries like digital economy, halal industry, and green tech under the Madani Economy framework.
