How Can Foreigners Start a Business in Malaysia?
Malaysia is strategically positioned in the heart of Southeast Asia. It serves as an ideal gateway to the ASEAN market, which comprises approximately 680 million people.
Its stable policy environment, robust infrastructure, and recent participation in trade agreements like the CPTPP and enhanced ASEAN trade frameworks reinforce its appeal to foreign investors. In 1H 2025, Malaysia attracted RM 190.3 billion in approved investments, an 18.7% increase year-on-year, with 56.1% originating from foreign sources, strengthening its growing role as a regional investment hub.
Why to Start a Business in Malaysia as a Foreigner?
Malaysia continues to welcome foreign investors, offering a supportive environment and strong business opportunities. Its extensive transport networks and central location in Southeast Asia make it an ideal base for businesses in manufacturing, services, or exports.
However, starting a business in Malaysia as an expat requires understanding local regulations, business structures, and compliance requirements. The right approach ensures your foreign company in Malaysia is legally compliant and positioned for growth.
What are the Steps to Start a Business in Malaysia?
To successfully start a business in Malaysia, it’s important to follow a step-by-step process for company registration in Malaysia.
Step 1: Understand the Types of Business Foreigners Can Start
Malaysia continues to encourage foreign investors and expatriates to participate in its economy, but the type of business entity you choose will determine your legal compliance requirements, tax obligations, and operational flexibility.
As a foreigner, you cannot register a sole proprietorship or partnership in Malaysia unless you hold permanent residency (PR). Instead, the most common options available are:
- Private Limited Company (Sdn. Bhd.)
The most popular choice for foreign investors, an Sdn. Bhd. offering limited liability, flexibility in shareholding, and potential for 100% foreign ownership in permitted sectors. - Branch Office
Suitable for foreign companies wishing to extend their operations into Malaysia without creating a separate legal entity. - Representative Office
A non-trading entity ideal for market research, liaison, or exploring opportunities before making a full investment.
Choosing the right structure is a crucial first step, as it will directly impact how your business operates, its regulatory obligations, and its ability to expand in Malaysia and the broader ASEAN market.
Step 2: Register Your Company in Malaysia
Like many jurisdictions worldwide, Malaysia has its own company registration procedures. The Companies Commission of Malaysia (SSM) is the government agency responsible for incorporating companies in Malaysia.
- Choose and reserve a Name your business
- Conduct a name search before registration (You may refer to the SSM’s guidelines for name search before your application)
- Submit the registration documents to SSM within three months upon the approval of your company’s name
- Pay a registration fee for the business entity [that you choose], including a deposit for an office/shop space as well as an initial bank account deposit.
- Apply for the business license, such as the WRT license (here is the list of business licenses and application procedures)
- Open a corporate account for your business.
You can read more about the key considerations before [a foreigner] setup a company in Malaysia on our website.
Step 3: Apply for Visas and Permits
To legally establish and operate a business in Malaysia, foreign investors must obtain the appropriate pass from the Immigration Department of Malaysia:
- Employment Pass (EP)
Allows foreign professionals to work in their own company in Malaysia in a managerial, executive, or technical role.
- Malaysia Tech Entrepreneur Programme (MTEP)
Aimed at both new and experienced entrepreneurs in sectors such as agritech, fintech, and AI, this program enables tech founders to relocate, set up businesses, and secure a residence pass in Malaysia.
Additional Considerations for Foreign-Owned Businesses in Malaysia
Beyond incorporation, foreign entrepreneurs should plan for sector-specific rules, compliance requirements, and market readiness to ensure a smooth business setup in Malaysia.
- Wholesale, Retail, and Trade (WRT) License
Foreign-owned companies with more than 50% foreign equity engaged in wholesale, retail, or distributive trade must obtain a Wholesale, Retail, and Trade (WRT) license from the Ministry of Domestic Trade and Consumer Affairs. - Professional Assistance
Engaging a licensed filing agent or corporate service provider can simplify the registration process, ensuring compliance with regulatory requirements. - Market Research
Conducting in-depth market analysis helps assess industry trends, consumer behaviour, and competition before making an investment decision. - Licensing and Permits
Depending on the sector, additional approvals may be required from sector-specific authorities (e.g., finance, education, healthcare, or food and beverage).
Step 4: Tax Compliance in Malaysia
Register your business with the Inland Revenue Board (LHDN) to obtain a tax identification number. It’s essential to stay compliant with Malaysia’s tax regulations by filing annual tax returns, managing corporate taxes, and adhering to SST requirements.
Foreign-owned companies are required to comply with ongoing tax responsibilities, including:
- Corporate Income Tax (CIT)
All companies must file annual corporate tax returns based on their Malaysian-sourced income. Accurate reporting ensures compliance and avoids penalties.
- Estimated Tax Payments
Businesses are required to submit advance tax instalments in accordance with the LHDN schedule.
- Withholding Tax
Certain cross-border payments, such as royalties, technical fees, and management services, are subject to withholding tax.
- Sales and Service Tax (SST)
Companies exceeding the prescribed turnover threshold or operating in taxable sectors must register for SST. This ensures compliance with Malaysia’s indirect tax requirements.
- Statutory Filings and Record-Keeping
Timely submission of audited financial statements, supporting documents, and annual tax returns is critical.
Ready to Start Your Business in Malaysia?
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