Business Licences in Malaysia
Before a business can legally start operating, businesses are required to comply with some form of licensing, which could be a general licence, an industry/sector specific licence or activity specific licence. Business licences are required by the legislation and administered by various government agencies, statutory bodies and local authorities. Business licences includes registrations, approvals, licences and permits. The compliance requirements vary by industry, business activity and location.
Business licences can be categorized into 3 different logical groups, namely:
- General licences
- Sector Industry Specific licences
- Activity Specific licences
General licences are licences that are required and shall be applicable once the investor has decided to start a business in Malaysia.
List of General licences, which may be applicable to any business, include:
- Company Registration
- Company and Employees Income Tax Registration
- Employees Provident Fund
- Social Security Organisation
- Human Resources Development Fund
- Business Premise Licenses and Signboard Licenses
- Businesses in Malaysia are required to apply for business premise licenses and signboard licenses from the respective State Authorities. The requirements for the application may vary according to each local authority.
Sector / Industry-Specific Licences
Sector/Industry Specific licences are licences unique to a particular industry or sector that are specified by the Government. This involves major policies that controlled the development of certain industries or sectors in line with the development policy of the country.
Examples of Sector/Industry Specific licences are:
- Licences related to the Manufacturing Sector
A company with a paid up capital/shareholder’s fund not exceeding RM2.5 million or manpower less than 75 people may apply for a confirmation letter that the company is exempted from manufacturing licence approval. The applicant should submit a copy of form ICA 10 together with a copy of the following documents:-
– Memorandum and Articles of Association
– Certificate of Incorporation (Form 9)
– Registered Address (Form 44)
For further information, please visit MIDA’s website at http://www.mida.gov.my
- Licences related to the Wholesale, Retail Trade
The most common license required for a foreign owned company is Wholesale, Retail Trade (WRT) License.
This WRT license is applicable to any Foreign Participation (i.e. foreign equity at 51% and above) in the Malaysia Distributive Trade Services include wholesalers, retailers, franchise practitioners, direct sellers, suppliers, who channel their goods in the domestic market, and commission agents or other representatives including those of international trading companies.
The WRT license is required by all the said business sectors before they can apply for a professional work permit. For WRT, the minimum paid up capital requirement is RM 1 million, with company full set-up i.e. with business premises supported with valid tenancy agreement, phone line and etc. Please refer to official portal of Ministry of Domestic Trade, Co-operatives and Consumerism (MDTCC) for further details on WRT License
- Licences related to the Telecommunication Sector
- Licences related to the Broadcasting Sector
- Licences related to the Oil Exploration Sector
When Setup Company in Malaysia, companies which wish to explore and develop upstream oil and gas reserves in Malaysia are required to sign a production sharing agreement with Malaysian state Oil Company Petronas.
For further information, please visit Petronas website at www.petronas.com.my
- Licences related to the Construction
All Companies involved in Building and Construction must obtain a licence from the Construction Industry Development Board (CIDB) before incorporating in Malaysia and before undertaking any construction and related activities in the country.
For further information, please visit CIDB’s website at www.cidb.gov.my
- Licences related to the Banking Sector
Under the Banking and Financial Institutions Act, 1989, the Malaysian Central Bank licenses and regulates businesses such as banking, money broking, discount houses, provision of credit and finance, merchant banking, deposit taking and certain other financial businesses.
For further information, please visit Bank Negara’s website at www.bnm.gov.my.
Activity-Specific licences are licences that regulate particular activity and could be applicable to one or more Industries or Sectors. This category of licence requires investor to comply with sets of specific guidelines designed to protect the interest of the citizen, employment, safety of workers, environment and general public.
Examples of Activity Specific Licences are:
- Certificate of Fitness for Certified Machinery
- Approval for Expatriate Post
- Approval to install/resite/alter Air Pollution Control Equipment (bag filter and chimney)
- Building Plan Approval
- Sales Tax Licence
The above information is a general guide towards making the initial steps, decision and planning for the intended business by potential investors and business owners.
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