Guide to Setup a Construction Company in Malaysia
The construction sector in Malaysia is playing a crucial role in the economy in terms of generating revenue, and in fact, it’s a booming industry due to the numerous mega infrastructure projects in the country. The construction sector consists of the residential construction, non-residential construction, civil engineering and so on.
How to Setup a Construction Company in Malaysia
The booming construction industry in Malaysia has contributed to the trend of setting up the construction companies in the country. Starting a construction company in Malaysia involves procedures that are similar to that of setting up a Malaysian company. Still, there are a few specific tasks that have to be completed when registering a construction company.
Here are the steps in setting up a construction company:
1. Company registration
In Malaysia, the process of company registration is rather straightforward and simple. Most of the investors prefer to register a limited company (Sdn Bhd), while foreign investors can opt to setup foreign-owned company in Malaysia or incorporate a local company (they must appoint one local director). All companies [operating on the local market] will need to register with the Companies Commission Malaysia (“SSM” in Malay) regardless of the legal entity chosen for incorporation.
Requirements for construction companies in Malaysia
- CIDB License
Apart from the crucial step of company registration, getting the right business license for the operation of the business is another important step. One compulsory requirement for all types of companies operating in this construction sector is that all investors will need to obtain a license issued by the Construction Industry Development Board (CIDB).
The CIDB license is renewable and available for a period of minimum one year (and up to three). Applicants will need to pay certain tax when applying for the construction license according to the grades of CIDB schemes that considers the established capacity (square meters and volume). Please note that all applicants need to inform the CIDB in Malaysia about the real sum of the construction project, which must not exceed RM 500,000,000 for foreign contractors established in the country (For project worth more than RM 500,000,000 , failure to inform the authorities will be imposed penalties of about RM 5,000,000 and the license can be withdrawn).
It is a mandatory requirement for companies in the following fields to obtain a license from the CIDB before incorporating in Malaysia and before undertaking any construction and related activities in the country:
- civil engineering construction;
- building construction;
- mechanical construction;
- electrical construction.
- Other construction licenses
Other than the CIDB license in Malaysia, few more licenses are mandatory for a construction company in the country:
- Bumiputera Status Certificate to participate in government projects;
- Sijil Perolehan Kerja Kerajaan for allocated construction projects;
If you are starting a construction company in Malaysia soon, it is advisable that you understand the registration process and licenses needed before your construction business kick off. Feel free to contact us at any time to get professional assistance!