Beginner’s Guide on Starting a Construction Business in Malaysia
The construction sector in Malaysia plays a crucial role in the economy. In fact, it’s a booming industry thanks to the numerous mega infrastructure projects in the country. The construction sector consists of residential construction, non-residential construction, civil engineering and more. Many investors have come from far and wide and found tremendous success in the construction field. If you’re thinking about starting a construction business right here in Malaysia, you’ve come to the right place.
Besides hiring a professional and trusted company incorporation specialist like 3E Accounting, a construction company also needs qualified personnel. To work in this sector, you and your employees must be registered appropriately and hold valid certificates. You can register with the Construction Industry Development Board (CIDB). They will be the ones who will issue the certificates based on the personnel’s skill level.
Working without a valid permit will put you, your employees, and your company at risk of getting fined. Ask our Malaysia company registration experts more about Act 520 that outlines the legal requirements for working in the construction industry.
What is a Construction Business?
A construction company specialises in building and infrastructure work. They construct buildings based on the blueprints and agreed-upon terms between them and the clients. Construction companies handle property building, development, housing facilities, roads, pavements, motorways and any type of project that falls under the construction work umbrella.
As a business owner looking at starting a construction business, you can offer a range of services or choose to specialise in a few services. It is up to you and your passion. For example, an entrepreneur passionate about landscaping might offer services dealing with pavements, motorways, roadworks, and so on. If you want to construct buildings, on the other hand, you can specialise in residential buildings, commercial buildings, industrial buildings, and more.
We can’t mistake the construction business for a manufacturing business. Construction focuses on infrastructure and building. Manufacturing, on the other hand, focuses on the mass production of products. Depending on what you want to niche in, you have the following options to choose from:
- General construction
- Small renovation and construction
- Large-scale renovation company
- Real estate development
- Architecture and design firm
- Engineering company
- Subcontracting company
- Material supplies company
- Equipment lessor
- Remediation and restoration company
It is worth repeating that you should only specialise in an area that you are passionate about. Running a construction company can be hard work and you need to love what you do so that you can rise to the challenges that come.
Malaysia’s Business Registration Process
Whether you’re a local or an international investor, you need to register your business legally in Malaysia. You can’t run your business until completing the registration and obtaining the necessary licenses and permits.
You must have your company registered with the Companies Commission of Malaysia or the SSM (Suruhanjaya Syarikat Malaysia). It is the regulating authority for all businesses in Malaysia. 3E Accounting can help you gather your documents and submit an application to the SSM.
As a foreign investor who is starting a construction company in Malaysia, you will need to work with the locals. You will need one local director and one local shareholder on your team for the business registration process. Depending on your business structure, you may also require a Company Secretary for your business. Ask our 3E Accounting team how we can help with this.
The Licenses and Permits You Need
One example of a license that you will need when starting a construction business in Malaysia is the CIDB License. The CIDB issues this license. The CIDB license is renewable and available for a period of a minimum of one year and up to three years maximum.
When applying for this license, you will need to pay a certain tax based on the grades of CIDB schemes that consider the established capacity (square meters and volume). All applicants need to inform the CIDB in Malaysia about the real sum of the construction project. This must not exceed RM 500,000,000 for foreign contractors established in the country. For projects 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.
The following activities in Malaysia will require a CIDB License:
- Civil engineering construction
- Building construction
- Mechanical construction
- Electrical construction
Other than the CIDB license in Malaysia, few more licenses are mandatory for a construction company operating in Malaysia. One is the Bumiputera Status Certificate to participate in government projects. The second is the Sijil Perolehan Kerja Kerajaan for allocated construction projects. Ask 3E Accounting, your corporate service provider, how we can help.
Ready to Launch Your Construction Company?
Malaysia is home to companies big and small, both local and foreign. For a decade, 3E Accounting has been one of the many forces that have helped to launch these businesses into the bright future they have now. We’re passionate about helping budding entrepreneurs launch their business and this is why we’re here to help you succeed. For more information about our company incorporation services, contact us today. Let’s work together to build your successful company.