Setting Up a Business in Malaysia

How can I choose the right way to enter the Malaysia?

Start with the Right Plan and Support in Malaysia. As with any foreign market, Malaysia’s company setup process, regulatory environment, and investment requirements are unique. Establishing a legal entity involves various costs, compliance steps, and time commitments, all of which must be carefully planned to mitigate potential risks. Once an investment structure is in place, reversing or restructuring can be costly and complex — making it essential to start with the right strategy from the outset.

To maximize the chances of success in Malaysia, businesses should ensure they have a:

• Clearly defined business scope and objectives aligned with local regulations;
• Sound business model informed by Malaysian market realities;
• Strategic selection of local partners, suppliers, or distributors to enhance operational strength;
• Careful choice of service lines, product offerings, and pricing models suited to local demand; and
• Well-considered location strategy, balancing infrastructure, workforce availability, and cost factors.

Gaining on-the-ground market insights and leveraging local professional expertise are critical in navigating Malaysia’s regulatory framework, tax environment, and industry-specific requirements. Beyond reviewing this Doing Business in Malaysia guide, investors are strongly encouraged to seek professional advice for pre-market entry assessments, entity setup planning, and compliance management. With the right support, companies can build a strong foundation for sustainable growth and long-term success in Malaysia. In this respect, the contributors of this Guide are available to provide this expertise via the Chat or Contact Us link buttons. 

What are the steps to open a bank account in Malaysia?

Establishing a corporate bank account is a legal and operational necessity for all businesses registered in Malaysia. Under the Companies Act 2016 and regulations by Bank Negara Malaysia (BNM), companies must maintain proper accounting records and financial transparency, which requires dedicated business accounts. These accounts are essential for meeting corporate tax obligations, securing licenses, and demonstrating financial legitimacy.

Malaysia’s well-regulated banking system—comprising both conventional and Islamic banks—offers a wide range of services tailored to startups, SMEs, and multinational corporations. Local banks such as Maybank, CIMB, and Public Bank provide SME-focused solutions with low minimum deposits, while international banks like HSBC and Standard Chartered cater to global operations. The country’s growing digital banking sector, including GXBank and Boost Bank, offers fast, low-cost, and fully online onboarding options.

Opening a corporate account typically involves providing SSM incorporation documents, director identification, proof of address, and business licenses. Foreign-owned companies face additional due diligence, including beneficial ownership verification and source-of-funds checks. Processing times range from 5–15 business days for local entities and 20–40 days for foreign companies. A properly established corporate account not only ensures regulatory compliance but also enhances business credibility, facilitates trade, and provides access to financing and tax advantages.

How well-developed is Malaysia’s IP protection environment?

Malaysia offers a highly developed and internationally aligned framework for intellectual property (IP) protection, administered by the Intellectual Property Corporation of Malaysia (MyIPO) under the Ministry of Domestic Trade and Consumer Affairs. The system covers patents, trademarks, industrial designs, copyrights, geographical indications, and layout designs of integrated circuits. As a member of WIPO and signatory to global treaties such as the Paris Convention, Berne Convention, and TRIPS Agreement, Malaysia ensures its IP standards meet international best practices, providing strong confidence to both local innovators and foreign investors.

Recent legislative reforms, including the Copyright (Amendment) Act 2022, reflect Malaysia’s responsiveness to digital challenges such as online piracy and streaming-based infringement.

Businesses benefit from a robust enforcement environment, specialized IP courts, and active cooperation among agencies like MyIPO, Customs, and the Ministry of Domestic Trade. Strategic programs such as the Patent Prosecution Highway (PPH) with major economies including Japan, the U.S., and Singapore further enhance protection by expediting patent processing and facilitating cross-border recognition.

For companies operating in Malaysia, the IP regime provides substantial commercial advantages through long protection periods, clear enforcement mechanisms, and alignment with global standards. From trademarks renewable indefinitely to industrial design protection lasting up to 25 years, Malaysia’s comprehensive IP ecosystem supports innovation-driven growth while ensuring fair competition and investment security in both traditional and digital industries.

How difficult is it to close a business in Malaysia?

Closing a business in Malaysia requires careful planning and compliance with legal procedures under the Companies Act 2016, Registration of Businesses Act 1956, and Limited Liability Partnership Act 2012. The available options differ depending on the business structure.

Regardless of structure, businesses must secure tax clearance from the Inland Revenue Board (LHDN), cancel licenses and permits, and settle all statutory contributions before dissolution. The strike-off process generally takes six to nine months, while liquidation can extend longer depending on complexity. Proper closure ensures compliance, prevents penalties, and allows directors and shareholders to exit cleanly from future obligations under Malaysian corporate law.

Can I do business without setting up an entity?

Foreign companies can legally operate in Malaysia without establishing a local entity by leveraging compliant alternative structures. These include working through Employers of Record (EORs), independent contractors, local distributors or resellers, or establishing a Representative Office (RO). Such approaches allow businesses to test the Malaysian market, hire staff, or maintain client relationships without incurring the costs, time, and compliance burdens of full incorporation.

However, limitations apply—foreign firms cannot issue local invoices, sign contracts requiring Malaysian legal status, or access government incentives reserved for resident companies.

EOR arrangements are the most flexible and widely used option, enabling companies to hire employees locally while the EOR handles payroll, EPF, SOCSO, and tax compliance. Other options such as working with contractors or distributors offer additional flexibility but carry higher compliance risks if relationships are not properly structured. Representative Offices, though non-revenue generating, provide a formal local presence for research and liaison purposes. Regardless of the model, compliance with Malaysian employment law, tax withholding obligations, and immigration rules remains mandatory.

Operating without an entity offers speed and low setup costs—ideal for market testing or short-term projects—but may not suit companies with long-term or large-scale plans. Businesses are advised to transition to a Malaysian entity once they reach sustained revenue, expanded headcount, or a permanent market presence. Doing so enables access to local banking, government incentives, and enhanced operational control, ensuring long-term stability within Malaysia’s regulatory framework.