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8 Steps How to Start Business in Malaysia for Foreigner 2024

Last updated: Apr 18, 2024

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Have you ever wondered how to start a business in Malaysia for foreigners? If yes, don’t worry we have the answer for you.

Starting a business venture in Malaysia as a foreigner opens the door to many full-potential industries.

From a bustling retail sector to an innovative tech landscape and a thriving tourism industry, Malaysia offers a diverse range of opportunities for entrepreneurs from all over the world.

Why Start A Business in Malaysia?

According to data from the Malaysian government, micro, small, and medium enterprises (MSMEs) in Malaysia experienced a notable shift in Gross Domestic Product (GDP) growth from -7.3% in 2020 to a positive growth of 1% in 2021.

This significant turnaround underscores the promising business landscape for small enterprises in Malaysia.

With this positive growth trajectory, it becomes evident that venturing into small business opportunities in Malaysia holds considerable potential for success and growth.

Moreover, this country has been steadily attracting around 5,000 foreign companies from over 40 nations to establish their business presence in the country.

The potential for business growth not only opens opportunities for local businesses in Malaysia but also entices foreign entrepreneurs to build businesses in Malaysia.

Discover how to start a business in Malaysia for foreigners below so that you can gain more insight into business opportunities in this country.

8 Steps on How to Start A Business in Malaysia for Foreigners

Figure 1: Illustration of a foreigner starting a business in Malaysia.

Are you a foreign entrepreneur aiming for business opportunities in Malaysia? Launching a business as a foreigner in a new country can be exciting and challenging at the same time.

In this article, we will guide you through 8 essential steps to start your business journey in Malaysia.

From understanding how to conduct market research, registering a business, and forming a company team, we will cover it all.

1. Conduct Market Research

The first step when opening a business in Malaysia as a foreigner is to conduct thorough market research.

This step involves analysing the local market landscape, understanding consumer preferences, identifying potential competitors, and assessing the demand for your product or service.

By gaining insight into the dynamics of the Malaysian market, you can tailor your business strategy to meet the needs of your target audience and position your business for success in this diverse and dynamic business environment.

2. Conduct a Competitor Analysis

After conducting market research, the next step to opening a local business in Malaysia as a foreigner is to conduct a detailed competitor analysis.

In this step, you need to identify and evaluate existing businesses operating in your industry or niche.

By studying their strengths, weaknesses, strategies and market position, you can gain valuable insights to inform your business approach.

Analysing competitor offerings, pricing strategies, marketing tactics, and customer bases can help you identify gaps in the market and opportunities to differentiate your business.

Moreover, understanding how consumers perceive competitors can guide you in developing a unique value proposition to attract customers and carve out your place in the Malaysian market landscape.

3. Develop a Business Plan

When you establish a business in Malaysia as a foreigner, developing a comprehensive business plan is crucial to the future development of your business.

This plan serves as a roadmap that outlines your business's goals, strategies, and operational details. It should include sections on market analysis, target audience, competitive analysis, marketing and sales strategies, financial projections, and operational plans.

Creating a well-defined business plan not only helps you clarify your business idea but also allows you to present your vision and goals to potential investors, partners, and stakeholders.

Furthermore, a business plan also serves as a guide to steer your business in the right direction and adapt to the changing landscape of the vibrant Malaysian market.

4. Choose Your Business Types

When you build a business in Malaysia, you need to choose a business type first. Many business types exist for foreign business in Malaysia and each is accompanied by different compliance criteria and taxation frameworks.

Foreign entrepreneurs are generally deciding between forming a locally incorporated company or a foreign-owned company.

Furthermore, foreign investors with permanent residency in Malaysia can select either sole proprietorship or partnership.

They also have the flexibility to register as a private limited company, Labuan company, or representative office.

5. Register Your Business Name to SMM

Picking a suitable name for your business is crucial before its launch. It is necessary to choose a name that is distinctive, recognizable, and different from existing registered business names.

In addition, the chosen business name must comply with the guidelines set by the Companies Commission of Malaysia (SSM). After you check that your business name is available, you should register it at the SSM and pay a fee of RM30.00 per name.

6. Register Your Business to SMM

When you are opening a business in Malaysia, regardless of your nationality, it requires you to submit several important incorporation documents to the Companies Commission of Malaysia (SSM).

These documents may include:

The Memorandum and Articles of Association/Constitution
Legal Declaration by Directors or Promoters Before Appointment
Statement of Compliance
The identity cards of each director and company secretary (one copy each)
The business name approval letter from the SSM (one copy)

Moreover, registration fees and processing timelines vary depending on the business structure and the registration method that you prefer, whether online or in-person.

7. Obtain an Industrial License and Permit of Your Business

Ensuring compliance with pertinent regulations and obtaining requisite permits is crucial for the lawful initiation of your business endeavour.

Depending on its nature, your business may necessitate special licenses or permits from different government bodies like the Ministry of Trade and Industry or local councils.

Therefore, it's vital to be aware of these requirements and fulfil them to ensure a seamless and legally sound start to your business.

8. Register Business Tax

Registering for business tax is essential to comply with legal requirements and fulfil obligations to the government, ensuring smooth operations and avoiding penalties.

You are required to register your business with the Inland Revenue Board (LHDN) and obtain a tax identification number.

Additionally, adherence to Malaysia's tax laws and regulations is necessary, which includes filing annual tax returns and fulfilling obligations such as corporate tax and goods and services tax (GST) payments.

9. Establish Company Team Formation

Building a company team formation is a crucial step when starting a business in Malaysia for foreigners.

Building the right team with diverse skills and expertise ensures that your business has the necessary support to navigate local regulations, cultural nuances, and market dynamics.

Whether recruiting local talent or bringing in experts from abroad, forming a competent team is crucial to laying a strong foundation and driving the success of your venture in Malaysia.

Those are the 8 steps on how to start a business in Malaysia for foreigners.

When you formulate a business plan, you also have to strategise your marketing so that you can attract more audiences, especially in the digital realm.

If you are starting a new business, you may need to utilise the use of SEO to promote your business so that it can shine on search engines.

Search Engine Optimization (SEO) can enhance website visibility through organic traffic by using relevant keywords in the creation of SEO-friendly content that adapts to the target audience.

Let's apply SEO to your business website and see how SEO Services by cmlabs can increase the online presence of your business in SERPs!

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