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General Guideline & Facilities
Starting Up A Business

Guidelines for approval of projects

 

Government's guidelines for approval of industrial projects in Malaysia are based on the following criteria:

  • Projects must have Capital Investment Per Employee (CIPE) of at least RM140,000.00; and
  • Total full-time workforce of the company must comprise at least 80% of Malaysians. Employment of foreign workers including outsourced workers is subjected to current policies; and
  • Total number of staff at managerial, technical and supervisory levels (MTS) is at least 25% of total employment or having a value added (VA) of at least 40%.

 

A licensed company which desires to expand its production capacity or diversify its product range by manufacturing additional products will need to apply to MIDA.

Incorporating A Company

 

To incorporate a company, an application must be made to the SSM using Form 13A together with a payment of RM30 (for each name applied) in order to determine if the proposed name of the intended company is available. The application will be approved if name is available and the proposed name will be reserved for the applicant for three months.

 

The following incorporation documents are to be submitted to the SSM within the three months from the date of the approval of the company's name:

 

  • Memorandum and Articles of Association
  • Declaration of Compliance (Form 6)
  • Statutory Declaration by a person before appointment as a director, or by a promoter before incorporation of a company (Form 48A)
  • Additional documents which would include:
  • The original Form 13A
  • A copy of the letter from SSM approving the name of the company
  • A copy of the identity card of each director and company secretary or a copy of the passport where a foreign director is appointed

 

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Protection of Foreign Investment

 

Malaysia's commitment in creating a safe investment environment has attracted more than 8,000 international companies from over 40 countries to make Malaysia their offshore base. A company whose equity participation has been approved will not be required to restructure its equity at any time as long as the company continues to comply with the original conditions of approval and retain the original features of the project.

 

Malaysia's readiness to conclude Investment Guarantee Agreements (IGAs) is a testimony of the government's desire to increase foreign investor confidence in Malaysia. IGAs will:

 

  • Protect against nationalisation and expropriation
  • Ensure prompt and adequate compensation in the event of nationalisation or expropriation
  • Provide free transfer of profits, capital and other fees
  • Ensure settlement of investment disputes under the Convention on the Settlement of Investment Disputes of which Malaysia has been a member since 1966.

 

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Passport or Travel Documents

 

All persons entering Malaysia must possess valid national passports or other internationally recognised Travel Document valid for travelling to Malaysia. These documents must be valid for at least six months from the date of entry into Malaysia. Those with passports not recognised by Malaysia must apply for a Document in lieu of Passport as well as visa issued by the Malaysian Representative Office abroad. Applications for visas can be made at the nearest Malaysian Representative Office in the respective countries. In countries where Malaysian Representative Office has not been established, applications can be made to the nearest British High Commission or Embassy.

 

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Expatriates are foreigners who are qualified to fulfil the following positions:

 

1. Key Post
These are high level managerial posts in foreign-owned private companies and firms operating in Malaysia. Key posts are posts essential for companies to safeguard their interest and investments. The expatriates are responsible in determining the company’s policies in achieving its goal and objectives.

 

2. Time Post

 

  • a) Executive Post
  • These are intermediate level of managerial and professional posts. The post requires professional qualifications, practical experience, skills and expertise related to the respective jobs. The expatriates are responsible in implementing the company’s policies and supervision of staff.
  • b) Non-Executive Post
  • These are posts for the performance of technical jobs that require specific technical or practical skills and experience.

 

Employment of Foreign Worker
In Malaysia, foreign workers can be employed in the manufacturing, construction, plantation, agricultural, services and domestic help sector.Services sector consists of eleven sub sectors including restaurants, cleaning services, cargo handlings, launderettes, caddy in golf clubs, barbers, wholesales/retails, textiles, metal/scraps/recycle activities, welfare homes and hotel/resort islands. All applications for foreign workers should be submitted to the One Stop Centre, Ministry of Home Affairs except for applications for foreign domestic helpers which should be submitted to Malaysia’s Immigration Department. For further information on employment of foreign workers, please visit the Ministry of Home Affairs website at www.moha.gov.my

 

Workforce for Industry

 

Manpower Development
Malaysia offers the investor a diligent, disciplined, educated and trainable labour force. Malaysian youths who enter the labour market would have undergone at least 11 years of school education i.e. up to secondary school level, and are therefore easy to be trained in new skills.

 

To cater to the manufacturing sector's expanding demand for technically trained workers, the Malaysian government has taken measures to increase the number of engineers, technicians and other skilled personnel graduating each year from local as well as foreign universities, colleges, and technical and industrial training institutions.

 

In addition, Malaysia enjoys a free and competitive labour market where employer-employee relationship is cordial and harmonious. Labour costs in Malaysia are relatively low while productivity levels remain high in comparison with industrialised countries.

 

Labour Costs

 

Salary and fringe benefits for employees in the manufacturing sector vary according to industry, location and employment size. The common types of leave provided by companies include annual leave, public holiday, sick leave, maternity leave and compassionate leave. Companies also provide free medical treatment and hospitalisation to their employees. In some companies, additional benefits include provision of uniforms, transport, incentives payments, shift allowance and insurance coverage. Bonus payments are given by companies based on the companies’ performance and individual performance.

 

The Minimum Wages Order 2012 came into effect on 1 January 2013 for employer which employs more than 5 employees. The Order shall also apply with effect from 1 January 2013 to an employer who carries out professional activity classified under the Malaysia Standard Classification of Occupations (MASCO) irrespective of the number of employees employed. For employers having five employees or less, the Order shall take effect from 1 July 2013.

 

Facilities For Recruitment

 

Besides registered private employment agencies, employers and job seekers can seek assistance from government employment offices located throughout the country. Employers seeking to recruit workers can obtain detailed information on job seekers registered with these employment offices whose functions include:

 

  • Undertaking publicity campaigns to aid employers' recruitment drive
  • Arranging preparatory work relating to holding interviews and aptitude tests

 

The polytechnics and the community colleges also provide facilities for prospective employers to conduct interviews for graduating students in their institutions.

 

BANKING, FINANCE AND
EXCHANGE ADMINISTRATION

 

Financial System
The Malaysian financial system comprises of a diversified range of institutions to serve the increasingly more varied and complex needs of the domestic economy. The financial system consists of the conventional financial system and the Islamic financial system which co-exists and operates in parallel.

 

The principal objective of Bank Negara Malaysia (the Bank), the Central Bank of Malaysia, is to promote monetary stability and financial stability conducive to the sustainable growth of the Malaysian economy. Its primary functions as set out in the newly enacted Central Bank of Malaysia Act 2009 are to:

 

  • Formulate and conduct monetary policy in Malaysia;
  • Issue currency in Malaysia;
  • Regulate and supervise financial institutions which are subject to the laws enforced by the Bank;
  • Provide oversight over money and foreign exchange markets;
  • Exercise oversight over payment systems;
  • Promote a sound, progressive and inclusive financial system;
  • Hold and manage the foreign reserves of Malaysia;
  • Promote an exchange rate regime consistent with the fundamentals of the economy; and
  • Act as financial adviser, banker and financial agent of the Government.

 

To achieve its mandates, the Bank is vested with powers under various laws to regulate and supervise the banking institutions and other non-bank financial intermediaries. The Bank also administers the country's foreign exchange regulations.

 

Export Credit Refinancing

 

Export Credit Refinancing (ECR) scheme provides short-term pre- and post-shipment financing to direct or indirect exporters. It is available to manufacturer or trading company with ECR credit line duly established with any participating commercial bank. A pre-shipment ECR facility facilitates purchases of materials and overhead expenses while post-shipment ECR provides financing to direct exporter upon shipment.

 

Foreign Exchange Rules
Malaysia continues to maintain a liberal foreign exchange administration (FEA) policy which are mainly prudential measures to support the overall macroeconomic objective of maintaining monetary and financial stability while safeguarding the balance of payments position. The FEA policies have been progressively liberalised to enhance competitiveness of the economy and to achieve greater efficiency in the conduct of trade and investments.

 

INTELLECTUAL
PROPERTY PROTECTION

 

Intellectual property protection in Malaysia comprises of patents, trademarks, industrial designs, copyright, geographical indications and layout designs of integrated circuits. Malaysia is a member of the World Intellectual Property Organisation (WIPO) and a signatory to the Paris Convention and Berne Convention which govern these intellectual property rights.

 

In addition, Malaysia is also a signatory to the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) signed under the auspices of the World Trade Organisation (WTO). Malaysia provides adequate protection to both local and foreign investors. Malaysia's intellectual property laws are in conformance with international standards and have been reviewed by the TRIPs Council periodically.

 

Trade marks
Trade mark protection is governed by the Trade Marks Act 1976 and the Trade Marks Regulations 1997. The Act provides protection for registered trademarks and service marks in Malaysia. Once registered, no person or enterprise other than its proprietor or authorised users may use them. Infringement action can be initiated against abusers. The period of protection is ten years, renewable for a period of every ten years thereafter. The proprietor of the trade mark or service mark has the right to deal or assign as well as to license its use.

 

In accordance with TRIPS, Malaysia prohibits the registration of well-known trade marks by unauthorised persons and provides for border measures to prohibit counterfeit trade marks from being imported into Malaysia. Malaysia accedes to the Nice and Vienna Agreements on 28 June 2007 which was enforced on 28 September 2007. Nice Agreement is concerning the International Classification of Goods and Services for the purpose of the registration of marks whereas the Vienna Agreement establishes a classification for marks, which consist of or contain figurative elements. Both agreements are significant to facilitate trade mark registration.

 

As with patents, while local applicants may file applications on their own, foreign applicants will have to do so through registered trade mark agents.

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