19+ Pros and Cons of Doing Business in Malaysia (Explained)

Considered among the most lively countries in South-East Asia, Malaysia as an optimal financing location offers many advantages. From production and assembly to business sector technological experience, doing business in Malaysia provides opportunities for everyone across the value chain.

If Malaysia is to be used as its target market or as a regional getaway, investors/entrepreneurs can find a plethora of possibilities upon landing. In addition, the World Bank has ranked Malaysia as the 6th most friendly country in the world to do business in, defeating developed nations like the UK, Australia, and South Korea. Starting a company in Malaysia is thus a concept worth considering.

Advantages of doing business in MalaysiaThe drawbacks of doing business in Malaysia
Low-Income Tax ReturnsProtection of Investors
Responsible and an educated workforceConstruction permits
Encouraging government policiesDifficulty in getting credits
Promising InfrastructureCultural barriers
The banking system is flexibleInsolvency risks

Advantages of Doing Business in Malaysia

  • Location

Malaysia is situated in the heart of ASEAN and offers more than 600 million people a getaway to the international markets. The nation also has a GDP of over 2 trillion US dollars.

Major business centers in Asia, such as Tokyo, Beijing, Hong Kong, Shanghai, and Seoul, can be reached within a few hours from Kuala Lumpur.

  • The Democratic Government Provides Political Stability

In recent times, Malaysia marked its 60th anniversary of freedom and continues to enjoy a peaceful political climate headed by liberal democracy.

Via initiatives such as the Economic Transformation Program ( ETP), the government has committed to introducing favorable policies and providing its support for developing a positive business and investment climate.

  • Easy to do Business

Opening a company in Malaysia, it has been said, needs only three procedures, 5.5 days, and costs 7.2 percent income per capita in business local taxes, ensuring a quick and concise process for an investor when they want to reach consumers.

  • Infrastructural Benefits

The high-speed rail project linking Singapore and Kuala Lumpur is one of the most-looked projects in Malaysia that will have seven stops.

  • Profits

The Malaysian government offers opportunities for management to create themselves at Greater Kuala Lumpur to promote the involvement of the private sector and foreign investors in the economy. It includes grants, funds, tax benefits, and job benefits for expatriates.

  • Productive Workforce

Projects of the government to provide free education have greatly led to the growth of the productive labor force in the country. Because of the broad command of more than half the population over the English language, companies in Malaysia may expect exposure to a powerful pool of local talent to help further their business ambitions.

If a newcomer is trying to set up a company in Malaysia, they do not need to worry about workforce productivity because everyone is qualified for the same.

  • Diverse Culture

Besides the ease of company creation in Malaysia, there is also a diverse culture in the country which makes Malaysia a compelling destination to live in. The Malaysian government has also made concerted strides to counter the crime rate in the country through government reform programs, in order to further boost livability.

It has also established an efficient and convenient transportation system under the ETP ‘s Greater KL / Klang Valley National Main Economic Area, such as through the Mass Rapid Transit (MRT) Entry Point project.

  • Business-Oriented Environment

Malaysia ranked 2nd in ASEAN in the year 2017 Doing Business Survey of the World Bank and ranked 23rd out of 190 nations. Malaysia’s corporate-friendly policies and government-initiated attractive fiscal plans have made Malaysia one of the easiest places to start an international business.

Disadvantages of Doing Business in Malaysia

  • Opening a Business in Malaysia

There are 9 processes involved in establishing a Malaysian company which should take about two weeks to complete. An application on the specified form (13A) should be submitted to the Companies Commission of Malaysia ( CCM) to ensure the availability of the name of the company name.

  • The Corporate Tax Rate is High in Malaysia

In Malaysia, corporate income tax rates are a little high. It is around 24 percent, and it is one of Asia’s highest tax rates, sadly.

  • Securing Business Deals is a Problematic Task

You can fall in a loop, between opening a bank account and obtaining a business visa. And when you’re a foreigner in this country you can’t actually open a bank account before you get the required business visa approval. The embassy, on the other hand, also asks for proof of a bank deposit on the name of your company to accept your business visa.

  • Corruptions are at a Hike There

When you start a business in Malaysia you might face some unexpected downside. As corruption and bureaucracy may come in the scenario, when running the business it may give you some temporary hassles.

However, to prevent such unwelcoming incidents, a few pre-measured should be undertaken.

  • Cultural Clashes

While working in this country, some will face racial or cultural confrontations. Though such unpleasant complaints are comparatively few, there are some, however. Malaysia seems to be conservative and often orthodox in its religious stance and its social and cultural practices. Practices differ greatly between provinces.

  • Property Registration

Registering property requires that an attorney perform the required searches and sign a sales-purchase agreement in their presence.

The Transfer Memorandum (14A) must then be submitted to the Stamp Office for adjudication and assessed by JPPH (Jabatan Penilaian Dan Perkhidmatan Harta), prior to payment of the stamp duty and registration of the transfer at the Land Office / Registry.

  • The High Trading Cost Across Borders

The cost of cross-border trade in Malaysia is extremely low, underscoring its role as a manufacturing powerhouse in central Asia. It takes more than 38 hours to export and 43 hours to import, however, with a huge amount of documentation to plan.

  • Tax Payment

Per year, there are 8 tax payments that require an average of 188 hours of company time to process. Price, immovable property, and vehicle taxes should be viewed in addition to corporate income rates and pension benefits.

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