How to start a business in Malaysia is the question in town. Malaysia is a land of opportunities for a sensible entrepreneur. The entire Asian business community considers the Malaysian business circle a trade magnet where good ideas thrive quickly.
Whether you are a foreigner or local, becoming an entrepreneur in Malaysia is a dream coming true.
But most individuals will also say that Malaysian business ownership has become a bit of a myth. So here is a detailed overview of starting a business in Malaysia. We have discussed every misconception that we have come across.
You will find out which ones are myths and which ones are real. You will also gain useful links for all licensing, registration, approval and business research requirements that you may have to fulfill.
So here are 15 simple steps that you will need to follow in order to start a business in Malaysia.
Step 1- Business Plan:
It should be an obvious point but still worthy of being stated. Do extensive research in the Malaysian market and understand the basic culture of the land before you decide to invest.
Step 2- Product Research:
Product research is the most significant part of the business plan. Make sure that you conduct extensive research into the product or services that you plan to launch. Do not just take up a sample of 500 random respondents to a survey.
If you start your business without proper and concrete market research, you may lose your money in many ways that could have been avoided.
Step 3- Opening a bank account:
As business is being launched, you will need a bank account to handle your financial transactions. You cannot use your personal account because the company requires a corporate account.
If you are a foreigner then you will need to have a strong investment. Without a strong investment, banks do not allow foreigners to open bank accounts.
If you are a local individual then you simply need to open a corporate bank account that will allow you to open a corporate account. This account will be needed to manage a large number of transactions for the business.
Step 4- How to start a business with High Remittance Fees:
The remittance fee, if you are a foreigner, is RM 5000 and much less if you are local. The RM 500,000 is simply a myth and nothing more.
We advise you to research the topic of remittance here at Advisorybiz. This is a well- respected and trusted site that will guide you on the matter very well. Remittance fees in Malaysia are reasonable and can be easily afforded by any serious investor.
Step 5- Appointing a local director
There is a myth that the company needs to hire a local Malaysian national to be the director of the company. That myth is not true; foreigners can be the company directors and file the paperwork as foreigners.
The myth that the business owner needs to be a permanent resident of Malaysia is also not accurate as a complete foreigner can also own business in the country. You simply need to register your business with the government.
Step 6- Minimum Capital Requirement:
The answer is that there is no minimum capital requirement for small businesses. You can show any capital that you have if it is compatible with your business plan and product than you will easily gain an LLC license.
If you are launching a major industry or a serious business like fisheries, manufacturing or factory based production, and then you need to show RM 500,000 to the government.
This is where the number comes in. To know more about the capital requirement of SME’s check out The STar’s discussion on SME’s in Malaysia!
Step 7- Government Regulation:
Like any other businesses, the regulations of the country have to be taken into account for your business as well.
There are unique regulations for every kind of business but any business that requires import or export as a part of your business plan will need licensing. There is an extensive licensing protocol for import and export business.
The importer export licensing is a long process and every product will have to be approved by a specific ministry.
There is no one office that issues licenses for all imports and exports. More information for import/export license can be found at Bizfluent, the known business website of Malaysia.
Step 8- Common Business Options in Malaysia:
If you want to start a business but do not know which business options are the best then here are a few good ones for you.
Restaurant ownership: Restaurant ownership is considered a great business because restaurants are the most successful enterprise in the country.
Import/Export Business: The import/export industry in Malaysia is very strong so if you can import or export a product in the country then that is a lucrative option.
These businesses are the most commonly opted for a person is allowed to launch a product or offer any services that you feel are better ventures.
Step 9- Licensing Process:
Licensing Process in Malaysia is complex and will require a great understanding of the system. There are three licenses that are available for businesses;
Company License: This will be a license issued by the industry that your company belongs with and will be issued by the relevant Ministry in Malaysia.
Business License: This is the basic license that we have explained earlier.
Activity License: The activity licenses include service/goods tax, building plan approval license, fire brigade approval license, expatriate work permit license and similar licenses that you need in order to run your business.
It should be noted that there are eight other forms of licenses that will be needed. More on licensing at Malaysia Biz Advisory’s website.
Step 10- Launching your business and Product:
Now that you have gained all of these necessary permits and have done your research; it is time to launch your business. By this time, you should have understood the market in a great and detailed manner.
Your product research that was the second step of the plan will help you launch the business in the correct direction. Remember, that focusing your business on the right target market is the difference between a successful and doomed venture.
Step 11- Company registration:
Company registration is a long process as was shown by the licensing process. We made a separate point so that we could elaborate more.
You will require all of the licenses and will need to show all of the paperwork that has been completed.
The process will only continue successfully if you have conducted all of your approvals and company registration is the last step.
Otherwise, it is common in Malaysia for the company registration process to go awry. Company registration applications are commonly rejected unless you have done all of your paperwork and your company is ready to be registered. Here are the steps for company registration in Malaysia y SF Consulting, renown consulting on legal issues.
Step 12- Doing Business in Malaysia:
Truth is, many local, as well as foreigners, have achieved the aim of successful business ownership in Malaysia. There are regulations so that only serious investors will consider doing business in the area.
But if the regulations are seriously followed, then all of the approvals and licenses can be easily gained and the return on investment will certainly make up for the investment itself.
Step 13- How to start a business in the Local Competition:
The competition is high in Johor Bahru, Kuala Lumpur, Penang and Selangor that are considered in Peninsula states of Malaysia.
Eastern Malaysia has much less attention from investors and is open to new products and services. If a person launched their business in these regions then they are going to find themselves as one of the few suppliers of their product.
This is the attitude we were discussing in product research. Make sure that you conduct a good research on where your product or services are in high demand and low supply so that you can take your product there.
Once your product is launched in a less competitive market, it will gain profit quickly and you will be successful without much competition.
Step 14- Promoting Your Business:
Conventional promotion methods are not the best idea for a new business. Commercial advertisement is expensive and most of the commercial advertising is not giving the right results.
We would suggest that you include marketing research in your product research.
Gain a good digital marketing team and launch a digital marketing campaign for your product so that it gains the right attention from the audience as that is a serious issue.
Make sure that you focus your marketing budget where it will gain the highest attention from consumers. In the modern world, the Malaysian population is not watching TV commercials and newspapers are a dying breed.
A better solution is to use the money to reach out to consumers on social media and other digital forums so that the consumers will gain the right attention.
Step 15- Making your business successful
Now comes the part that no one can guide you through. You have to work day in and day out and make sure that your investment comes through.
Our advice: make sure that you truly understand your business before you launch one. A good way to do that is to get a job in the field or get an internship as that will put you in the center of the market.
No school can teach you what a regular experience in the real market will be able to teach you.
This will save you the risk of losing your business because you did not truly understand the market. This is not case-specific advice but universal wisdom that is followed all around the world.
After investing a considerable amount of money into a business, it is only wise to understand the local market before launching the business.
So here is our guide on How to Start a Business in Malaysia! This is our fifteen step guide on how to start your business in Malaysia.
One thing that makes Malaysia very attractive for investors is the fact that the economy of Malaysia has always grown and has rarely gone into any decline.
The result is that the biggest names in the business from around the world are opening their offices in Malaysia and using Malaysia as an expansion point for Asia.
The result is that the expansion point is becoming the hub of power in Asia.
Launching your business here is worth the risk and the investment but you have to truly do your research and understand all the underlying variables before launching the business.
The business plan has to take into account every problem, whether social, local, governmental or in any other sector.
That can only be achieved if the business owner considers living in the country for a considerable amount of time and chooses to learn the local customs so that they can successfully conquer the terrain.
We at e3Hubs wish you the best of luck in your venture.