Entrepreneurship begins with the establishment of a business entity. If you decide to start a business, you must decide whether you would like to incorporate the company as a corporation, a limited liability company, or SDN BHD.
When assessing these options, it is imperative to take into account various factors that influence the outcome, as well as the pros and cons of each option. There may have been some discussion of company incorporation in Malaysia, but what are the advantages?
Is there a reason you would want to incorporate your business rather than just start it as a sole proprietorship?
There is a common misconception that company incorporation is a complex procedure, but this is not true. In addition, incorporation also plays an instrumental role in your company’s success. In the long run, this is an imperative step for any company and offers numerous benefits.
Foreign investors seeking to establish a business base in Asia have a number of excellent options. It is widely believed that Singapore is the region’s largest international economic center, but Malaysia should not be overlooked.
Due to its kind and welcoming nature, Malaysia has attracted a number of foreign investments over the years. According to the World Bank’s 2018 Ease of Doing Business Report, Malaysia is ranked as one of the easiest countries in the world to do business. This explains why foreign investors are attracted to Malaysia. There are many benefits to starting a business in Malaysia, including the following:
1. Incorporation within one to three business days
The process of incorporating a company is now entirely online via SSM’s MyCOID platform. The process only takes a few days if the company name you intend to use is available and your application has been approved by the Companies Commission of Malaysia (“SSM”).
In order to complete the process, you will need some basic company information, including the names and addresses of shareholders and directors. You will also need a brief description of your intended business, a business address, and a registered address, as well as any supporting documentation.
2. Minimum ownership requirements (one shareholder, one director, and one RM)
Incorporating a company is as simple as having one (1) shareholder, one (1) director, and RM1 in share capital. Furthermore, the shareholder and director may be the same individual.
Incorporating your company on RM 1 alone is not practical, but that is all that is required. Your company can always increase its share capital at a later date. Furthermore, you may introduce new shareholders (up to a maximum of 50 for private limited companies) and appoint more directors at a later date.
3. A strategic location with adequate infrastructure
Politically and economically, Malaysia is one of the most stable nations in the world. She is also strategically located in the heart of Southeast Asia, with Kuala Lumpur as a financial hub. In addition, there are a number of free-trade zones across the country, such as Port Klang, Kulim, and Bayan Lepas. In addition to a robust transportation network, Malaysia also has a strong communication infrastructure throughout the country.
4. Credit availability and ease of property purchase
There is a wide range of financial support available to business operators from commercial banks, financial institutions, and even venture capital firms. These financial institutions are willing to provide loans and investments for your business ventures. In Malaysia, it is also relatively easy for local companies to purchase or rent property.
5. Low cost of rental, operation (utilities), and wages
Overall, operating your business in Malaysia, as compared to other countries in the region, allows you to save money in the long run since you will enjoy much lower office and premise rental rates, competitive water and electric utility prices (and easy access), as well as lower minimum wage obligations!
6. No double taxation and low corporate tax
There is a corporate tax rate of 24% (17% for SMEs with paid-up capital less than RM 2.5 million) and a maximum individual income tax rate of 30%. Foreign business owners can benefit from the double taxation incentive in their home countries because Malaysia has signed numerous double taxation treaties with other major countries around the world.
7. Incentives specific to specific industries
Local companies are eligible to apply for a variety of industry-specific tax incentives. Generally, these incentives are offered for investments in the manufacturing, agriculture, tourism (including hotels), and approved services sectors, as well as for R&D, training, and environmental protection activities. Indirect tax incentives consist of exemptions from import duties, sales taxes, and excise duties, while direct tax incentives provide partial or total relief from income tax payments.
8. Government incentives to promote business formation and investment
Malaysian policy is aimed at promoting local businesses, start-ups, SMEs, and foreign investment in the country through the implementation of various tax exemption policies, grants, funding, and investments in facilities.
9. A strong pool of local and international talent
With its highly reputable public and private educational institutions catering to a wide range of business needs, Malaysia continually produces a strong pool of local talent as well as returning overseas talent. Furthermore, it is relatively easy to obtain the services of foreign workers in the country.
Conclusion
A Sdn Bhd company offers many advantages, such as limited liability, tax benefits, transferability of shares, and the ability to operate as a separate entity. In order to maximise your benefits from this type of company, you should be aware of its true benefits.
Without a doubt, Malaysia provides a diverse range of business opportunities. Nevertheless, it is imperative that you select the type of company carefully in order to take advantage of these opportunities and benefits.
