SETTING UP A BUSINESS IN MALAYSIA
Malaysia is home to a dynamic business environment and well-developed infrastructure. The Country, not only has an atmosphere that is conducive for business but also offers quality living at affordable cost, so it is loved by families from all ethnic backgrounds.
Malaysia, therefore, attracts many entrepreneurs to set up their businesses here. According to ‘World Bank Doing Business 2020 Report’, Malaysia was ranked 12th amongst 190 global economies covered by the report. It does not imply that there is a lack of regulations for setting up a business here, but it just means that the rules are well developed and clear.
Setting up and managing a business, are entirely two different domains. I will, therefore, divide this Article into two sections – (1) Setting up a Business & (2) Managing a Business.
- Setting up a Business in Malaysia:
- Registering the Company with SSM (via a registered company secretary office)
- Opening a Bank Account (Registering a company does not ensure opening of a bank account as banks have their own due diligence process)
- Acquiring premises for operations that meet the business and legal requirements
- Completing other Requirements:
- Obtain Business License from relevant authorities
- Some businesses may have specific requirements related to paid-up capital, local shareholding/directors, business premises, etc.
- Employment Pass:
- If the company would like to hire foreign employees, then it must fulfil the requirements of relevant immigration department – Expatriate Services Division (ESD), which is available on their website. Other than meeting the requirements set by ESD, the company will also have to justify the need to hire foreign employees. Therefore, getting the approval is only possible if there is shortage of local talent for the skill set required by the company.
Above are some of the basic steps for setting up a business in Malaysia. Additional processes may be involved for certain types of businesses. Most of the information is available online, so it is highly recommended to do your homework before starting a business. There are multiple Facebook groups in Malaysia of Entrepreneurs and Business people, which one can join to remain updated with the local business environment and can seek any clarification or information.
- Managing a Business:
Managing a business of course is much more challenging than setting it up.
When it comes to starting a small business, a lot of people will get impulsive ideas e.g. if someone is a good cook, then the person may think that starting a restaurant is a great idea. But cooking for fun or for family is different than doing it on commercial basis. Running any type of business will require a certain set of skills for which you need to get the right resources and include the relevant costs.
How to manage a business is a huge subject which is impossible to cover in an Article. Multiple books have been and can be written on this vast subject. I will, however, try to cover some of the basic things that one should do if one plans to set up a new business.
- Feasibility Study: Before you decide on the type of business you wish to venture in, conduct a feasibility study to see if it is viable. Make sure that you do a proper market research to help you in planning for your business.
- Business Plan: Your business plan should outline what you want to do, how it will be done and the resources that you will require. In short, it will cover how the business will achieve its goals.
- Financial Projections: This is extremely important as many businesses fail because they do not make realistic financial projections. Therefore, one should do proper budgeting. The forecast should include best and worst case scenarios. This will help you in managing your business finances.
- Technology: Another important aspect which is now key to any business success is the use of technology to manage operations and do e-commerce. While there is no harm in having a physical location where you can showcase your products and target walk in customers, but surely a portion of the revenue should come from online sales. The focus should be future expansion, based on e-commerce instead of physical outlets to control the fixed expenses.
- Contingency Plan: There are always chances of businesses facing uncertain times due to circumstances that are beyond one’s control. The most glaring example of recent times is the COVID-19 pandemic, which has resulted in majority of businesses being badly hit and some even going bankrupt or on the brink of it. This may be an extreme example and having a contingency plan for such huge event by setting aside funds will result in under-utilization of resources at one’s disposal. Having said that it will always be prudent to have a contingency plan in place in case the business performance is not according to the original plan due to any internal or external reasons. Contingency planning will help to keep one’s head above the water when there is reduced revenue for a certain period of time.
By and large, setting up a business in Malaysia is not very difficult. The most important part is going through the planning processes diligently. These things may seem complicated for small businesses but are surely doable. If one does not have the expertise for this, seeking help from friends or doing research online should be should be given due consideration. Going through the above steps would help you to set up your business and run it successfully.