This complete guide provides information on setting up a company and obtaining work visas in Malaysia by foreigner. It covers everything from legal processes to minimum paid-up capital requirements, as well as how to prepare the documents and processes required for setting up a new company or applying for a work visa. Last updated in February 2023.
Formation of Company
What is the process of doing business in Malaysia as a foreigner?
To do business in Malaysia, you will need to incorporate a legal entity (a company or LLP) in Malaysia and obtain the necessary business licenses. You will also need to obtain a working visa for your foreign personnel to carry out business activities.
What is the minimum paid-up capital requirement for a foreign-owned company in Malaysia to obtain a working visa for its foreign employees?
The answer varies with the sector or industry that the company is in. For wholesale, retail and trading sector (including restaurants and food & beverage), the minimum paid-up capital is RM1,000,000. For the construction sector, the minimum paid-up capital is RM750,000. For other sectors, it is RM500,000.00. The paid-up capital has to be proven by transfer of fund in the company’s bank account or other method as approved by a qualified accountant/ auditor.
What do I need to form a company in Malaysia?
To incorporate a company in Malaysia, you will need the following documents:
(a) Identity documents of all directors (at least one local director) and shareholders, or incorporation documents if the shareholder is a foreign company.
(b) Have a company name that has been approved by the Companies Commission Malaysia and reserved for the new company.
Is it necessary to appoint a local resident as a director for a company in Malaysia?
Yes, to form a new company it is necessary to appoint at least one Malaysian citizen or a foreigner who has stayed in Malaysia for at least 182 days out of the past 365 days as local director.
What is the time frame required for the company formation process in Malaysia?
The process of company formation typically takes less than one week.
Is there a specific industry sector restriction for a foreign-owned company in Malaysia?
No, there are no specific restrictions of industry sector for foreign-owned companies in Malaysia. However, certain sectors such as government contractor, banking, insurance, telecommunications and other public services sectors may have additional requirements imposed on foreign equity.
Can a foreign company own 100% of the shares in a Malaysian company?
Yes, a foreign company can own 100% of the shares in a Malaysian company.
Is it necessary to have a physical office to incorporate a company in Malaysia?
There is no rigid and express requirement to have a physical office to incorporate a company in Malaysia. A registered office address with a mail forwarding service, mostly the company secretary’s office can be used as the official address of the company.
Working Visa or other Visa
What is the process of obtaining an employment pass for a foreign worker in Malaysia?
The process of obtaining an employment pass for a foreign worker in Malaysia typically involves the following steps: (a) The Malaysian company sponsors the foreign worker and applies for an employment pass on their behalf. (b) The company must demonstrate that they have tried to recruit a local worker but were unable to do so. (c) The foreign worker must provide personal and educational background information, and undergo a medical examination. (d) The Malaysia Immigration Department will review the application and make a decision on the employment pass.
What is the time frame required for the visa application process in Malaysia?
The process of visa application typically takes 2 to 3 months.
What are the requirements for a Malaysian company to sponsor a foreign worker for an employment pass?
The requirements for a Malaysian company to sponsor a foreign worker for an employment pass include: (a) The company must be registered and operating in Malaysia. (b) The company must demonstrate a genuine need for the foreign worker. (c) The company must meet the minimum paid-up capital requirement as specified by the sector or industry it operates in. (d) The company must have a good track record and not have any previous labor or immigration law violations.
Can a foreign worker bring their dependents to Malaysia on a working visa?
Yes, a foreign worker can bring their dependents to Malaysia on a dependant pass if they are eligible and meet the necessary requirements. The dependants will typically include the worker’s spouse and children under the age of 21.
Can a foreign worker change jobs while in Malaysia on a working visa?
A foreign worker can change jobs while in Malaysia on a working visa, but they must obtain a new employment pass from the new employer and a release letter from the previous employer to cancel their current employment pass.
What are the tax implications for a foreign worker in Malaysia on a working visa?
A foreign worker in Malaysia on a working visa is subject to the same tax laws as a Malaysian citizen. The worker must pay personal income tax on their earnings in Malaysia and comply with all applicable tax laws. The employer is responsible for withholding the appropriate amount of tax from the worker’s salary and submitting it to the tax authorities.
Is it possible to apply for permanent residency in Malaysia after working on a working visa?
Yes, it is possible to apply for permanent residency in Malaysia after working on a working visa. The specific requirements and eligibility criteria vary and it is best to consult an immigration lawyer or professional for further guidance.
What are other options for obtaining visa in Malaysia?
You may obtain visa for long stay in Malaysia by: –
(a) MM2H Program
The Malaysia My Second Home (MM2H) Program is aimed at attracting foreigners for long-term stays in Malaysia. Read more here.
(b) Setting Representative Office in Malaysia
To set up a representative office to carry out market survey, research or coordination in Malaysia. This allows a buffer period before actual commitment to commence business in Malaysia. Read more here.
(c) Invitation by a Malaysian company to work as director or senior management personnel, whereby the company will secure a work permit for you.