Malaysian is an Asian country situated in the south of the Asia area. Speaking about the Malaysian population, the very young habitant of 27 million is made up of Malays up to 65%, Chinese up to 26%, Indians that is 8%, and other indigenous peoples and Eurasians. Malaysian is the country’s official national language, but English is widely used in the business world. The currency used in the country of Malaysia is the ringgit or MYR, one euro is equivalent to 4.67 ringgits.
Foreign and domestic investment has contributed to this transformation, making Malaysia one of the world’s largest exporters of electronic products.
Capital is opened to foreigners
The limits of foreign participation vary according to the type of activity. Since 2003, the general rule is a minimum participation of local partners, the Bumiputra, of at least 30%. This distribution does not act as law, but then again is the basic rule followed by the administrations which issue production licenses and work permits for expatriates.
The competent authorities may decide on a case-by-case basis the foreign participation in the capital. In the wholesale and retail sector, or for service activities, for example, this 30% rule applies.
On the other hand, foreign investors who take a manufacturing license possess the aptitude to control the entire of their company.
What are investment incentives?
Malaysia welcomes all investors, regardless of their origin. Tax incentives are offered under the Promotion of Investment Act 1986 and the Income Tax Act 1967. The main incentives are:
– Pioneer status, that is the equivalent of innovative companies;
– Tax allowance for investment and reinvestment;
– Double deduction of expenses that is granted for certain expenses if the conditions imposed are satisfied;
– Incentives for approved agricultural projects, research, and development;
– Industrial construction allowance;
– Incentive measures for tour operators who promote Malaysia;
– Incentive measures for approved foreign investments and foreign construction projects;
– Incentive measures for operational headquarters.
Apart from that, the requests are approved on a case-by-case basis at the discretion of the authorities concerned, who administer the various conditions.
It is important to note that the federal territory of Labuan, located in eastern Malaysia, was created in the form of an international offshore financial center, abbreviated CFIO, in 1990 in order to increase the attractiveness of Malaysia as a financial center.
France benefits to invest and create business in Malaysia
France benefits from a double taxation agreement. Malaysia has also entered into investment guarantee agreements with most of the major industrialized countries.
These generally guarantee that Malaysia will not expropriate or nationalize property if starved of prompt and adequate compensation, in exception of the public purposes.
An attractive corporate tax rate
In 2008, a unitary tax system was implemented. Under this system, corporate income tax is the final tax and dividends distributed to shareholders are tax exempt.
The corporate income tax rate, whether resident or not, is 25%. A resident enterprise with paid-up capital of up to 2.5 million ringgits that is equivalent to 535,600 euros at the start of the reference period will be taxed at the following rates. A foreign branch is also taxed at the rate of 25% on its income, the source of which is in Malaysia.
Employment and social relations
A significant resource of Malaysia is its workforce. Although labor costs are low compared to industrialized countries, productivity and quality standards are high.
Apart from that, there is no minimum wage law and base salary rates vary by city and industry. The employment contract takes effect as soon as the employee starts working.
Any contract with a minimum duration of one month must be written. Hours of work may not exceed 48 hours per week. Paid leave varies from eight to sixteen days per year depending on the number of years of service.
Employment of expatriate staff
A great reason to opt for business creation in Malaysian is that foreign companies are allowed to bring in their own staff in fields that lack qualified Malaysians. Besides, the foreign business possesses also the ability to permanently assign certain key positions to foreigners.
As a final point, know that the CCI France Malaysia maintains close relations with the MIDA (Agency for the promotion of dependent investments of the Ministry of International Trade), InvestKL, SSM or Malaysian Trade Register and other entities. Make sure to read more on how to register SSM Malaysia if you’re planning to get your business registered.