Costs of Doing Business

One Ringgit Malaysia (RM) is divided into 100 sen. Currently, the Ringgit exchange rate operates on a managed-float regime against a trade-weighted basket of currencies. In this section, costs quoted in US Dollar are conversions based on US$1 = RM3.20.
To view exchange rates of the major foreign currencies, please visit the Bank Negara Malaysia’s website.

Company Registration

Companies doing business in Malaysia must register with the Companies Commission of Malaysia (SSM) under the Companies Act 1965.

The reservation of a business name costs 30 RM or 9 USD.

For registration of a company, fees range according to nominal share capital, 1000 RM (313 USD) to 70,000 RM (21,875 USD).

Low Taxes

According to the IFC Paying Taxes 2013 Report, Malaysia possesses a low overall total-tax-rate (TTR) at 24.5% while MSC Malaysia at 17% as compared to countries such as Singapore (27.6%), Indonesia (34.5%), Philippines (46.6%), India (61.8%), China (63.7%) and Brazil (69.3%).

TTR = Profit Tax + Labor Tax + Other Taxes

*International Finance Corporation (IFC) Paying Taxes 2013 Report

Income of any person including a company, accruing in or derived from Malaysia or received in Malaysia from outside Malaysia is subject to income tax. However, income received in Malaysia by any person other than a resident company carrying on business of banking, insurance or sea or air transport for a year of assessment derived from sources outside Malaysia is exempted from tax.

To modernise and streamline the tax administration system, the self-assessment system was implemented for companies, sole proprietor, partnerships, cooperatives and salaried groups and the assessment of income tax is based on a current year basis.

For current tax rates please visit http://www.mida.gov.my/env3/index.php?page=taxation.

Additionally, if the companies are under MSC Status, under Bill of Guarantee  (BoG) 5, they can get 100% tax exemption. More information, please refer to http://www.mscmalaysia.my/news/introducing-msc-malaysia-certified-solutions#bog5.

Low Labour Costs

Labour costs in Malaysia are relatively low while productivity levels remain high in comparison with industrialised countries. According to a World Bank study in 2011, Malaysia’s wage growth (2.6% p.a.) was slower than productivity growth (6.7% p.a.)

Comparative salaries present an attractive proposition for employers. Eg. An IT manager’s gross annual salary is approximately Australia USD92,873 vs Malaysia USD35,249.

*NSW Government, Industry & Investment, 2011

MSC status companies enjoy freedom of foreign knowledge worker movement under BoG2. More information, please refer to http://www.mscmalaysia.my/news/introducing-msc-malaysia-certified-solutions#bog2.

Competitive Costs

Malaysia is one of the most cost-effective and easiest places to do business. The cost for high-value work activities has always been known as the most competitive in the world.

FINANCIAL RESILIENCE

Despite three global downturns including the worst global recession in the post-war era, Malaysia’s economy has proven its financial resilience by being ranked 5th out of 58 economies ahead of China (10), Indonesia (14), Japan (42), the Philippines (18), Singapore (12), South Korea (15), Thailand (21), the UK (47) and the US (4

Malaysia is SAFE AND SECURE, and this is reflected by being ranked 1st in the financial risk factor segment (characterised by new financial instruments, non-performing loans, etc), ahead of countries such as Brazil, China, Japan, the Philippines, South Korea, the UK, and the US.

*IMD Business School

LOW INFLATION RATE

The country’s economy has been experiencing steady growth of 5.5% p.a. with low inflation rate of 1.8% (as of August 2013).

*Department of Statistics Malaysia, 2013

According to data from Central Intelligence Agency (CIA) 2011, Malaysia has among the lowest inflation rates within the APAC region at 3.2% in 2011, as compared to India (8.9%), China (5.5%), Indonesia (5.4%), Philippines (4.7%) and Thailand (3.8%) whilst Vietnam has an alarming rate of 18.7%.

*Central Intelligence Agency, 2011

COST-EFFECTIVENESS

In cost-effectiveness for outsourcing activities, Malaysia is rated 8.9 out of a possible 10, better than Brazil (4.9), China (7.5), the Philippines (8.7), Russia (6.2), Thailand (8.6), the US (2.4) and Vietnam (8.1).               

*The Sourcing Line, 2011

BUSINESS EFFICIENCY

Malaysia is 4th out of 58 economies beating out Australia (5), Germany (25), Japan (23), the Philippines (32), Thailand (20), the UK (26), and the US (13).

*IMD Business School, 2011

LIVING COST

Kuala Lumpur, Malaysia’s capital, is ranked 138th out of 141 cities, making it one of the LEAST EXPENSIVE in the world.

*The Guardian, 2011

 

Published by the Economist in 2012, the cost of living in Malaysia is relatively low compared to nations like Singapore and Brazil.

*The Economist’s Big Mac Index, 2012

MOST COMPETITIVE

Malaysia is the world’s 10th MOST COMPETITIVE out of 58 countries ahead of nations such as Brazil (38), China (28), Indonesia (35), India (31), Japan (27), the Philippines (39), Thailand (26).

*IMD Business School, 2011

ACCOMMODATION & HOTEL RATES

Malaysia’s 5 Star Hotel rates is among the lowest in the APAC region, comparatively cheaper than Thailand, India, Philippines, China, Indonesia and Singapore.

*IDC 2012

LOW GAS & FUEL RATES

Due to subsidies from the government, Malaysia offers among the lowest Gas & Fuel rates in the APAC region, comparatively cheaper than Singapore, Philippines, Thailand, India and China.

*IDC 2012

LOW ELECTRICITY TARIFF

Malaysia’s electricity tariff rate (0.131 USD/kWh) is cheaper than countries like Brazil (0.160), India (0.180), Singapore (0.215) and Mexico (0.280).

*IDC 2012

LOW TELECOMMUNICATION TARIFF

In terms of fixed line and mobile types, both are lower compared to countries like Singapore, Poland, Brazil and Mexico. Malaysia’s mobile broadband tariff is also lower than China and Brazil.

*IDC 2012