Business in Malaysia

DOING SUCCESSFUL BUSINESS IN MALAYSIA
DOING
SUCCESSFUL BUSINESS
IN MALAYSIA
1
CHARTERED ACCOUNTANTS
The material contained in this publication is not intended to provide comprehensive or

complete advice on any specific matter. Every care has been taken to ensure that the
information given is accurate. However, no reader should act on the basis of the
information contained in this publication without seeking appropriate professional advice.
The publisher, auditors and editors expressly disclaim all and any liability to any person in
respect of the consequences of any actions taken or omitted on the basis of the contents
of this publication.
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FOREWORD
This booklet has been prepared to give useful background information to those planning to do
business in Malaysia. It covers the main provisions of the legal, financial, taxation and
employment regulations. It does not attempt to deal exhaustively with any of the topics
covered and the reader's attention is drawn to the fact that changes in the laws may have
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occurred after the date of publication. The text reflects the laws in force as at 31 May 2008
and does not incorporate subsequent changes.
We strongly recommend that anyone intending to do business in Malaysia should seek

professional help before undertaking any major commitment. Apart from the formalities of
establishing a business in Malaysia, there can be important and perhaps complex financial
and taxation implications of initial policy decisions which should be considered in consultation
with a professional advisor.
RSM Robert Teo, Kuan & Co is a member of RSM International (RSMi), currently the seventh
largest accounting and consulting organisation in the world.
RSMi, with its International Executive office situated in London, was formed in 1964, adopting
its current name worldwide on 1st January 1993. RSMi is represented by over 660 offices in
over 64 countries around the world, with a staff force of over 25,000 professionals. The
network covers the countries set out in appendix B.
Each member firm is managed and staffed by nationals of the country concerned and can
provide clients with a comprehensive range of services relating to auditing, accounting, tax,
consulting and financial and management advice.
RSM Robert Teo, Kuan & Co. offers a full range of financial advisory services as set out at
the beginning of this booklet. Specialists are available to assist with most aspects of
establishing new ventures in Malaysia and many investors from overseas have successfully
taken advantage of these services in the past.
Any partner in the offices of RSM Robert Teo, Kuan & Co. would be glad to meet those
visiting Malaysia and to provide help and advice where required. We suggest that enquiries
be directed to:
Dato’ Robert Teo Keng Tuan

International contact partner
RSM Robert Teo, Kuan & Co.

Penthouse, Wisma RKT, Block A
2 Jalan Raja Abdullah
Off Jalan Sultan Ismail
50300 Kuala Lumpur
Malaysia
Telephone: (603) 2697 2888
Fascimile: (603) 2691 7733; 2698 6600,
Email: audit@rsmi.com.my
rktax@rsmi.com.my
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CONTENTS
INTRODUCTION TO RSM ROBERT TEO, KUAN & CO.
INTRODUCTION TO RSM INTERNATIONAL
Chapter 18 Labuan International

SECTION A General Business and Offshore Financial
Legal Requirements Centre (IOFC)
Chapter 1 Malaysia Chapter 19 Malaysia Multimedia

An Introduction Super Corridor
Chapter 2 Government policies SECTION D LABOUR

affecting business REGULATIONS,
WELFARE AND SOCIAL
Chapter 3 Exchange Controls SECURITY
Chapter 4 Banking and Finance Chapter 20 Labour conditions
Chapter 5 Types of Business Chapter 21 Labour Legislations

Entities
Chapter 22 Employment of foreign
Chapter 6 Company Formation workers
Chapter 7 Company Chapter 23 Industrial relations

Administration
SECTION E STRIKING OFF &
Chapter 8 Immigration WINDING UP OF
requirements COMPANY
Chapter 9 Accounting and Chapter 24 Guidelines for striking

Reporting Requirements off the name of a
company
SECTION B TAXATION Chapter 25 Guidelines on winding

up of a company &
Chapter 10 Principal Taxes closure of a foreign
company
Chapter 11 Administration
SECTION F MERGERS &
Chapter 12 General Taxation ACQUISITIONS
Chapter 13 Corporate Taxation Chapter 26 General guidelines on

Mergers & Acquisitions
Chapter 14 Personal Taxation
Chapter 15 Withholding Taxes Appendix I Acronyms and

abbreviations
Chapter 16 Tax Incentives &
Government Grants Appendix II Investment Guarantee
Agreements
Chapter 17 Operational
Headquarters (OHQ) Appendix III Scale of stamp duty for
authorised share capital
SECTION C LABUAN
INTERNATIONAL Appendix IV Visa requirements to
OFFSHORE FINANCIAL enter Malaysia
CENTRE
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Appendix V Double Tax Agreements
Appendix VI Tax Rates
Appendix VII Personal reliefs and

rebates
Appendix VIII Rates of levy for foreign

workers
Appendix IX Places to stay in

Malaysia
Appendix X Qualitative Listing

Criteria on Bursa
Malaysia
Appendix XI Integrated Bus and Rail

Network
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TO OUR VALUED CLIENTS AND ASSOCIATES
• Robert Teo, Kuan & Co.

• Strategic Business Advisors Sdn. Bhd.
• Profit Improvement Sdn. Bhd.
• Tax Consultants Sdn. Bhd.
• NWT Advisory Services Sdn. Bhd.
RSM International is a worldwide network of independent accounting and consulting firms. RSM
International and its member firms are separate and independent legal entities. RSM International
does not itself provide accounting or consultancy services. All such services are provided by
affiliate members practicing on their own account.
RSM is represented by affiliate independent members in 64 countries and brings together the
talents of almost 28,000 individuals in over 660 offices worldwide. The network’s total fee income
of US$3.06 billion places it amongst the top 7 international accounting organizations worldwide.
Affiliate members are driven by a common vision of providing high quality professional services,
both in their domestic markets and in serving the international professional needs of their client
base. RSM International is a member of the Forum of Firms. The objective of the Forum of Firms
is to promote consistent and high quality standards of financial and auditing practices worldwide.
In Malaysia, RSM International’s member firm is represented by RSM Robert Teo, Kuan & Co.,
founded in 1978 and now one of the leading and fastest-growing providers of audit, assurance,
accounting and tax services.
Any partner/director in the office of RSM Robert Teo, Kuan & Co. would be glad to meet those
visiting Malaysia and to provide help and advice where required.
International Contact Partner
Penthouse, Wisma RKT Dato’ Robert Teo Keng Tuan
Block A, 2 Jalan Raja Abdullah
Off Jalan Sultan Ismail Audit
50300 Kuala Lumpur Tan Yen Fen / Ng Boon Hiang
MALAYSIA
Strategic Consulting & Advisory
Girish Ramachandran
Telephone: 603 2697 2888
Facsimile: 603 2691 7733 Tax
Email : audit@rsmi.com.my Lee Voon Siong / Wong Yok Chin
rktax@rsmi.com.my
askus@rsmsba.com Corporate Services
Website : www.rsmi.com.my Eng Bee Hong
Restructuring & Insolvency

Arul Gunendran
Profit Improvement / Risk Management

Stephen Seah
Business Development
Julius Lau Tze Yi
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Introduction to Robert Teo, Kuan & Co.
Background
Robert Teo established the practice in 1978 under the name of Robert K. T. Teo & Co. in Kuala
Lumpur. On admission of Ms. Kuan Mei Ling as partner, a new firm was formed under the name of
Robert Teo, Kuan & Co. The name of the firm was changed to RSM Robert Teo, Kuan & Co. when
the firm became a full member of RSM International.
The firm is committed to providing high quality and cost effective services and our work is
based on the highest professional standards that comply with International Accounting
Standards, International Auditing Guidelines and the Malaysian Companies Act 1965.
Every client, whether it is a large multinational company or a private individual, is given

personal and close attention.
We have been providing services for many years to foreign companies which include
internationally known foreign corporations with substantial operations in Malaysia. We have
in the process developed an understanding of problems normally encountered by foreign
clients. Our system of control has been developed to ensure that all our foreign clients are
given prompt and urgent attention in view of tight reporting deadlines to head offices
abroad.
Range of Services
The range of services provided by the firm is quite broad and the main services are
summarised as follows:
Auditing
The partners of the firm are approved auditors under Section 8 of the Malaysian
Companies Act 1965, for purposes of carrying out statutory audits of limited
companies incorporated in Malaysia and Malaysian branches of foreign companies.
The firm follows a high code of standards set by established accountancy bodies,
both locally and internationally. This underlines our commitment to achieving work of
the highest standards at all times. Our exposure to a wide range of industries and
good relationship with major institutions enable us to advise our clients in the best
possible manner.
Tax consultancy and planning
This is an area of major interest to most individuals and corporations and is a subject
that often outweighs many others as the prime factor for consideration in any
business organisation. Many corporate decisions are usually based on tax
considerations and expert guidance is important due to significant financial
implications. The tax consultancy services are provided by our associate company,
RSM Tax Consultants Sdn Bhd, which services both our local and international
clients. The services range from routine tax compliance assignments to advisory and
tax planning matters usually applicable when establishing new corporations and
restructuring existing ones. We keep in constant communication with our clients,
updating them on the latest developments in tax legislations and advising them of the
implications. In this regard, we periodically issue tax circulars on new tax legislations
as well as on current events which affect our clients.
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Our tax services cover a broad spectrum of business activities and usually involve in-
depth analysis and interpretation of tax legislations so as to minimise tax exposure
within the confines of the Malaysian Income Tax Act 1967.
Our tax specialists are highly qualified and have wide experience acquired from many
years of service in the profession.
We have a significant number of large clients from Korea, Japan, Hong Kong,
Taiwan, Singapore, Australia, Europe and the United States of America. We have a
special team of qualified staff to provide the necessary services for our overseas
based clients.
Corporate services
This service involves maintaining and updating the statutory records of our corporate
clients. Such services include formation of companies, filing of statutory forms,
attending meetings and taking of minutes, advising clients regarding corporate
matters, etc. Clients, particularly those foreign clients wishing to establish businesses
in Malaysia are advised on the most appropriate form of corporate structure,
exchange control regulations, taxes and incentives, import levies and other legal
requirements.
Accounting
This service is extended to some of our clients either on a continuous or part-time

basis to convey the right method of record keeping and to provide advice in the form
of financial accounting systems which are best suited to the clients' businesses. This
involves the setting up of accounting systems and internal controls with the main
objectives of achieving efficiency, accuracy and control of the company's assets.
Business information
We have the necessary expertise to provide our clients with business information on
both local and international investments. Such information includes up-to-date
government legislations and guidelines, company searches and any other specific
business information that our clients may require from time to time.
Corporate recovery
We undertake corporate recovery work through RSM NWT Advisory Services Sdn.
Bhd. We are on the panel of a number of financial institutions, both local and foreign,
handling recovery work which includes the following:
Receiverships Credit control review Provisional liquidation

Asset disposal Debtors review Corporate solvency review
Financial monitoring Debt recovery Litigation support
Cash flow restructuring Debt restructuring Schemes of arrangement
Security and risk review Liquidation Turnaround management
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Corporate finance services
The firm also has expertise in the following areas of corporate services:
Initial public offering Share valuation Loan dossiers

Equity capital financing Share buy-back Investment appraisals
Strategic partnerships Management buy-out Project coordination
Mergers & acquisitions Independent expert advice System review
Financial markets Structured financing Viability investigations
Procurement of loans Arranging off-shore loans Cost reduction planning
Debt structuring High yield bonds Reverse takeovers
Applications to Authorities Equity linked securities Share placements
Management consultancy services
Our support to clients extends to related services as follows:
a. Design of systems
- Financial accounting systems
- Management accounting systems
- Administration systems, etc.
b. Business planning and appraisal

- Company appraisals
- Organisation and corporate planning
- Management audit
- Merger and acquisition studies, etc.
c. Finance
- Financial controls
- Project evaluation
- Financial planning
- Cost reduction planning, etc.
d. Special assignments
- Investigation of suspected fraud
- Purchase and sale of businesses
- Review of accounting systems
e. Others
- Corporate planning and advice on capital restructuring
- Share valuation of unlisted companies
- Accountant's report for inclusion in prospectus
- Feasibility studies
- Executive recruitment
Investment consultancy services
We have the expertise to support foreign clients who wish to establish business in
Malaysia and our services cover the following areas:
a. Registration of a company in Malaysia
b. Application for manufacturing licence
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c. Application for tax incentives such as:

- Pioneer Status
- Investment Tax Allowances
- Other incentives
d. Application for key posts/expatriate posts
e. Application for work permits
f. Assistance in identifying project sites

- Purchase of land/construction of factory
- Purchase of land and factory
- Rental of factory
- Advising on the implications of the Malaysian National Land Code
g. Arrangement of financing which include:

- Preparation of feasibility/viability reports
- Advising on requirements for loan procurement
h. Recruitment of staff
i. Application for Licensed Manufacturing Warehouse (LMW) status and

exemption of custom duties on imports of:
- Machinery
- Raw materials
The above summary of the services provided by us is not exhaustive and we are always
ready to work with clients and their staff in all areas of their activities where the involvement
of a public accountant is considered to be of assistance.
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Introduction to
RSM Robert Teo, Kuan & Co is a member of RSM International (RSMi), currently the seventh
largest international group of independent accounting and consultancy firms in the world in terms
of fee income.
The acronym “RSM” comes from the names of the 3 initial core firms, Robson Rhodes of the
United Kingdom, Salustro Reydel of France and McGladery & Pullen LLP of the United States of
America. RSMi, with its International Executive office situated in London, was formed in 1964,
adopting its current name worldwide on 1st January 1993. Today, full member firms of RSMi carry
the signature name of RSM as part of the firms’ name. RSMi is represented by over 660 offices in
over 64 countries around the world, with a staff force of over 25,000 professionals. The network
covers the countries set out in Appendix B.
Each member firm is managed and staffed by nationals of the country concerned and can provide
clients with a comprehensive range of services relating to auditing, accounting, tax, consulting and
financial and management advice. Each member firm is independent, managed and staffed by
nationals of the country concerned and can provide clients with a comprehensive range of services
relating to auditing, accounting, tax consulting and financial and management advice.
Co-ordination of common standards and objectives amongst the member firms is maintained by
the International Board of Directors and a number of specialised committees under the overall
authority of the International Council based in Amsterdam.
The RSMi International network covers countries in following regions:
Africa: Europe: Latin America North America:

Afghanistan Austria Argentina Canada
Algeria Belgium Bolivia Mexico
Mauritius Cyprus Brazil Puerto Rico
Morocco Denmark Chile United States of America
South Africa France Colombia
Tunisia Germany Cuba Caribbean
Greece Dominican Republic Bermuda
Asia- Pacific Italy Ecuador
Australia Luxembourg El Salvador Middle East
China, Peoples’ Republic Malta Nicaragua Egypt
Hong Kong Netherlands Peru Iran
India Norway Uruguay Israel
Indonesia Poland Venezuela Jordan
Korea Portugal Kuwait
Malaysia Romania Lebanon
New Zealand Russia Saudi Arabia
Pakistan Spain United Arab Emirates
Philippines Sweden Yemen
Singapore Switzerland
Taiwan Turkey
Thailand United Kingdom
Vietnam
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Chapter 1: Malaysia - An Introduction
1.1 Geography and climate
Malaysia is strategically located in the heart of South East Asia, one of the world’s fastest
growing trade and economic regions. It occupies two distinct regions - Peninsular West
Malaysia, and East Malaysia, separated by about 750 km of the South China Sea. The
country covers an area of 329, 750 square km. Peninsular Malaysia has an area of 131,587
square km stretching from Thailand in the north to Singapore in the south. Sabah and
Sarawak straddle the northern and western coast of Borneo, covering 74,398 and 124,449
square km respectively.
About four-fifths of Malaysia’s approximate land area of 330,000 square km is covered by

tropical rain forests while major land uses include the cultivation of rice, rubber and palm oil.
Malaysia lies in the equatorial zone where no seasons mark the passing of months. The
days are generally warm and sunny with temperatures averaging 26 degrees celcius. The
wet north-east and south-west monsoons which blow from October till March and from May
till September respectively bring much rain to Malaysia, especially along the coastal areas.
1.2 Population
Malaysia has a population of approximately 27.17 million with a diversity of races and
colourful cultures. The population is made up of Malays, Chinese, Indians, indigenous
people and others including Eurasians. Malaysia has a very young population with about
70% below 35 years of age.
Malaysia’s literacy rates are high at 94% and school leavers entering the job market have at
least 11 years of basic education. Life expectancy of the population is 72 years for males
and 76 for females.
Bahasa Malaysia or the Malay language is the national and official language of the country.
English is widely used in commerce and industry.
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Islam is the official religion but freedom of worship for other religious groups is guaranteed
by her constitution.
1.3 History
The early history of Peninsular Malaysia can be said to date from about the fourteenth
century in the era of the Malaccan Sultanate. Peninsular Malaysia eventually attained
independence from the British in 1957. The Federation of Malaysia made up of Peninsular
Malaysia, Sarawak, Sabah and Singapore was formed in 1963. Singapore left the
Federation in 1965.
1.4 Government
The Supreme Head of State is His Majesty, the Yang Di Pertuan Agong, a constitutional
monarch who is elected from among the nine State Rulers by the Conference of Rulers and
holds office for five years. All Peninsular Malaysian states have hereditary rulers except
Melaka and Pulau Pinang (Penang); those two states along with Sabah and Sarawak in
East Malaysia have governors appointed by government. Powers of state governments are
limited by federal constitution. Under terms of federation, Sabah and Sarawak retain certain
constitutional prerogatives (e.g., right to maintain their own immigration controls)
Each of the thirteen states of Malaysia has its own constitution and a state government to
handle state affairs.
Malaysia welcomes foreign investments, particularly in the manufacturing sector, and does
not discriminate against investors from any country. To encourage foreign investments,
Malaysia offers many incentives and other advantages to foreign investors and has entered
into double taxation agreements with more than 65 countries (please refer to Appendix V).
1.5 Investment guarantee agreements
To encourage foreign investments, Malaysia has signed investment guarantee agreements

with most major industrialised countries, as set out in Appendix II. These agreements
generally cover the following:
a. A guarantee that there shall be no expropriation or nationalisation except for a public

purpose and with prompt and adequate compensation;
b. A permission to remit or repatriate in any convertible currency profits or capital on

investment.
All disputes will be settled at the International Centre for the Settlement of Investment
Disputes, of which Malaysia is a member.
The government plans to develop Malaysia into an industrialised nation by the year 2020.
The private sector is expected to play a major role in such development, with manufacturing
becoming the leading economic sector.
1.6 Resources and primary products
Malaysia is a country full of natural resources and is a major producer of some of the world's
primary commodities such as:
Rubber 13% of the world output
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Palm Oil 45% of the world output

Timber 35% of world production of tropical hardwood timber
Tin 25% of the world output
Malaysia also produces substantial volumes of crude petroleum, natural gases, pepper,
cocoa, copra, coconut oil, tapioca, tobacco and pineapples.
1.7 Transport and communication
Malaysia has one of the most developed transport and communication systems in South
East Asia.
Airports
There are presently five international airports, fifteen domestic airports and eighteen other
aerodromes.
Malaysia's central position at the cross-roads of South East Asia makes her particularly
convenient as a transhipment centre. Malaysia's air cargo facilities are well-developed.
Ports
Malaysia's seven international ports are at Penang Port, Port Kelang, Johor Port, Port of
Tanjung Pelepas, Kuantan Port and Kemaman Port in Peninsular Malaysia and Bintulu Port
in Sarawak. Most of these ports offer containerised services in addition to normal and
ancillary services. Many minor ports serve industrial towns.
There is also a specialised industrial port at Kemaman, on the east coast of Peninsular
Malaysia which caters to the needs of petroleum companies.
Roads, Railway and Public Transportation
In Peninsular Malaysia, travel and transport by land is well served by an extensive network
of macadamised roads and railway system linking major towns as well as to Singapore in
the south and Thailand in the north.
The Kuala Lumpur Sentral is the central transportation hub integrating all major rail transport
networks, including the Express Rail Link to the Kuala Lumpur International Airport,
Malaysia’s newest and biggest airport and Putrajaya, the government’s administrative
centre. (refer to Appendix XI)
Telecommunication
The telecommunication system provides telephone (both digital and analogue systems),
telegraph and telex services and also communication facilities for broadcasting, civil
aviation, police, customs and fisheries. Malaysia is using the latest digital and fibre optics
technology to provide high quality telecommunication services at competitive prices.
Malaysia has three network service providers providing a full range of local, domestic and
international encompassing voice and data facilities. There are also six cellular service
providers providing services nationwide using various technologies including GSM 900 and
PCN 1800.
There are six internet service providers with whom Malaysians can log onto the Net.
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Postal services
The Malaysian Postal Service Department provides a full range of services including postal
remittance service with foreign countries.
1.8 Utilities
There is ample supply of electricity throughout Malaysia.
Water supply in Malaysia is available at any time of the day and is fully treated.
Waste disposal is under the jurisdiction of the local authorities such as city halls, town
councils and municipalities.
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Chapter 2: Government Policies Affecting Business
2.1 Ninth Malaysia Plan (9MP)
The 9MP will chart the nation’s development agenda for the first 5 years of the national
Mission. The 9MP will seek to achieve growth with distribution. The government has set
target of completely eliminating hardcore poverty and halving overall poverty to 2.8% by
2010. The government will emphasise trans-border development including developing the
Northern Corridor, encompassing areas in the states of Perlis, Kedah, northern Perak and
Pulau Pinang; the Eastern Corridor encompassing areas in the states of Terengganu,
Kelantan and Pahang; the Southern Corridor focusing on southern Johor; as well as the
states of Sabah and Sarawak.
2.2 Third Industrial Master Plan (IMP3)
The Third Industrial master Plan will serve as a guide for the country’s economic
development from Year 2006 to 2020. The IMP3 aims to improve the country’s global
competitiveness across three pillars of the economy namely the manufacturing, services
and agriculture sectors.
Measures will be instituted to encourage the manufacturing sector to progress towards

production of more value-added goods or components, greater utilisation of technology and
heavier emphasis on product or process improvement via R & D.
2.3 National Development Policy (NDP)
Following the expiry of the NEP in 1990, the Government introduced the National
Development Policy (NDP) in 1991 as the framework for economic policy between 1991 and
2000. The goal of NDP is to promote balanced development to create a more unified and
just society. The NDP, which emphasises growth with equity, is intended to enable all
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Malaysians to participate fully in the country's economic life, thus promoting political stability
and national unity.
2.4 Free Market Economy
In general, the Malaysian government permits a free-market economy. It does, however,

regulate certain industries, including financial services, pharmaceuticals and transport.
Consumer protection is provided in legislations on money-lending, product descriptions,

price control of essential goods, housing development and hire-purchase transactions.
2.5 Industrial Co-ordination Act 1975 (ICA)
The Industrial Co-ordination Act 1975 (ICA) provides for the co-ordination and orderly
development of manufacturing activities in Malaysia.
A manufacturing company with shareholder funds of RM25 million and above is required to
apply for a manufacturing licence from Malaysian Industrial Development Authority (MIDA),
a licensing agency of the Ministry of International Trade and Industry.. A licence is required
for each location of a manufacturing activity.
The following manufacturing activities are exempted from complying with the requirements
provided under ICA:
a. manufacturing activities with:
i. shareholders' funds of less than RM 2.5 million; or

ii. less than seventy-five full-time paid employees;
b. milling of oil palm fresh fruits into palm oil;
c. production and processing of natural rubber of all types, including latex, skim sheets,
crepe, scrap, technically-specified rubber, non-standard and modified rubber or any
other unvulcanised form of natural rubber prepared by any patented or
technically-specified procedure; and
d. milling of paddy into rice.
All manufacturing projects licensed under ICA must obtain the prior written approval of the
MIDA before entering into any technical agreements involving foreign partners.
Technology transfer agreements cover licence rights over specific processes, formulae or
manufacturing technology (patented or unpatented), other knowledge and expertise
necessary for the setting up of a plant and provision of various technical assisting and
supporting services.
This is done to ensure that:
a. the agreement will not impose unfair and unjustifiable restrictions or handicaps on the
local party;
b. the agreement will not be prejudicial to national interest; and
c. the payment of fees (if applicable) will commensurate with the level of technology to
be transferred.
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2.6 Regulation of businesses
The principal regulatory agencies concerned with business operations are:
a. Ministry of International Trade and Industry (MITI)
This Ministry deals with foreign investments and promotion thereof and has overall
responsibility for all aspects of foreign trade and industrial development. MITI acts
through:
i. Malaysian External Trade Development Corporation (MATRADE)
MATRADE was established since March 1, 1993 as the external trade

promotion arm of Malaysia’s MITI. MATRADE functions as a focal point
for Malaysian exporters and foreign importers to source for trade related
information.
ii. Malaysian Industrial Development Authority (MIDA)
MIDA controls the promotion and co-ordination of all industrial activities. It

advises MITI on the formulation and implementation of various industrial
development policies, strategies and incentives for industry and on other
matters concerning accelerated industrial development.
MIDA issues manufacturing licences, which are required under ICA and
gives approval on various incentives.
iii. Small and Medium Industries Development Corporation (SMIDEC)
SMIDEC was established on May 2, 1996. The establishment of SMIDEC

was in recognition of the need for a specialised agency to further promote
the development of Small and Medium Industries (SMIs) in the
manufacturing sector.
b. Securities Commission (SC)
This is a statutory body, set up under the Securities Commission Act 1993 to ensure
the orderly and efficient development of the Malaysian securities market for the
purpose of national economic development.
SC's primary role is to advise the Minister of Finance on all matters relating to the
securities and futures contract industries. It is also to safeguard the public's and
minorities' interest, as well as to maintain market integrity and efficiency.
c. Local Government Authorities
These authorities are responsible for local by-laws that affect business operations.
Such laws relate mainly to buildings and structures (business premises), health, public
safety and security, and displays (signboards, advertisement hoarding (i.e.,
billboards), etc.)
d. Factories and Machinery Department
Approval from this department is required before manufacturing operations may

begin.
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e. Ministry of Science, Technology and Innovation
This Ministry has responsibility for the administration of the Environmental Quality Act
and ensures that factories are equipped with appropriate anti-pollution controls.
Various other government agencies regulate specific industries, such as finance and
banking, insurance, real estate, petroleum, etc.
2.7 Industrial and intellectual property protection
Patents Act 1983
Patent protection in Malaysia is governed by the Patents Act 1983 and the Patents
Regulations 1986. Protection is given to inventions which may relate to a product or a
process. An invention is patentable if it is new, involves an inventive step and is industrially
applicable. The period for patent protection is fifteen years from the date of grant.
The Patents Act conforms with the requirements of the Paris Convention of which Malaysia
is a party as of 1st January, 1989. The classification of patent application used in Malaysia
is in accordance with the International Patent Classification.
Trade Marks Act 1976
Trade mark protection in Malaysia is governed by the Trade Marks Act 1976 and the Trade
Marks Regulations 1983. The Trade Marks Act, modelled along the acts of some of the
industrial countries, provides effective and adequate protection for registered trade marks in
this country. The protection of a trade mark is not limited in time, provided its registration is
periodically renewed and its use continues. The Trade Marks Act does not discriminate in
the rights conferred under the Act to locals or foreigners.
Copyright Act 1987
Copyright protection in Malaysia is governed by the Copyright Act which came into force on
1st December, 1987. The Copyright Act provides for a better and more comprehensive
protection of copyright. The duration of the copyright protection is fifty years.
2.10 Guidelines on foreign equity ownership
The Malaysian government welcomes foreign investment in the manufacturing sector. In

keeping with the objective of ensuring increasing Malaysian participation in manufacturing
activities, it is the policy of the government to encourage projects to be undertaken on a
joint-venture basis.
Foreign investors are allowed to hold 100% equity irrespective of their level of exports with
the exception of certain products / activities where Malaysian Small and Medium Industries
have the capabilities.
For projects involving non-renewable resources, such as the extraction or mining and
processing of mineral ores, majority foreign equity participation of up to 100% is permitted.
In determining the percentage, the following criteria will be taken into consideration:
a. the level of investment, technology and risks involved in the projects;

b. the availability of Malaysian expertise in the areas of exploration, mining and
processing of the minerals concerned; and
c. the degree of integration and level of value added involved in the projects.
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Assurance in respect of equity ownership
A company that has been approved with a given equity condition will not be required to
restructure its equity at any time, notwithstanding the fact that the company may have
undergone expansion or diversification, provided that the company continues to comply
with the original conditions of approval and retains the original features of the project.
Foreign Investment Committee (FIC)
This non-statutory body regulates acquisitions, mergers and takeovers. It was formed to
ensure that mergers, takeovers or acquisitions of Malaysian assets that involve foreign
interests take into consideration the objectives of NDP.
For the purposes of implementing the guidelines, FIC was established and is responsible for
major issues on foreign investments. The functions of FIC are:
i. to formulate policy guidelines on foreign investments in all sectors of the economy to

ensure the fulfilment of the objectives of the NDP;
ii. to monitor the progress and help resolve problems pertaining to foreign private
investments and to recommend suitable investment policies;
iii. to supervise and advise ministries and government agencies on all matters concerning
foreign investments;
iv. to co-ordinate and regulate the acquisition of any assets or interests, mergers and
take-overs of companies and businesses in Malaysia; and
v. to monitor, assist and evaluate the form, extent and conduct of foreign investments in
the country and to maintain comprehensive information on foreign investments.
20
Chapter 3: Banking and Finance
3.1 Central Bank
Bank Negara Malaysia is the Central Bank of Malaysia and is responsible for supervising
the banking system to promote monetary stability and to develop a sound financial
structure. The objectives of BNM in essence are to encapsulate the importance of
promoting economic growth with price stability and maintaining monetary and financial
stability. It also issues the Malaysian currency, acts as banker and financial adviser to the
government, administers foreign exchange control regulations and is the lender of last
resort to the banking system.
The Banking and Financial Institutions Act 1989 (BAFIA) extended BNM’s powers for the
supervision and regulation of financial institutions and deposit taking institutions who are
also engaged in the provision of finance and credit.
3.2 Financial institutions
Commercial banks
There are nine licensed commercial banks operating in Malaysia. There are also
thirteen foreign banks that have established representative offices in Malaysia, but
they are not permitted to conduct normal banking business. Commercial banks
are also authorised to deal in foreign exchange and are the only financial
institutions allowed to provide current account facilities.
In addition to offering normal banking services, commercial banks may accept

deposits denominated in foreign currencies from non-residents, loan foreign
currencies to residents or syndicate such loans for productive purposes or for the
purchase of Malaysian assets owned by non-residents.
21
In 2004, the legislative framework was amended to enable rationalisation of retail

banking business through the consolidation of the commercial banks and finance
companies within the same banking group. This initiative was introduced to enable
the domestic banking groups to streamline their businesses and reap benefits
from economies of scale. To date, all domestic banking groups have rationalised
their commercial banking and finance companies businesses.
Investment Banks (IBs)
January 1, 2007 signified a historic occasion for the Malaysian financial landscape
when merchant banks, stockbroking companies, universal brokers and even
discount houses transformed into investment banks. Investment banks differ from
commercial banks, which mainly take deposits and make commercial and retail
loans. Investment banks engage mainly in public and private market transactions
for corporations, governments and investors. These transactions include mergers
and acquisitions (M & A), divestitures and issuance of equity and debt securities.
Investment banks also advise and assist clients with specialised industry expertise
(such as technology and real estate). They also do securities businesses such as
trading, securitisation, financial engineering, merchant banking, funding,
investment, management and securities services.
Other banking institutions
a. Bank of Islam Malaysia Berhad

Bank Muamalat Malaysia
In Malaysia, separate Islamic legislation and banking regulations exist side-by-

side with those for the conventional banking system. The legal basis for the
establishment of Islamic banks was the Islamic Banking Act (IBA), which came
into effect on 7 April 1983. The IBA provides BNM with powers to supervise and
regulate Islamic banks. The above banks provide all the conventional banking
services, based on Islamic concepts of banking and credit.
b. Development financial institutions
The development financial institutions are government agencies specialising in the

provision of medium and long-term loans to finance capital investments of new
industries as well as entrepreneurs in the industrial sector.
The six Development Financial Institutions are:
i. Bank Pembangunan Malaysia

ii. Bank Perusahaan Kecil & Sederhana Malaysia (SME Bank)
iii. Export – Import Bank of Malaysia Berhad
iv. Bank Kerjasama Rakyat Malaysia
v. Bank Simpanan Nasional
vi. Agrobank (formerly known as Bank Pertanian Malaysia)
Other Development Financial Institutions:
i. Malaysian Industrial Development Finance Berhad (MIDF)

ii. Credit Guarantee Corporation Malaysia Berhad (CGC)
iii. Lembaga Tabung Haji
iv. Sabah Development Bank Berhad
v. Sabah Credit Corporation Berhad
22
MIDF was formed as a joint venture between the government and the private sector
to provide medium and long-term finance for the manufacturing industry. The other
development banks provide loans to meet the credit needs of the industrial and the
agriculture sectors respectively.
3.3 Securities and commodities exchanges
Bursa Malaysia (Bursa)
The Kuala Lumpur Stock Exchange was incorporated on December 14, 1976
as a company limited by guarantee and took over the operations of the Kuala
Lumpur Stock Exchange Berhad in the same year. On April 14, 2004 its name
was changed to Bursa Malaysia Berhad. Bursa Malaysia provides a market
place for the buying and selling of stocks of public companies. Securities of
over five hundred companies are quoted on the main board and about 300
companies are quoted on the second board of the Bursa. Foreign investors are
permitted to buy and sell shares of the listed companies in the stock exchange,
subject to compliance with regulatory requirements.
A committee manages the Bursa to regulate and maintain a free and open
market for the purchase and sale of securities. The manipulation of share
prices and short-selling is an offence in Malaysia.
Malaysia Derivatives Exchange (MDEX)
The MDEX, formerly known as Kuala Lumpur Options and Financial Futures
Exchange, was launched in June 2001. MDEX is an integrated derivatives
exchange offering a wide range of products to investors.
Malaysian Exchange of Securities Dealing and Automated Quotation (MESDAQ)
The MESDAQ was set up as an avenue for capital raising including allowing
the listing of technology incubators and MSC status companies seeking listing
on MESDAQ to dual list on NASDAQ.
Labuan International Financial Exchange
The Labuan International Financial Exchange (LFX) is an offshore financial

exchange board in Labuan, the international business financial centre for
Malaysia. LFX was established to complement the various business financial
services currently available in Labuan. LFX is limited by shares and is wholly
owned by Bursa Malaysia Berhad. LFX is a full fledged Exchange with listing
and trading facilities. Its initial focus will be listing of financial instruments.
3.4 Insurance companies
Under the Insurance Act 1996, BNM retains a substantial degree of regulatory control over
the management, control of licensees and critical aspects of their operations. There are 66
insurance companies operating in Malaysia, out of which 53 are incorporated domestically
while 13 are foreign companies. The insurers comprise 5 life companies, 40 general, 13
composite companies which transact in both life and general businesses, 7 general
reinsurers and 1 life reinsurance company. There are 2 insurance companies providing
services based on Islamic principles. Insurance companies are monitored by the Central
Bank.
23
3.5 Offshore Financial Centre
The Federal Territory of Labuan was established as an International Offshore Financial

Centre (Labuan IOFC) in October 1990.
(Please refer to Chapter 20 for details)
24
Chapter 4: Exchange Controls
4.1 Exchange control policy
Malaysia has a very liberal exchange control system which enables businesses to deal
freely in foreign exchange with very little or no restriction. The system applies uniformly to
all countries except Israel against which special restrictions apply. The main objectives of
the exchange control policy in Malaysia are to ensure that export proceeds are received
promptly in Malaysia, to assist Bank Negara in monitoring the settlement of payments and
receipts in international transactions as well as to encourage the use of the nation’s financial
resources for productive purposes. The foreign exchange administration rules have been
progressively liberated to facilitate a conducive and competitive business environment by
enhancing the efficiency of the regulatory delivery system.
4.2 Investments in Foreign Currency Assets
The current limits for investment in foreign currency assets by residents are principally
applicable only to resident individuals and corporations who have domestic ringgit borrowing
and convert ringgit into foreign currency to invest abroad. There are no limits for residents
with no domestic ringgit borrowing or those investing abroad with their own foreign currency
funds.
4.3 Foreign currency accounts (FCA)
A resident is free to open FCA to retain any amount of foreign currency receipts, with
licensed onshore banks, licensed offshore banks in Labuan and overseas banks. The
account can be credited with foreign currency funds sourced from foreign currency received
from non-residents, foreign currency received from residents for permitted purposes, and
from the conversion of ringgit.
Resident exporters are allowed to retain their foreign currency export proceeds, without
converting them into Ringgit Malaysia, in foreign currency accounts maintained with
25
licensed onshore banks in Malaysia. Resident individuals are free to open joint foreign
currency accounts for any purpose. Prior permission however, is required for resident
corporations to maintain joint foreign currency accounts.
There are no restrictions for a non-resident to open or maintain any number of foreign
currency accounts with licensed onshore banks in Malaysia as well as the amount to be
retained in the accounts. The ringgit account maintained by a non-resident with banks in
Malaysia is termed as an External Account.
4.4 Non resident borrowings from local sources
Non-resident controlled companies (NRCCs) operating in Malaysia do not face difficulties in

obtaining domestic credit facilities to finance their business in Malaysia.
NRCCs can also obtain any amount of forward exchange contracts, guarantee facilities and
As a general rule, NRCCs which borrow in excess of RM 10 million in Malaysia are required
to ensure that their domestic borrowings do not exceed their capital funds by more than
three times. This is to ensure that NRCCs bring in sufficient amount of their own funds to
finance projects in Malaysia as a long-term proposition, and not merely as a venture for
quick profits without any long-term commitment to the economy.
4.5 Investment in Immovable Properties
Non residents are free to purchase residential or commercial properties in Malaysia. Such
purchases need only to comply with guidelines issued by the Foreign Investment Committee
of Malaysia. Foreign interests are allowed to acquire property valued at more than
RM150,000 per unit with no limits on the number of properties acquired. Effective 21
December 2006, approval is not required for non residents to purchase residential
properties exceeding RM250,000.
Non residents are also free to borrow any amount of property loans to finance or refinance
the purchase of residential and commercial properties in Malaysia.
4.6 Foreign borrowings
Bank Negara Malaysia wishes to announce further liberalisation of the foreign exchange
administration rules on borrowing in foreign currency by residents as well as borrowing and
lending in ringgit between residents and non-residents, with immediate effect. This
liberalisation is part of the continuous efforts to enhance Malaysia's competitiveness by
facilitating greater access to financing and reducing the cost of doing business.
I. Borrowing in foreign currency by residents
(a) A resident company is free to borrow any amount in foreign currency from
(i) its non-resident non-bank parent company;

(ii) other resident companies within the same corporate group in Malaysia
(previously, approval required for any amount); and
(iii) licensed onshore banks.
(b) A resident company is free to obtain any amount of foreign currency

supplier's credit for capital goods from non-resident suppliers; and
(c) A resident company or an individual is free to refinance outstanding

approved foreign currency borrowing, including principal and accrued
interest.
26
The thresholds for foreign currency borrowing of RM100 million in aggregate by a

resident company on a corporate group basis and RM10 million for a resident
individual would no longer be applicable for the above financing activities.
II. Borrowing in ringgit by residents from non-residents
(a) A resident company is allowed to borrow in ringgit, including through the

issuance of ringgit-denominated redeemable preference shares or loan
stocks:
(i) of any amount from its non-resident non-bank parent

company to finance activities in the real sector in
Malaysia; and
(ii) up to RM1 million in aggregate from other non-resident

non-bank companies and individuals for use in Malaysia;
and
(b) A resident individual is allowed to borrow in ringgit up to RM1 million in

aggregate from non-resident non-bank companies and individuals for use
in Malaysia.
Previously, borrowing in ringgit of any amount from non-residents required prior

permission of the Controller of Foreign Exchange.
III. Lending in ringgit by residents to non-residents
(a) A resident company or individual is free to lend in ringgit of any amount to

non-resident non-bank companies and individuals to finance activities in
the real sector in Malaysia (previously, only allowed up to RM10,000).
(b) A licensed onshore bank is free to lend in ringgit of any amount to non-
resident non-bank companies and individuals to finance activities in the
real sector in Malaysia (previously, only allowed up to RM10 million in
aggregate).
27
Chapter 5: Types of Business Entities
5.1 Forms of business
In Malaysia, a business may be carried on in any one of the following forms:
a. by an individual operating as a sole proprietorship;

b. by two or more (but not more than twenty) persons in partnership; and
c. by a locally incorporated company or by a foreign company registered under the
provisions of the Companies Act 1965.
The above may be utilised by almost any form or type of business. In the case of
partnerships, partners are both jointly and severally liable for the debts and obligations of
the partnership if assets are found to be insufficient. Formal partnership deeds may be
drawn up governing the rights and obligations of each partner but this is not obligatory.
5.2 Company structure
Companies in Malaysia are governed by the Companies Act 1965, which provides for three
types of companies:
a. a company limited by shares;

b. a company limited by guarantee; and
c. an unlimited company.
5.3 Company limited by shares
A company having a share capital may be incorporated as a private company (identified

through the words ‘Sendirian Berhad’ or ‘Sdn Bhd’ appearing together with the company
28
name) or public company (identified through the words ‘Berhad’ or ‘Bhd’ appearing together
with the company name). The requirements to form a company are:
• A minimum of two subscribers to the shares of the company

• A minimum of two directors; and
• A company secretary who can be either
o An individual who is a member of a professional body prescribed by the
Minister of Domestic Trade and Consumer Affairs; or
o An individual licensed by the Companies Commission of Malaysia (CCM)
Both the directors and company secretary shall have their principal or only place of
residence in Malaysia.
5.4 Private companies
A company having a share capital may be incorporated as a private company where its
articles of association:
a. restricts the right to transfer its shares;
b. limits the number of its members to fifty, excluding employees and some former
employees;
c. prohibits any invitation to the public to subscribe for its shares and the debentures;
and
d. prohibits any invitation to the public to deposit money with the company.
5.5 Public companies
A company can be formed as a public company or alternatively, a company which is

incorporated as a private company can also be converted to a public company subject to
Section 26 of the Companies Act.
A public company cannot offer shares to the public unless a prospectus which complies with
the requirements of the Companies Act has been registered with CCM. The proposal for the
issue or offer of shares to the public should be submitted to SC for approval first before the
prospectus can be accepted for registration.
A public company can apply to Bursa Malaysia for permission to have its shares quoted on
the Exchange, subject to compliance with the requirements set by Bursa Malaysia. (refer to
Appendix X)
5.6 Branch of foreign company
Every foreign company shall, within one month after it establishes a place of business or
commences to carry on business within Malaysia, lodge with CCM for registration, notice of
the situation of its registered office in Malaysia in the prescribed form.
The appointed local agent of the foreign company is answerable for the performance of all
acts required to be done by the company under the Companies Act. Any change in agents
must be reported to CCM.
29
5.7 Representative office
A foreign corporation may also apply to MITI to set up a representative office. A

representative office has no legal status nor can it be engaged in any profit-making or
trading activities. Principally a representative office serves as a promotional and liaison
office of its parent company. Its activities shall be restricted to promotion, market research,
liaison and co-ordination of activities done on behalf of its head office.
5.8 Regional office
A Regional Office of a foreign company based in Malaysia performs permissible activities

for its headquarters/principal. Such office should be totally funded from sources outside
Malaysia and are not required to be incorporated or be registered with the Companies
Commission of Malaysia (CCM) under the Companies Act 1965.
An approved regional office serves as the coordination centre for its affiliates, subsidiaries
and agents within the Asia Pacific region. It is responsible for conducting designated
activities within the region it operates.
30
Chapter 6: Company Formation
6.1 Basic requirements and procedures
Essentially, the principal requirements for the incorporation of a company consist of:
a. Obtaining approval of a name by the Companies Commission of Malaysia.

b. Having at least two directors (promoters), whose principal or only place of residence
is in Malaysia.
c. Having two or more shareholders who are initial subscribers to the memorandum of
association.
d. Having a registered office in Malaysia.
e. Having a minimum authorised share capital of RM 100,000.
6.2 Stamp duty
The stamp duty payable on incorporation depends on the amount of the authorised share
capital to be determined. A schedule of the stamp duty is set out in Appendix III.
31
Chapter 7: Company Administration
7.1 Directors
Directors must be natural persons. A company must have at least two directors whose
principal or only place of residence is in Malaysia. The number of directors is not limited by
statute, but companies usually specify a maximum number of directors in their articles of
association. Directors' meetings may be held in or outside Malaysia. The duties and
responsibilities of directors are set out in the Companies Act and the articles of association.
An undischarged bankrupt cannot act as a director.
7.2 Company secretary
Under the Companies Act, a company must appoint a company secretary who must be a
natural person and a member of a professional body approved under the Companies Act, or
a person licensed by CCM. A person will be disqualified to act as a company secretary if he
is an undischarged bankrupt or is convicted whether within or outside Malaysia.
7.3 Registered office
A company must have a registered office in Malaysia at which all books, registers and
documents required to be kept as provided in the Companies Act are kept.
The statutory registers and minute books required to be kept are:
- Minutes of meetings of shareholders and of the directors

- Register of shareholders
- Register of directors, managers and secretaries
- Register of directors' shareholdings
- Register of charges and debentures
32
7.4 Statutory auditors
Every company must appoint an approved auditor or a firm of approved auditors to report to
the shareholders on the accounts of the company.
7.5 Annual general meeting
Every company must hold an annual general meeting in each calendar year, not more than
fifteen months after the previous annual general meeting. A newly incorporated company
must hold its first annual general meeting within eighteen months of its date of
incorporation.
7.6 Statutory filing
The company must lodge an annual return at CCM within one month after the date of every
annual general meeting. Unless the company is an exempt private company, the audited
accounts and directors' report must be lodged with the annual return.
33
Chapter 8: Immigration Requirements
8.1 Passport requirements
All persons entering Malaysia must possess valid national passports or other internationally recognised
travel documents valid for travel to Malaysia. These passports or travel documents must be valid for at
least six months beyond the date of entry into Malaysia.
Those who are in possession of passports which are not recognised by Malaysia must apply for a
document in lieu of a passport and visa which is issued by Malaysian missions abroad.
8.2 Visa requirements
Visa requirements to enter Malaysia are set out in Appendix IV.
8.3 Application for visas
Application for visas for the purpose of entry into Malaysia should be made at the nearest Malaysian
mission abroad. In countries where Malaysian missions have not been established, applications should
be made to the nearest British High Commission or Embassy.
8.4 Entry into Malaysia
a. Passes obtained at point of entry
A visit pass for the purpose of a social or tourist visit or business may be issued at the point of entry
if the visitor can satisfy the immigration authority at the point of entry that he has a valid passport
and visa (wherever applicable).
34
The types of pass issued are as follows:
i. Visit pass (social or tourist)
Visit passes (social or tourist) are issued solely for the purpose of a social or tourist visit. A
person who has been issued with a social or tourist visit pass is not permitted to take up
employment, business or professional work while in Malaysia.
ii. Visit pass (business)
Visit passes (business) are issued to foreign visitors who enter Malaysia for purposes of
conducting business negotiations or inspection of business houses. These passes cannot be
used for the purposes of employment or for supervising the installation of new machinery or
the construction of a factory.
iii. Conversion of pass
Foreign visitors, except those from the Republic of Singapore, who have entered Malaysia
on social or tourist visit passes, may apply to the Immigration Department for converting
their social or tourist passes into business visit passes. This ruling is designed to assist
foreign visitors who wish to undertake business activities.
All applications for converting social or tourist visit passes into business passes must be
submitted to the Immigration Department with a letter of recommendation from MITI.
b. Passes obtained prior to arrival in Malaysia
Other than applications for entry for the purpose of tourist, social or business visits, all applications
for passes of the types mentioned below must be made prior to arrival in the country.
All such applications must have sponsorships in Malaysia. The sponsors must agree to be
responsible for the maintenance and repatriation of the visitors from Malaysia if it should become
necessary.
The types of pass issued are as follows:
i. Visit pass (temporary employment)
A Visit Pass (Temporary Employment) (VPTE) is suitable for assignments of less than 2
years. The duration of the VPTE will be in accordance with the period of assignment under
the employment contract. A duly registered Malaysian company must sponsor the VPTE
application.
ii Employment pass
An Employment Pass is a long-term work permit for assignments of 2 years or longer. An

Employment Pass can be valid for a period of up to 5 years, in accordance with the
employment contract and subject to the discretion of the MID. A duly registered Malaysian
company must sponsor the Employment Pass application.
iii Visit pass (professional)
The Professional Visit Pass (PVP) is suitable for assignments of up to 12 months for
technical roles. Assignments to install or repair machinery, computer software or equipment
or perform other technical duties, no matter how brief, would qualify for a PVP. The assignee
must remain employed and on the payroll of his/her home company throughout the PVP
assignment to qualify for a PVP. A contract or agreement evidencing the relationship
35
between the assignee's home company and the Malaysian host company will also be
required as a registered Malaysian company must sponsor all PVP applications. A PVP
application is submitted to the MID, and the Inland Revenue Board must be notified.
iv Dependent's pass
The wife and children of Employment Pass holders may be granted Dependent Passes.
Husbands of female employees are eligible for Long Term Social Visit Passes (LTSVP). The
spouse and children under 21 years of age of Visit Pass (Temporary Employment) holders
are eligible for LTSVP.
The spouse and children of Professional Visit Pass holders are generally not eligible for
Dependent or LTSVP status. On a discretionary basis, and provided that the PVP is issued
for 12 months, the spouse of a PVP holder may be granted a LTSVP.
The LTSVP is valid for one year, renewable up to the expiry of the employee's Employment
Pass or VPTE.
v Student's pass
This is issued to any person who enters the country for the purposes of taking up studies in
any approved educational institution.
8.5 Employment of expatriate personnel
It is the government's policy to see that Malaysians are eventually trained and employed at all levels of
employment. Notwithstanding this, foreign companies are allowed to bring the required personnel in
areas where there is a shortage of trained Malaysians to do the job. In addition to this, foreign companies
are also allowed certain key posts to be permanently filled by foreigners.
Companies should make every effort to train more Malaysians so that the employment pattern at all
levels of the organisation will reflect the multi-racial composition of the country.
8.6 Guidelines on employment of expatriate personnel in the manufacturing sector
a. Any foreign company with a paid up capital of US$2 million (or equivalent) and above will
automatically be allowed five expatriate posts including key posts. Additional expatriate posts will
be given when necessary upon request.
b. Any foreign company with a paid up capital of less than US$2 million (or equivalent) will be
considered for expatriate posts on the basis of the following:
i. Key posts can be considered where the foreign paid up capital is at least equivalent to RM
500,000. This figure, however, is to be considered as a guideline only and the number of
key posts allowed depends on the merits of each case.
ii For executive posts which require professional qualifications and practical experience,
expatriates may be employed up to a maximum period of ten years subject to the condition
that Malaysians are trained to eventually take over the posts.
iii For non-executive posts which require technical skills and experience, expatriates may be
employed up to a maximum period of five years subject to the condition that Malaysians are
trained to eventually take over the posts.
c. The other conditions relating to expatriate employment are as follows:
36
i An expatriate officer who is transferred from one post to another post within the same
company is not required to obtain a new employment pass. His original employment pass
will be amended to reflect the change in post.
ii A new expatriate officer replacing another expatriate officer is required to obtain a fresh
employment pass.
iii All employment passes are valid for the period of time as approved for the post. However,
for key posts holders, the employment passes will be given on a five-year renewable basis.
iv All holders of employment passes will be issued with multiple entry visas valid for the
corresponding period that the employment pass is valid.
8.7 Applications for expatriate posts
Applications for expatriate posts (including key posts, executive and non-executive posts) can be
submitted to MIDA at the same time as the company's application for approval of its project.
37
Chapter 9: Accounting and Reporting Requirements
9.1 Accounting books and records
Financial statements of companies incorporated in Malaysia are required to be kept in a manner that will
sufficiently explain its transactions and enable them to be conveniently and properly audited. Under the
Companies Act, 1965 and the Income Tax Act, 1967, transactions of the company must be recorded
within sixty days of the date of transactions and the records must be kept in Malaysia and be retained for
at least seven years. There is also a requirement in the Companies Act to keep in Malaysia all
accounting and other related records of companies incorporated in Malaysia. In respect of operations
outside Malaysia, records relating to operations outside Malaysia may be kept by the company at a place
outside Malaysia provided that all such statements and returns with respect to the business dealt with in
the records are sent to and kept at a place in Malaysia.
9.2 Form and content of financial statements
The Companies Act sets out various disclosure requirements relating to form and content of financial
statements but does not promulgate any accounting standards. With the establishment of Malaysian
Accounting Standards Board (MASB), compliance with the approved accounting standards is mandatory
and legally enforceable.
The directors of the companies incorporated under the Companies Act are required by that Act to
prepare financial statements that give a true and fair view of the financial position of the company at the
end of the financial year and results and cash flows of the company for the financial year. In this regard,
the financial statements are to be prepared using “approved accounting standards” issued and adopted
by the MASB. Compliance with the approved accounting standards in preparing financial statements
pursuant to any laws administered by the CCM, the Securities Commission and the Central Bank of
Malaysia, is mandatory and legally enforceable.
The financial statements may be prepared in Bahasa Malaysia or in English. However, the currency of
presentation must be in the Malaysian currency, i.e. Ringgit Malaysia (RM).
38
Holding companies must prepare group financial statements in the form of consolidated balance sheets
and income statements dealing with the group as a whole.
Public companies listed in the KLSE have additional disclosure requirements in the annual report
prescribed by KLSE over and above those required by the Act.
Financial statements of banks and finance companies and insurance companies are subject to
modification by Bank Negara Malaysia while presentation of financial statements of co-operative
societies is governed by the Co-operative Act 1948.
9.3 Financial reporting requirements
The Malaysian Institute of Accountants (MIA) is the national accountancy body in Malaysia and
was established in 1967 under an Act of Parliament, the Accountants Act, 1967. The functions
of MIA are to:
• regulate the practice of the accountancy profession in Malaysia including the issue of auditing
standards, guidelines and code of ethics;
• promote in any manner it thinks fit, the interests of the accountancy profession in Malaysia;
• provide for the training, education and examination by MIA, or any other body, of persons practising
or intending to practice the accountancy profession; and
• to determine the qualification of persons for admission as members.
With the enactment of the Financial Reporting Act 1997, MASB was established to take over the role of
MIA in relation to the following matters:
• issue new accounting standards as approved;

• review, revise or adopt as approved accounting standards existing accounting standards;
• issue statements of principles for financial reporting;
• sponsor or undertake development of accounting standards;
• conduct such public consultation as may be necessary in order to determine the contents of
accounting concepts, principles and standards;
• develop a conceptual framework for the purpose of evaluating proposed accounting standards; and
make such changes to the form and content of proposed accounting standards as it considers
necessary.
Presently, there are two sets of standards being issued and adopted by the MASB; namely Financial
Reporting Standards (FRSs) and Private Entity Reporting Standards (PERSs). FRSs are for public listed
companies, their subsidiaries, associates and entities jointly controlled by them. PERSs on the other hand
are meant primarily for private companies incorporated under the Companies Act 1965 but they are also
given the option to use FRSs. However, if a company chooses FRSs or PERSs, it must comply with the
full set of FRSs or PERSs respectively in their entirety.
The decision to have two sets of standards is a conscious decision made by the MASB, recognising that
public listed companies and private companies have different information needs. FRSs, which are
equivalent International Financial Reporting Standards (IFRSs), serve to ensure a more informed and
detailed reporting, reflecting the MASB’s commitment to convergence to IFRSs. PERSs on the other
hand, are introduced after recognising the burden of compliance by the private companies if they were to
comply with IFRSs.
MASB has issued to current date the following MASB Approved Accounting Standards for Private
Entities:
MASB 1 Presentation of Financial Statements

MASB 2 Inventories
MASB 3 Net Profit or Loss for the Period, Fundamental Errors and Changes in
39
Accounting Policies
MASB 4 Research and Development Costs
MASB 5 Cash Flow Statements
MASB 6 The Effect of Changes in Foreign Exchange Rates
MASB 7 Construction Contracts
MASB 8 Related Party Disclosures
MASB 9 Revenue
MASB 10 Leases
MASB 11 Consolidated Financial Statements and Investments in Subsidiaries
MASB 12 Investments in Associates
MASB 14 Depreciation Accounting
MASB 15 Property, Plant and Equipment
MASB 16 Financial Reporting of Interests in Joint Ventures
MASB 19 Events After the Balance Sheet Date
MASB 20 Provisions, Contingent Liabilities and Contingent Assets
MASB 23 Impairments of Assets
MASB 25 Income Taxes
MASB 27 Borrowing Costs
MASB 28 Discontinuing Operations
MASB 29 Employee Benefits
MASB 30 Accounting and Reporting by Retirement Benefit Plans
MASB 31 Accounting for Government Grants and Disclosure of Government
Assistance
MASB 32 Property Development Activities
IAS 25 Accounting for Investments
IAS 29 Hyperinflationary Economies
MAS 5 Accounting for Aquaculture
IB-1 Preliminary and Pre-operating Expenditure
MASB has issued to current date the following MASB Approved Accounting Standards for Entities other
than Private Entities:
FRS 1 First-time Adoption of Financial Reporting Standards

FRS 2 Share-based Payment
FRS 3 Business Combinations
FRS 5 Non-current Assets Held for Sale and Discontinued Operations
FRS 6 Exploration for and Evaluation of Mineral Resources
FRS 101 Presentation of Financial Statements
FRS 102 Inventories
FRS 107 Cash Flow Statements
FRS 108 Accounting Policies, Changes in Accounting Estimates and Errors
FRS 110 Events After the Balance Sheet Date
FRS 111 Construction Contracts
FRS 112 Income Taxes
FRS 1142004 Segment Reporting
FRS 116 Property, Plant and Equipment
FRS 117 Leases
FRS 118 Revenue
FRS 119 Employee Benefits
FRS 120 Accounting for Government Grants and Disclosure of Government
Assistance
FRS 121 The Effects of Changes in Foreign Exchange Rates – Net Investment in a
Foreign Operation
FRS 1232004 Borrowing Costs
FRS 124 Related Party Disclosures
FRS 126 Accounting and Reporting by Retirement Benefit Plans
FRS 127 Consolidated and Separate Financial Statements
FRS 128 Investments in Associates
FRS 129 Financial Reporting in Hyperinflationary Economies
FRS 131 Interests in Joint Ventures
FRS 132 Financial Instruments: Disclosure and Presentation
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FRS 133 Earnings Per Share

FRS 134 Interim Financial Reporting
FRS 136 Impairment of Assets
FRS 137 Provisions, Contingent Liabilities and Contingent Assets
FRS 138 Intangible Assets
FRS 140 Investment Property
FRS i-12004 Presentation of Financial Statements of Islamic Financial Institutions
FRS 2012004 Property Development Activities
FRS 2022004 General Insurance Business
FRS 2032004 Life Insurance Business
FRS 2042004 Accounting for Aquaculture
The numbering of the FRSs corresponds to the IFRSs issued by the IASB. For example, FRS 1 in
Malaysia is equivalent to IFRS 1. FRS with a ‘100 prefix’ corresponds to its equivalent IASs. Thus FRS
101 is equivalent to IAS 1. FRS with a ‘200 prefix’ denotes locally developed Standard with no equivalent
International Standard.
9.4 Audit requirements
Under the Companies Act, every company must appoint an approved auditor or a firm of approved
auditors to report to the shareholders on the financial statements of the company. An approved auditor
must be a member of MIA and is additionally licensed by the Minister of Finance to perform a statutory
audit under section 8 of the Act.
The directors may appoint the first auditors of the company, but the shareholders may make subsequent
appointments at the annual general meeting. An auditor holds office until the conclusion of the next
annual general meeting. Auditing standards issued by MIA prescribe the basic principles that their
members are expected to follow when conducting an audit. These standards are modelled primarily on
the International Auditing Guidelines issued by the International Federation of Accountants. Auditors are
required by MIA to:
• state in their report whether the audit has been conducted in accordance with approved auditing
standards; and
• refer to any significant non-compliance with IAS and MAS adopted by MASB and MASB standards if
the fact on non-compliance is not disclosed in the financial statements.
The auditors must express an opinion on the following:
• whether the statutory financial statements have been prepared in accordance with the provisions of
the Act and applicable approved accounting standards and whether they give a true and fair view of
the state of affairs of the company, its results and cash flow position; and
• whether the company has kept proper books of accounts and other records and registers required
under the Act.
In addition, the auditor is required to report to the Companies Commission of Malaysia all breaches or
non-compliance with the provisions of the Act and applicable approved accounting standards if the
circumstances are such that in his opinion the matter has not been or will not be adequately dealt with by
comment in his report or by bringing the matter to the notice of the directors.
9.5 Annual accounts
Companies are required to present audited financial statements to shareholders annually. There is no
specific date to which the financial statements must be drawn, but many companies choose 31st
December to coincide with the tax year. Where a company is a subsidiary of another corporation
incorporated in Malaysia, its accounting year end must be co-terminous with that of the holding company.
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Chapter 10: Principal Taxes
10.1 Income tax
Income accruing in or derived from Malaysia is subject to Malaysian income tax.
Foreign income received in Malaysia by a resident person is tax exempt, except for a resident company
carrying on the business of banking, insurance or sea or air transport.
10.2 Real Property Gains Tax (RPGT)
A gain on disposal of a chargeable asset is subject to real property gains tax. Chargeable assets include
the following:
a. Real properties situated in Malaysia

b. Investments held in a real property company (RPC)
A RPC refers to a controlled company which owns real property or shares or both, the market value of
which is more than 75% of the value of its total tangible assets.
A "controlled company" means a company having not more than fifty members and controlled by not
more than five persons.
The rates of RPGT range from 5% to 30% depending on the period during which the chargeable assets
have been held before disposal.
Disposal of a chargeable asset after 1st April 2007 will be exempted from Real Property Gains Tax.
10.3 Stamp duty
Stamp duty is levied on documents as provided under the Stamp Act 1949.
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10.4 Indirect taxes
Indirect taxes include:
a. Custom duties on import and export of goods.

b. Sales tax on goods.
c. Service tax on goods and services.
10.5 Local taxes
In Malaysia, the Federal Government levies income tax. The State Governments impose assessments
and quit rents on properties and licence fees for various businesses carried out within the states'
municipalities.
10.6 Estate duty
There is no estate duty in Malaysia.
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Chapter 11: Income Tax
11.1. Tax year
The tax year is based on the calendar year, i.e. from 1st January to 31st December. However, a
company may adopt an accounting period other than the calendar year.
Income is assessed on a current year basis.
11.2 Self Assessment System
Malaysian tax system is based on the Self Assessment System (SAS).
Under the SAS, no official assessment will be issued by the Inland Revenue to taxpayers. The
assessment is deemed to be issued on the date of submission of the income tax return.
11.3 Appeals
Appeals against an assessment must be lodged within thirty (30) days after the submission of tax returns.
11.4 Payments
Companies
Please refer to Chapter 15.
Non-companies
Individuals and other taxable persons with annual tax liability exceeding RM 1,000 are required to pay
their tax liability by six bi-monthly instalments as specified by the Inland Revenue.
44
For employed individuals, payments are made by monthly salary deductions under the Schedular Tax
Deductions (STD) system.
The balance of tax payable is required to be settled by 30 April or 30 June (Business income) of the
following year.
11.5 Penalties
Penalties, fines and prison terms are provided in the Income Tax Act 1967 for various offences, including
late payment, failure to submit tax returns, tax evasion, omission of income, etc.
A late payment penalty of 10% is levied on any tax not paid within the period stipulated. A further 5% will
be imposed if the tax is not settled after another sixty (60) days.
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Chapter 12: General Taxation
12.1. Sources of income
The following sources of income are liable to income tax:
a. gains or profits from a business;

b. gains or profits from an employment;
c. dividends, interest or discounts;
d. rents, royalties or premiums;
e. pensions, annuities or other periodical payments not falling under any of the foregoing paragraphs;
f. gains or profits not falling under any of the foregoing paragraphs.
Each of the above income is considered as a separate source of income.
12.2 Business income and expenses
Allowable Expenses
Only revenue expenses incurred wholly and exclusively in the production of the gross income are
allowable against the business income.
Current year loss
Current year adjusted loss can be utilised against any other income in the same basis year.
Unutilised loss brought forward
Unutilised loss for a year can be carried forward to be set off against income from any business source
for subsequent years.
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Capital allowances
Provision for depreciation is not allowed as a deduction for income tax purposes. Instead, capital
allowances are granted on qualifying expenditure.
Types of allowances are:
a. Capital allowances for plant and machinery

b. Industrial building allowance
c. Agriculture allowance
d. Forest allowance
Unutilised capital allowances
Unutilised capital allowances are available to be set off against income from the same business source
for subsequent years.
12.3 Double taxation agreements
Malaysia has concluded tax agreements with the countries listed in Appendix V.
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Chapter 13: Corporate Taxation
13.1 Single Tier system
Malaysia’s imputation system of taxation has been replaced with Single Tier System of Taxation with
effect from 1st January 2008. Under the Single Tier System, the tax on profit of companies is a final tax
and dividend distributed will be exempted from tax in hands of shareholders.
13.2 Tax residence
A company is resident in Malaysia for tax purposes if its management and control are exercised in
Malaysia. Generally, a company is considered resident in Malaysia if the meetings of its board of
directors are held in Malaysia, even if the companies are not incorporated in Malaysia.
13.3 Rates of tax
The rate of income tax for companies whether resident or not is at 26% and will be further reduced to
25% in Year of assessment 2009. For companies carrying on petroleum operations, the rate of income
tax is 38%.
13.4 Foreign branch
A foreign branch is taxed at the rate of 26% on its income derived from Malaysia and it will be further
reduced to 25% in Year of assessment 2009. However, interest income is taxed at the rate of 15%
except where provided otherwise under the Double Taxation Agreement that Malaysia has with the
country concerned.
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13.5 Compliance requirements
Estimated tax
Under the SAS, a company is required to notify the Inland Revenue thirty (30) days before the start of the
next financial year its estimated tax liability for the next financial year. The company is allowed to make a
revision of its estimated tax liability in the 6th month or the 9th month of its financial year.
For a company which first commences operations in a basis period, the company is allowed to notify the
Inland Revenue of its estimated tax payable within three (3) months from the date of commencement of
business operation or receiving income. Similarly, the company is allowed to furnish to the Inland
Revenue a revised estimate in the 6th or 9th month of the basis period, where applicable.
Where a company has underestimated its tax liability, the difference which exceeds 30% of its tax
payable for that year is subject to a penalty of 10%.
Submission
Company tax returns Form C or R are required to be submitted within 7 months from date of closing of
accounts.
Payments
Payments of the estimated tax payable shall be made on or before the tenth (10th) day of every calendar
month in equal instalments start from the second month in every basis period. For a new company, the
monthly instalments shall be made commencing from the sixth month of the basis period.
Late payments of the monthly instalments are subject to a penalty of 10%.
The balance of tax payable, if any, shall be made within seven (7) months after the end of each financial
year.
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Chapter 14: Personal Taxation
14.1 Tax residence
For tax purposes, an individual is treated as a resident if he is physically present in Malaysia in a

particular calendar year for 182 days or more. However, if his period of stay is less, he may still be
resident if certain conditions are satisfied.
14.2 Rates of tax and personal reliefs
For residents, the rate of tax is on a graduated scale on the chargeable income after deduction of
reliefs. The rates of tax are as shown in Appendix VI.
The reliefs available to a resident in Malaysia are summarised in Appendix VII.
For non-residents, the rate of tax is 28% on the gross income. No reliefs are available to a
non-resident.
14.3 Separate assessment for wife
A wife's incomes from all sources are separately assessed from that of her husband unless she elects
for her income to be combined with that of her husband.
14.4 Short term employment
Income from an employment exercised in Malaysia for a period not exceeding sixty days in a calendar
year is tax exempt provided the employee is not resident in Malaysia for tax purposes for the basis year
concerned. This provision does not apply to professional entertainers and non-resident directors.
50
14.5 Employees in Malaysia
An employee exercising an employment in Malaysia is taxable on his full income for the exercise of that
employment, notwithstanding that part of his income may be paid to him outside Malaysia.
Employment income is deemed to be derived from Malaysia:
a. For any period during which the employment is exercised in Malaysia;
b. For any period of leave attributable to the exercise of the employment in Malaysia; or
c. For any period during which the employee performs outside Malaysia duties incidental to the
exercise of the employment in Malaysia.
14.6 Exemptions
Exemption from income tax in the following circumstances:
Period of less than 60 days in Malaysia
The income of an individual who is not a tax resident, from an employment exercised in Malaysia is
exempted from tax where the employment is exercised for the following period(s):-
a. for a period or periods which together do not exceed sixty (60) days in a calendar year; or
b. or a continuous period (not exceeding sixty days) which overlaps over two calendar years.
Double Taxation Agreements

Period of more than 60 days but less than 183 days in Malaysia
Malaysia has signed double taxation agreements (DTA) with more than 65 countries. Generally, the
income of an individual from an employment exercised in Malaysia is exempted from Malaysian
income tax where the following conditions are satisfied:-
a. the employee is present in Malaysia for a period or periods not exceeding in the aggregate 183
days in the basis year;
b. the remuneration of the employee is paid by, or on behalf of, a person who is not a resident of
Malaysia; and
c. the remuneration is not deductible in determining taxable profits of a permanent establishment
which that person has in Malaysia.
The precise conditions are provided in the DTA of the countries concerned.
Operational Headquarter/Regional Office
The income of a non-citizen who is employed by a company with Approved Operational Headquarter
status or a Malaysian regional office of a foreign company is exempted from income tax on income
derived in respect of the period during which the employment is exercised outside Malaysia.
The exemption would only apply to the period when the employment is exercised outside Malaysia
and would not be applicable for the number of days that the individual is outside Malaysia for
personal reasons or on vacation.
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International Procurement Centre (IPC) / Regional Distribution Centre (RDC)
Expatriate employees employed by companies with IPC or RDC status are accorded the same tax
treatment as that given to expatriate employees working in an OHQ or a Regional Office.
Labuan Offshore Company
Managers
50% of gross income derived by a non-citizen exercising an employment in Labuan, in a
managerial capacity in an offshore company, is exempted from income tax.
Effective: From Year of assessment 1992 to Year of assessment 2010
Directors
Fees received by a non-citizen individual in his capacity as a director of an offshore company is

exempted from income tax.
Effective: Year of Assessment 2002 to Year of Assessment 2010
Offshore Company
An offshore company refers to an offshore company incorporated under the Offshore Companies Act
1990, and includes a foreign offshore company registered under the Offshore Companies Act 1990, a
licensed Malaysian offshore bank, an offshore limited partnership and an offshore trust.
Compliance requirements for an expatriate employee exercising employment in Malaysia
1. UPON ARRIVAL IN MALAYSIA
An expatriate employee having a source of income in Malaysia for the first time is required to notify
the Inland Revenue within two months of arrival in Malaysia.
2. SUBMISSION OF INCOME TAX RETURN
An expatriate employee is required to complete the Income Tax Return and submit it to the Inland
Revenue before 30th April of each year.
3. BEFORE LEAVING MALAYSIA
An expatriate employee is required to obtain tax clearance before leaving Malaysia upon expiry of his
employment contract or cessation of employment.
To determine the tax residence of an expatriate employee for tax purpose for the duration of his
employment in Malaysia, the employee is required to submit his original passport together with a
photostated copy thereof to the Inland Revenue for verification, before departure from Malaysia on
completion of assignment.
It is therefore important for the expatriate employee to ensure that all his entries and exits from
Malaysia are properly recorded and stamped on his original passport. In the absence of the original
passport or any other documentary proof of his stay in Malaysia, the Inland Revenue may tax the
expatriate employee as a non – resident at the rate of 28% on his gross income without granting any
personal reliefs.
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Where a “smart” card is used for entering and leaving Malaysia, the expatriate employee is required
to obtain a summary of his movements into and outside Malaysia from the Malaysian Immigration
Department for every entry and departure to facilitate the determination of his tax residence during
the duration of his employment in Malaysia. The expatriate employee is advised to retain the
counterfoil of all his air tickets for easy retrieval of information regarding his movements into and
outside Malaysia.
Where the employee has already left Malaysia without his passport being verified by the Inland
Revenue, a photostated copy (complete passport) verified by the Malaysian Embassy/Consular
overseas is acceptable by the Inland Revenue.
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Chapter 15: Withholding Taxes
15.1 Payments to non-residents
Withholding tax is required to be withheld and remitted to the Inland Revenue within thirty
days after paying or crediting the following payments to non-residents:
Rate
%
a. interest 15
b. royalties 10
c. remuneration of public entertainer 15
d. special classes of income under Section 4A
of the Malaysian Income Tax Act 1967 * 10
e. Non-resident contractor, consultant or
professional in respect of the service
portion of contract payment ** 13
* The tax under d. above is a final tax and the rate of tax may be varied in accordance
with the Double Tax Agreements which Malaysia has signed with the countries
concerned.
** The tax payment under e. above is made on account for the following:
Rate
%
1. Non-resident contractor, consultant
or professional 10
2. Expatriate and Foreign Employees of the above 3

---
13
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15.2 Interest paid to resident individual
Withholding tax at the rate of 5% is required to be withheld and remitted to the Inland
Revenue in respect of interest paid to a resident individual by an approved financial
institution. Certain interests received by a resident individual are exempted from tax
provided the conditions stipulated are satisfied.
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Chapter 16: Tax Incentives & Government Grants
Malaysia's principal tax incentives are provided under the Promotion of Investments Act 1986 and the
Income Tax Act 1967. These incentives which are designed to grant total or partial relief from payment of
income tax include following:
a. Pioneer status
A company given Pioneer Status will generally be granted partial exemption from the payment of
income tax. It will only have to pay tax on 30% of its statutory income. The period of tax exemption is 5
years, commencing from the production date as determined by the Ministry of International of Trade
and Industry. A 100% exemption may be granted for certain projects, for example strategic projects in
high tech industries with heavy capital investment, high R & D content or industrial linkages, etc.
b. Investment tax allowance
A company given Investment Tax Allowance will be granted an allowance of 60% in respect of
qualifying expenditure incurred within 5 years from the date of the approval of the project. The ITA can
be offset against 70% of the statutory income in the year of assessment. Unutilised ITA can be carried
forward to subsequent years until the whole amount has been used up. 30% of the statutory income
will be taxed at the prevailing company tax rate.
c. Infrastructure allowance
Infrastructure allowance (IA) is given on capital expenditure incurred on infrastructure in respect of a

business or businesses in operation in a promoted area. Infrastructure means any construction,
reconstruction, extension or improvement of any permanent structure including a bridge, jetty, port or
road. IA is given at the rate of 100% on capital expenditure incurred within 5 years. It is deducted
against statutory income up to an amount not exceeding 85% of the statutory income for a year of
assessment. Any unutilised IA can be carried forward to subsequent years until it is fully utilised.
d. Reinvestment allowance
Reinvestment allowance (RA) incentive is available to manufacturing companies and the agricultural
sector, which have been in operation for at least 12 months and incur qualifying capital expenditure for
the expansion of production capacity, modernisation and upgrading of production facilities, and
diversification into related products and automation of production facilities.
e. Industrial adjustment allowance
For the purpose of incentives, industrial adjustment has been defined as any activity proposed to be
undertaken by a particular sector in the manufacturing industry to restructure by way of reorganisation,
reconstruction or amalgamation within that particular sector with a view to strengthening the basis for
industrial self efficiency, improving industrial technology, increasing productivity, and enhancing the
efficient use of natural resources and the efficient management of manpower. Companies undertaking
approved industrial adjustment programmes are eligible for the Industrial Adjustment Allowance (IAA).
The IAA provides for an allowance of up to 100% in respect of qualifying capital expenditure incurred
by a manufacturing company in its efforts at undertaking industrial adjustment.
f. Double deduction of expenses (given in respect of certain expenses if the conditions imposed are
satisfied)
g. Approved agricultural projects incentives
h. Research and development incentives
i. Industrial building allowance
j. Incentive for in bound tour operators
k. Incentive for approved overseas investments
l. Incentive for overseas construction projects
m. Incentives for high technology and multimedia sector
n. Incentives for training
o. Incentives for exports of products manufactured in Malaysia and export of approved services
p. Operational Headquarters incentives
q. Labuan International Offshore Finance Centre
r. Malaysia Multimedia Super Corridor (MSC)
The well-developed financial and banking sector has enhanced the ability of Malaysian manufacturers
particularly the small and medium industries (SMIs) to expand their operations and export overseas. Apart
from the normal business credit, many commercial banks and financial institutions have been appointed by
Bank Negara Malaysia to disburse Government grants and provide financing facilities allocated for SMIs.
Financial assistance for small and medium enterprises (SMEs) is provided in the form of grants and soft
loans where qualifying criteria are met.
The qualifying criteria are as follows:
• Manufacturing companies or companies providing manufacturing related services incorporated under

the Companies Act 1965 with annual sales turnover of not exceeding RM25 million or full time
employees not exceeding 150;
• For the services sector, businesses must be incorporated under the Registration of Business
Ordinance 1956 with annual sales turnover of not exceeding RM5 million or full time employees not
exceeding 50;
• At least 60% equity held by Malaysians; and
• Possess valid premise license.
The grant schemes provided by Small and Medium Industries Development Corporation (SMIDEC) are:
1. Grant for Business Start Ups
Assistance is given in the form of a matching grant where 50% of the approved project cost is borne by
the Government and the remainder by the applicant. For enterprises in the manufacturing sector,
incorporated under the Registration of Business Ordinance 1956, assistance is given up to 80% of the
approved cost. The maximum grant allocated per application is RM 100,000.
2. Grant for Product and Process Improvement
Assistance is given in the form of a matching grant where 50% of approved project cost is borne by the
Government and the remainder by the applicant. The maximum grant allocated per application is
RM500,000.
57
3. Grant for Productivity and Quality Improvement and Certification
Assistance is given in the form of a matching grant where 50% of approved project cost is borne by the
Government and the remainder by the applicant. The maximum grant allocated per application is
RM250,000.
4. Grant for Development and Promotion of Halal Product
approved cost. The maximum grant allocated per application is RM150,000.
5. Grant for Enhancing Product Packaging, Design and Labelling Capabilities of SMEs
approved cost. The maximum grant allocated per application is RM 200,000.
6. Grant for Enhancing Marketing Skills of SMEs
Assistance is given in the form of a matching grant where 50% of the cost of training is borne by the
Government and the remainder by the applicant. For enterprise in the manufacturing sector, registered
under business ordinance 1956, assistance is given up to 80% of the approved costs.
7. Grant for RosettaNet Standard Implementation
The Government provides assistance to implement the RosettaNet Standard in the form of a grant
for local manufacturing, manufacturing related services as well as companies in the services sector.
The implementation of the RosettaNet Standard will enable Malaysian companies to adopt efficient
business processes with large companies as well as preparing them to embrace global Supply Chain
Management (SCM) System. With the adoption of the RosettaNet standard, local companies would
be able to conduct business electronically through common codes for sourcing of parts and
components with their partners, suppliers and buyers apart from enjoying the benefits of reduced
inventory costs, time to market and lower transaction costs. The two available models in
implementing the RosettaNet Standard are:
• RosettaNet Direct Model

o The assistance is given in the form of a matching grant, where 50 per cent of the
approved project cost is borne by the Government and the remainder by the
applicant. The maximum grant allocated per company is RM100,000.00.
• RosettaNet Application Service Provider (ASP) Model

o For SMEs The assistance is given in the form of a partial grant, where 70 per cent of
the approved project cost is borne by the Government and the remainder by the
applicant. The maximum grant allocated per company is RM30,000.00.
o For Non SMEs The assistance is given in the form of a matching grant, where 50
per cent of the approved project cost is borne by the Government and the remainder
by the applicant. The maximum grant allocated per company is RM30,000.00.
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Chapter 17: Operational Headquarters (OHQ)
Companies operating in Malaysia and carrying out qualifying services for their offices or related companies
outside Malaysia would be eligible to apply for Approved OHQ status.
The incentives include the following:
a. Exemption from tax for a period of ten years on business income arising from qualifying services
rendered;
b. Dividends received from investments in subsidiary or associate companies are exempted from tax for
a period of ten years.
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Chapter 18: Labuan International Offshore Financial Centre (IOFC)
18.1 Introduction
The Federal Territory of Labuan was launched as an IOFC on 1st October, 1990 to further enhance
the attractiveness of Malaysia as an investment centre. The IOFC will complement the onshore
financial system in Kuala Lumpur.
Activities which are promoted and accorded preferential tax treatment in Labuan include the following:
a. Offshore banking operations;

b. Trust and fund management;
c. Offshore insurance and offshore insurance related business; and
d. Offshore investment holding companies.
18.2 Fiscal incentives
Income Tax
The maximum amount of tax payable by an offshore company is 3% of the net profits per the audited
accounts or upon election, the maximum sum payable is RM 20,000 for each year of assessment.
Withholding tax
An offshore company is not required to withhold any tax on certain payments to a non-resident person
if the payments are exempt from tax in the hands of the recipients.
Exemption from stamp duty

All instruments made in connection with an offshore business activity by an offshore company are not
subject to stamp duty.
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18.3 Individual taxation
There is no special incentive for individuals resident in Labuan. They will continue to be subject to tax
under the Income Tax Act 1967.
Income derived by a non-citizen individual from an employment exercised in a managerial capacity in

an offshore company in Labuan is tax exempt up to an amount equivalent to 50% of the gross income
from that employment. This exemption is applicable up to the year of assessment 2010.
18.4 Non-fiscal incentives
Exchange control
An offshore company is free from complying with most of the provisions regarding movement of funds
into and outside Malaysia. Remittances can therefore be made freely.
Secrecy and confidentiality provisions

There are provisions in the various legislations to provide for secrecy and confidentiality as far as an
offshore company is concerned.
Multiple entry visas

Multiple entry visas will be issued to expatriates who have been granted work permits with offshore
companies in Labuan.
Appointment of auditor
An offshore company need not appoint an auditor provided it meets the requirements under the
Offshore Companies Act.
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Chapter 19: Malaysia Multimedia Super Corridor (MSC)
19.1 What is Malaysia MSC?
A gift from the Malaysian Government to technology developer and users seeking to expand their
Asian presence, to Malaysians wanting their country to prosper, and to neighbouring countries
aspiring to partner with a technology hub.
The MSC is a 15-by-50 kilometre (9-by-30 mile) zone extending south from Malaysia’s national
capital and business hub, Kuala Lumpur, which is devoted to creating a perfect environment for
companies wanting to create, distribute and employ multimedia products and services.
Malaysia is moving from an industrial economy base into one which is critically dependent on
technology information base.
The Smart School project is one of the flagship multimedia applications which the Malaysian
Government has targeted for development. Other flagship multimedia applications include
electronic government, telemedicine, a national multipurpose card, R& D clusters, world-wide
manufacturing webs and borderless marketing centres.
Companies wanting to join the Malaysia MSC can apply for “MSC” status. Incentives for
companies with MSC status include the following:-
1. A MSC status company will be granted with an initial period of five year exemption from
Malaysian income tax, which can be extended by another five year period depending on the
MSC company’s performance in transferring technology or knowledge to Malaysia; or with a
100 per cent investment tax allowance (ITA) incentive on qualifying capital expenditure.
A MSC status company granted with ITA incentive is allowed to deduct 100 per cent of
qualifying capital expenditure from its statutory income in respect of qualifying capital
expenditure during the five year period.
62
2. A MSC status company is allowed to import multimedia equipment duty free, provided that
the equipment is used by the company directly in facilitating the operational processes of the
MSC status company. The exemption does not apply to imports for the purpose of direct
sales and trading or used as components in manufactured items. However, application for
exemption from import duty is allowed for those companies engaged in value-added
reselling activities, such as system integrators.
3. A MSC status company can be wholly owned by foreign legal entities.
4. A MSC status company that is engaged in developing infrastructure for the MSC is allowed
to source capital globally for their investments.
5. A MSC status company will be given exemption from exchange control requirements which
include:-
• Execute transactions in any currency in Malaysia or elsewhere in the world
• Borrow any amount from financial institutions, associate companies or non

residents
• Hedge foreign exchange exposure
• Remit globally for any purpose
• Open foreign currency accounts in Malaysia or abroad with no limits on the

balances, including accounts for the retention of export proceeds
However, the exemptions from exchange control requirements do not extend to dealings
with Malaysia’s list of specified persons, comprising the residents or institutions of Serbia,
Montenegro or Israel or the currencies of these countries.
6. A MSC status company is given the right to tender for key implementation contracts for
Flagship Applications for which only companies with MSC status will be able to apply.
7. A MSC status company is allowed unrestricted employment of foreign knowledge workers,

defined in this context as an individual possessing any one of the following qualifications:
• Five or more years’ professional experience in multimedia/information technology

businesses or in a field that is a heavy user of multimedia
• A university degree (any discipline) or a graduate diploma ( in multimedia /IT

businesses) or in a field that will be a heavy user of multimedia
• A master’s degree or above in any discipline
8. A MSC status company is allowed direct access to Malaysia’s top leadership through
membership of the MSC’s International Advisory Panel, chaired by the Prime Minister, and
the Founders’ Council, chaired by the Deputy Prime Minister.
9. Research and development grants are available for local small and medium size
enterprises which are at least 51 per cent Malaysian owned.
10. Seven primary areas for multimedia applications have been identified to lead the
development of the MSC and to accelerate Malaysia progress towards the information Age.
The seven primary areas cover the following:-
(a) Electronic Government
(b) Multi – purpose card
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(c) Smart schools
(d) Telemedicine
(e) R & D Cluster
(f) World wide manufacturing web
(g) Borderless marketing
19.2 Criteria for qualifying for MSC status
The criteria for qualifying for MSC status include the following:-
1. The company applying for MSC status is a provider or heavy user of multimedia
products and services i.e. the company’s business activities participate directly in or
contribute directly to some segment of the multimedia value chain or the supporting
products and services chain. The MSC Company may be a contributor to or provider of
multimedia products and services, or it may be a heavy user of those products and
services.
2. A company with MSC status is expected to maintain a work force using a substantial
number of knowledge workers (at least 15%)
3. A company applying for MSC status is required to provide a compelling explanation of

how the company will transfer technology and/or knowledge to Malaysia or otherwise
contribute to the development of the MSC.
4. Conditions which a MSC status company is expected to comply with include:-
• Establish a separate legal business entity for MSC qualifying multimedia

businesses and activities
• Locate selected operations within the MSC designated cybercities by June 2000
64
Chapter 20: Labour Conditions
20.1 Introduction
Malaysia's important resource lies in its youthful labour force which is diligent, disciplined,
educated and readily trainable. Though labour costs in Malaysia are low relative to the
industrialised countries, labour productivity and quality standards are high.
During the last decade the Malaysian labour force has grown rapidly, due to robust
economic growth and the large proportion of young people born in the 1970s. Due to rapid
expansion of all sectors of the national economy, there has been a high demand for all
types of workers, especially skilled labour in the manufacturing sector and well-trained
professionals in the services sector. This led in turn to better wages and rapidly improving
working conditions.
20.2 Manpower development
The overall development strategy for the manufacturing sector requires an increased
number of technically trained workers. The government is undertaking active measures to
increase the number of engineers, technicians and other skilled personnel.
The Malaysian government is trying to develop better education at all levels, as it wants to
attract skill-intensive industries and services to the country. Primary education is
compulsory, and young people may choose between a large number of both public and
private schools and colleges. There is an established system of vocational and technical
training. A number of Malaysians receive their education overseas, many of them with state
support. In order to meet growing demand of university-trained professionals, in 1994
Malaysia allowed foreign universities to establish campuses in the country.
65
20.3 Labour costs
The higher wages and better working conditions attract large numbers of temporary workers
from neighbouring Indonesia, Bangladesh, Thailand, and the Philippines. Many of them are
hired to work in the low-skill and low-wage construction and service sectors and on
agricultural plantations. However, Malaysia has also experienced an inflow of illegal foreign
workers, prompting the government to implement harsh detention measures and mass
deportation of unauthorized arrivals.
There are currently over 600 trade unions in Malaysia, engaging in the union activities of
just over 11 percent of the workforce. Most of the private-sector trade unions are members
of the Malaysian Trade Union Congress (MTUC), which was established in 1951. Around 90
unions of public-and civil-sector employees are members of the Congress of Unions of
Employees in the Public and Civil Services (CUEPACS). Unions maintain their
independence from the government and from political parties; by law, union officers may not
hold principal positions in political organizations.
There is no national minimum wage, although there have been calls recently from trade
unions for its introduction. The Employment Act of 1955 established a maximum 48-hour
working week. Basic wage rates vary according to locations and industrial sectors.
20.4 Facilities for recruitment
Employment offices under the Ministry of Human Resources located throughout the country
can provide free assistance to both employers and job seekers.
66
Chapter 21: Labour Legislations
21.1 Employment Act 1955
The Employment Act 1955 is the legislation regulating the terms and conditions of
employment of any person, irrespective of his occupation, who has entered into a contract
of service with an employer under which such person's wages do not exceed RM1,500 a
month. Among other things it sets out the minimum conditions of employment which include:
a. A contract of service engaging a person may be written or oral, expressed or implied,

specifying the period of notice required to terminate it;
b. Wages earned must be paid not later than the seventh day after the last day of any
wage period;
c. Female workers are not permitted to work in any industrial or agricultural

undertakings between the hours of ten in the evening and five in the morning. An
application can however be made to waive the restriction;
d. Ten paid gazetted public holidays in any one calendar year;
e. Eight days of paid annual leave for employees with less than two years of service,
twelve days of paid annual leave for those employees with two or more years of
service but less than five years of service, and sixteen days for those with over five
years of service;
f. Fourteen to twenty-two days sick leave in a year depending on length of service and
where hospitalisation is necessary, up to an aggregate of sixty days sick leave in
each year;
g. Normal hours of work shall not exceed eight hours a day or forty-eight hours a week;
67
h. Payment for overtime work is at a minimum of one and a half times the hourly rate of
pay on normal working days, two times his hourly rate on rest days and three times
his hourly rate on public holidays;
i. Paid maternity leave for female employees on maternity leave for sixty days.
21.2 Employees Provident Fund Act 1951 (EPF)
The Employees Provident Fund Act 1951 provides for a compulsory contributory provident
fund which is payable to employees in full on reaching the age of 55 years. All employers
and employees are required to contribute to EPF at the rates of 12% and 11% respectively
of the employees' monthly wages.
Among the categories of employees precluded from compulsory contributions are:
a. Expatriates employees
b. Domestic servants - Persons who are employed to work in or connected with work in
a private dwelling house including a valet, gardener, and who are paid from the
private account of the employers.
However, expatriate employees, domestic servants and self-employed persons can elect to
contribute to the EPF.
21.3 Employees' Social Security Act 1969
The Social Security Organisation (SOCSO) administers the Employment Injury Insurance
Scheme and the Invalidity Pension Scheme, as provided for under the Employees' Social
Security Act 1969.
All establishments, including factories, employing workers earning wages not exceeding RM
3,000 a month, are required to insure their workers under the two social security schemes.
The Employment Injury Insurance Scheme provides employees with coverage in the event
of any disablement or death due to employment injury by way of cash benefits and medical
care. The contribution is borne solely by the employer and is about 1.25% of the wages of
an employee.
The Invalidity Pension Scheme provides a 24-hour coverage to employees against invalidity
and death due to any cause before the age of 55 years. The total contribution is about 1%
of the wages and is shared by the employer and the employee equally.
21.4 Human Resource Development Fund Act 1992
The Human Resources Development Act, 1992 which was enforced in January 1993 led to
the establishment of the Human Resources Development Fund (HRDF) and administered
by the Human Resources Development Council (HRDC). In line with the corporatisation
exercise via the Pembangunan Sumber Manusia Berhad Act, 2001, the HRDC is now
known as Pembangunan Sumber Manusia Berhad (PSMB).
The HRDF operates on the basis of a levy/grant system. Employers who have paid the levy
will qualify for training grants from the fund to defray or subsidise training costs for their
Malaysian employees.
21.5 Workmen’s Compensation Act 1952
68
An Act to provide for the payment of compensation benefits to a foreign worker who
possesses valid employment document for injuries sustained due to accident which arises
out of or in the course of employment or if death results from he accident, to the
dependents.
21.6 Occupational Safety and Health Act 1994
An Act to make further provisions for securing the safety, health and welfare of persons a t
work, for protecting others against risks to safety or health in connection with the activities of
persons at work, to establish the National Council for Occupational Safety and Health, and
for matters connected therewith.
69
Chapter 22: Employment of Foreign Workers
The policy on the employment of foreign workers will be reviewed from time to time. The
employment of foreign workers are allowed in:
a. the construction sector

b. the plantation sector
c. the service sector (domestic servants, hotel industry, trainers and instructors)
d. the manufacturing sector
The employment of these workers will be based on the merit of each case and subject to
conditions that will be determined from time to time. This policy applies only to foreign workers
belonging to the skilled, semi-skilled and unskilled categories and not expatriates under the
management, professional and technical/supervisory categories.
To ensure that employers will employ foreign labour only when necessary, an annual levy on
foreign workers will be imposed. The rates of levy vary depending on the types of industry and are
set out in Appendix VIII.
70
Chapter 23: Industrial Relations
23.1 Trade Unions
In line with the government policy to encourage the growth of responsible trade unions, the
following legislations have been enacted:
a. Trade Union Act 1959.
b. Trade Union Regulations 1959. Under this legislation:
i. Trade unions should confine their membership to employees within a particular trade,
occupation or industry;
ii. All trade unions must be registered;
iii. A union cannot organise a strike without first obtaining the consent by secret ballot of
at least two-thirds of its total members;
iv. All unions are inspected regularly to ensure compliance with the laws.
23.2 Industrial Relations Act 1967
The Industrial Relations Act 1967 provides for the regulation of relations between employers
and workmen and their trade unions, and the prevention and settlement of trade disputes.
The Act is self-contained. It replaces all previous legislation pertaining to industrial relations
but continue to encourage democratic self-government in industry by providing safeguards
to legitimate rights, prerogatives and interest of workmen and employers and their trade
unions, as well as ensuring the speedy and just settlement of trade disputes, so as not to
prejudice public and national interests.
71
23.3 Relations in non-unionised establishment
The normal practice for dispute settlement in a non-unionised establishment is for the
employee to try to obtain redress from his supervisor, foremen or employer directly. A
complaint can be lodged by the employee with the Ministry of Human Resources which will
conduct an investigation.
72
Chapter 24: Guidelines for striking off the name of a company
A. Striking off a company
Please refer below for guidelines on application to strike off the name of a company.
Strike Off
Section 308 (1) Section 308 (3)
Guidelines Guidelines
1 dissolve without having to undertake the formal process of 1 The Registrar may strike off a company that has been
winding up wound up where the Registrar has reasonable cause to
believe that:
2 - not carrying on business (a) no liquidator is acting
- not in opearation (b) the affairs of the company are fully wound up
and for a period of six (6) months the liquidator
has been in default in lodging any return
required to be made by him;
(c) affairs of the company has been fully wound up
under Section 217 (winding-up by court) and
there are no assets or the assets available are
not sufficient to pay the costs of obtaining an
order of ther Court dissolving the company.
Requirements: Requirements:
1 Director to obtain resolution of the shareholders (consent 1 The affairs of the company must remain unchanged for
of the majority shareholders) for the initiation of the six (6) months or longer. The evidence from the no
application to strike off the name of the comapany from change in the status of the company as shown in the
the register Form 75 after the order of winding up has been granted.
2 The company has no assets and liabilities at the time 2 Affairs of the company have been fully wound up and
when application is made. there are no assets available.
3 The company has no outstanding charges in the 3 The company must not have any asset which needs to
Register of Charges. be administered by the Liquidator prior to the making of
the application.
4 The company has no outstanding penalties or offer of 4 The company must not have any outstanding penalty.
compounds under the Companies Act 1965.
73
Strike Off
Section 308 (1) Section 308 (3)
5 The company has no outstanding tax or other liabilities 5 All outstanding tax liabilities with IRB incurred by the
with any government department or agency. liquidator in administering the company's estate must be
fully settled.
6 The information of the company with the Registrar is up 6 All indebtness to other Government department
to date. incurred by the liquidator in administering the company's
estate must be fully settled.
7 The company is not involve in any legal proceeding 7 The liquidator or the company must not be involved in
within or outside Malaysia. any legal proceeding whether inside or outside Malaysia.
8 The company has not make any return of capital to the

shareholders.
9 The company is not a holding company or a subsidiary

of another corporate body.
10 The company is not a Guarantor Corporation.
Application Procedure
Application procedure
1 Ensure all requirements are compiled.
2 Ensure all boxes in checklist are ticked (appendix 2) 1 Must be accompanied with a Statement by Liquidator
(appendix 3)
Application Fee
The completed application must be submitted together to the Registrar together with an application
fee of RM120.00.
Withdrawal of Application for Striking Off
The applicant may withdraw the application at any time before dissolution takes effect by writing to
the Registrar.
Gazette Notification
The striking off is effected through the issuance of letters and notices to the relevant party and the
publication of the relevant Gazette, after which the company shall henceforth be dissolved.
74
Chapter 24: Guidelines for winding up of a company &

Closure of a foreign company
Generally, a company can be wound up either by way of voluntary liquidation or by way of Court
order. Please refer below for further details.
Voluntary Court
Members' Voluntary Creditors' Voluntary
Circumstances - Occurance of specific events - Directors recognise that the company by Pursuant to a winding-up order granted
of Winding-Up - Expiration of fixed duration as provided by the reason of its liabilities cannot continue its by the Court, upon the application of a
company's M&A business petitioner on such basis defined in Section
- Company resolves by special resolution 218 of the Companies' Act 1965.
- Company is solvent i.e the company has - Company is insolvent i.e. the company - Usually company is insolvent i.e.
sufficient assets to pay off its debt (assets unable to settle its debts (liabilities more than unable to meet its debts as they fall
more than liabilities). assets). due (liabilities more than assets).
Procedure of Directors resolves in a board of directors' Directors resolves in a board of directors'
Winding-Up meeting that: meeting that:
(a) that the company be wind-up and majority of (a) the company is insolvent and unable to
the directors to declare that the company is continue with its business and a provisional
solvent and to sign Declaration of Solvency liquidator is appointed; and
(Form 66) (appendix 4); and
(b) that a meeting of members and
(b) that an EGM be called and a liquidator be creditors be called
appointed
The directors will then have to present to all
creditors in the meeting to disclose the
company's state of affairs (Form 61 & 62)
(appendix 5 & 6) and circumstances leading up
to the proposed winding-up.
Commencement Deemed commenced at the time of passing the Deemed commenced at the time declaration Upon receiving the Court Order the
of Winding-Up resolution. was lodged with the Registrar. (This is only liquidator takes possesion.
applicable if a Provisional Liquidator was
appointed before the resolution was passed)
Final Meeting After the affairs of the company are fully wound After the affairs of the company are fully wound After the affairs of the company are fully
and Dissolution up and tax clearance obtained, a general up, a general meeting of company and wound up, a general meeting of
meeting of the company be called. creditors be called. company and creditors be called.
The company deemed dissolved three months The company deemed dissolved three months Application to the Court for the release
from the date of the lodgement of the final from the date of the lodgement of the final of the liquidator and dissolution of the
meeting (Form 69) with the Registrar. meeting (Form 69) with the Registrar. company.
Closure of a Foreign Company
If a foreign company ceases to have a place of business or to carry on a business in Malaysia, it

must within 7 days lodge a prescribed notice of that fact with the Registrar by way of Form 90,
Notice of Foreign Company of Cessation of Business. The Registrar must also be notified within
one month if the foreign company goes into liquidation or is dissolved in its place of origin. Upon
expiration of twelve months after the lodgement of the notice, the Registrar will remove the name
from the register.
75
Chapter 24: General guidelines for Mergers & Acquisitions
Introduction
Mergers and Acquisitions (M&A’s) and Joint Ventures (JV’s) in Malaysia, as in any country with a
sound financial system, is subject to regulations, guidelines and recommended procedures. These
aim to ensure that all take-overs and mergers shall take place in a competitive, informed and
efficient market, and to ensure fair and equal treatment of all shareholders of a company involved
in a take-over and merger situation.
Regulatory / Statutory Approvals
Generally, when a merger / acquisition / joint venture is proposed, its success will be subject to the
approvals of the following parties: -
• Equity Compliance Unit, Securities Commission, subject to FIC’s guidelines
• Ministry of International Industry and Trade
• Bursa Securities
• Securities Commission, for the Offer document
• Ministry of Finance (if applicable)
• Directors / Shareholders of the acquirer & acquiree
• Any other relevant regulatory authorities, where applicable
If the transactions involve the sale or purchase of substantial assets by a public company, the
regulations which govern such transactions are under Section 32 of the Securities Commission Act
1993 (SCA) and the Companies Act 1965.
Where an acquisition involves the acquisition of voting shares which results in a change of control
in a company, certain laws and regulations are put in place to protect the interests of shareholders,
i.e. under Section 33 of the Securities Commission Act 1993 and the Malaysian Code on Take-
overs and Mergers 1998 (Take-over Code).
Where an acquisition is carried out through a take-over offer to all the remaining shareholders of a
company, the party which proposes to take-over the target company will issue an offer document
to the shareholders. The offer document will state all the important information on the offer. The
shareholders will be offered as consideration either cash or shares of another company in
exchange for their shares in the target company, or a combination of both shares and cash.
Merger/Acquisition/ JV
Proposal
Equity Compliance Unit
Ministry of International Industry & Trade
Bursa Securities
Approval
Securities Commission
Ministry of Finance
Directors & Shareholders
Other Regulatory Authorities
76
Transaction Types
Sale or Purchase of Acquisition- Voting Transaction-take

Assets of Shares over offer
Public Company Change of Control Party A

of Company
Governance Protection of Offer Document

interest of
shareholders
Party B
Companies Act 1965 Reg: Section 33
Reg : Section 32 Take over Code

Shareholders
Cash Shares
Given shares of
Another company
in exchange of
Target company
Foreign Investment Committee (FIC)
In 1974, the Malaysian Government set up the Foreign Investment Committee (FIC), an
institutional machinery responsible for implementing guidelines for regulating the acquisition of
assets, or any interests, mergers and takeovers of companies and businesses by local and foreign
interests. The guidelines are as follows: -
• Against the existing pattern of ownership, the proposed acquisition of assets or any
interests, merger or take-over should result directly or indirectly in a more balanced
Malaysian participation in ownership and control:,
• The proposed acquisition of assets or any interests, merger or take-over should lead
directly or indirectly to net economic benefits. In relation to such matters as the extent of
Malaysian participation, particularly Bumiputera participation, ownership and
management, income distribution, growth, employment, exports, quality, range of products
and services, economic diversification, processing and upgrading of local raw materials,
training, efficiency, and research and development;
• The proposed acquisition of assets or any interests, merger or take-over of companies
and businesses should not have adverse consequences in terms of national policies in
such matters as defense, environmental protection, or regional development;
• The onus of proving that the proposed acquisition of assets or any interests, merger or
take-over of companies and businesses are not against the objectives of the New
77
Economic Policy and the National Development Policy is on the acquiring parties
concerned.
The guidelines stated above applies to the following transactions: -

• Any proposed acquisition by foreign interests of any substantial fixed assets in Malaysia;
• Any proposed acquisition of assets or any interests, mergers and take-overs of companies
and businesses in Malaysia by any means, which will result in ownership or control
passing to foreign interests;
• Any proposed acquisition of 15% or more of the voting power by any one foreign interest
or associated group, or by foreign interests in the aggregate of 30% or more of the voting
power of a Malaysian company and business;
• Control of Malaysian companies and businesses through any form of joint-venture
agreement, management agreement, and technical assistance agreement or other
arrangements;
• Any merger or take-over of any company or business in Malaysia whether by Malaysian or
foreign interests;
• Any other proposed acquisition of assets or interests exceeding in value of the sum of $5
million, whether by Malaysian or foreign interests.
The above guidelines will not apply to specific projects which are approved by the Government
and defined as follows:-
• Acquisitions by Ministries and Government Departments
Acquisitions by Ministries and Government Departments are considered as being
approved by the Government and are therefore exempted from the FIC Guidelines.
• Acquisitions by Minister of Finance Incorporated, Menteri Besar Incorporated and

State Secretary Incorporated
Acquisitions by Minister of Finance Incorporated, Menteri Besar Incorporated and State
Secretary Incorporated are also considered to have been approved by the Government
and are therefore exempted from the FIC Guidelines. However this exemption does not
include disposals or divestments by the above parties as the acquirers are required by the
FIC Guidelines to obtain the approval of the FIC.
• Acquisitions by Statutory Corporations, Government- owned companies and their

subsidiaries
Acquisitions by Statutory Corporations and Government-owned companies and their
subsidiaries, either owned by the Federal or State Governments, are not considered as
approved by the Government and are therefore required by the FIC Guidelines to obtain
the approval of the FIC.
• Privatized Projects
Privatized projects, whether at the Federal or State level, are considered as approved by
the Government and therefore exempted from the FIC Guidelines. However only the
companies or parties who are the original signatories in the contracts for the privatized
projects are considered as approved by the Government. Other companies or parties who
later participated in the projects are not considered as approved by the Government and
are therefore required by the FIC Guidelines to obtain the approval of the FIC. The
definition of privatization however does not include sales of Government-owned
companies or their subsidiaries, either owned by the Federal or State Governments, to the
private sector, and the acquirers are required by the FIC Guidelines to obtain the approval
of the FIC.
78
General Terms / Issues / Agreements used in M&A / JV transactions
General key issues in a Conditional Sale and Purchase Agreement would include: -
• Consideration
• Conditions precedent
• Basis of arriving at the Purchase Price
• Sources of funding
• Liabilities to be assumed by acquirer
• Additional financial commitment
General key issues in a Proposed Mandatory Offer: -

• Consideration
• Conditions
• Warranty
• Duration
• Withdrawal
• Listing Status of acquiree (If applicable)
• Source of funding
General key issues to consider in a JV agreement: -

• JV structure
• JV objectives
• Financial contributions for each JV party
• Whether any party will transfer any assets or employees to the JV
• Ownership of intellectual property created by the JV
• Management and control, e.g. respective responsibilities and processes to be followed
• How liabilities, profits and losses are shared
• How any disputes between the partners will be resolved
• Exit strategy
• Non-disclosure agreements
79
APPENDICES
80
Appendix I
Acronyms And Abbreviations
BURSA Bursa Malaysia
CCM Companies Commission of Malaysia
CDS Central Depository System
EPF Employees Provident Fund
FIC Foreign Investment committee
ICA Industrial Co-ordination Act, 1975
IMP Industrial Master Plan
KLCE Kuala Lumpur Commodity Exchange
Labuan IOFC Labuan International Offshore Financial Centre
LMW Licensed manufacturing Warehouse
MIA Malaysian Institute of Accountants
MIDA Malaysian Industrial Development Authority
MIDF Malaysian Industrial Development Finance Berhad
MITI Ministry of International Trade and Industry
MSC Multimedia Super Corridor
NDP National Development Policy
NPC National Productivity Corporation
NRCC Non-resident controlled company
OHQ Operational Headquarters
RM Ringgit Malaysia (Malaysian currency)
RPC Real Property Company
SC Securities Commission
SOCSO Social Security organisation
81
Appendix II
Investment Guarantee Agreements
Malaysia has concluded Investment Guarantee Agreements with the following countries:
Date of signing
Countries agreement
1. United States of America 21.4.1959

(amended on 24.6.1965)
2. Federal Republic of Germany 22.12.1960

3. Netherlands 15.6.1971
4. Canada 1.10.1971
5. France 24.4.1975
6. Switzerland 1.3.1978
7. Sweden 3.3.1979
8 Belgo-Luxembourg 22.11.1979
9 United Kingdom 21.5.1981
10. Sri Lanka 16.4.1982
11. Romania 26.11.1982

12. Norway 6.11.1984
13. Austria 12.4.1985
14. Finland 15.4.1985
15. Organisation of Islamic Conference (OIC) 30.9.1987
16. Kuwait 21.11.1987
17. Association of South East Asian Nations ( ASEAN) 15.12.1987
18. Italy 4.1.1988
19. Republic of Korea 11.4.1988
20. People’s Republic of China 21.11.1988
21. United Arab Emirates 11.10.1991
22. Denmark 6.1.1992
82
23. Socialist Republic of Vietnam 21.1.1992

Date of signing
Countries agreement
24. Papua New Guinea 27.10.1992
25. Republic of Chile 11.11.1992
26. Laos People’s Democratic Republic 8.12.1992
27. Taiwan 18.12.1993
28. Republic of Hungary 19.2.1993
29. Republic of Poland 21.4.1993
30. Republic of Indonesia 22.1.1994
31. Republic of Albania 24.1.1994
32. Republic of Zimbabwe 28.4.1994
33. Turkmenistan 30.5.1994
34. Republic of Namibia 12.8.1994
35. Kingdom of Cambodia 17.8.1994
36. The Argentine Republic 6.9.1994
37. Jordan 2.10.1994
38. Republic of Bangladesh 12.10.1994
39. Republic of Croatia 6.12.1994
40. Bosnia Herzegovena 16.12.1994
41. Spain 4.4.1995
42. Pakistan 7.7.1995
43. Kyrgyz Republic 20.7.1995
44. Mongolia 27.7.1995
45. Republic of India 3.8.1995
46. Oriental Republic of Uruguay 9.8.1995
47. Republic of Peru 13.10.1995
48. Republic of Kazakhstan 27.5.1996
49. Republic of Malawi 5.9.1996
50. Czech Republic 9.9.1996
83
51. Republic of Guinea 7.11.1996
Date of signing
Countries agreement
52. Republic of Ghana 11.11.1996
53. Arab Republic of Egypt 14.4.1997
54. Republic of Botswana 31.7.1997
55. Republic of Cuba 26.9.1997
56. Republic of Uzbekistan 6.10.1997
57. Macedonia 11.11.1997
58. Democratic People’s Republic of Korea 4.2.1998
59. Republic of Yemen 11.2.1998
60. Republic of Turkey 25.2.1998
61. Republic of Lebanon 26.2.1998
62. Burkina Faso 23.4.1998
63. Republic of Sudan 14.5.1998
64. Republic of Djibouti 3.8.1998
65. Republic of Ethiopa 22.10.1998
66. Senegal 11.2.1999
67. State of Bahrain 15.6.1999
68. Saudi Arabia 25.10.2000
84
APPENDIX III
Scale of Stamp Duty for Authorised Share Capital
(Payable to the Companies Commission of Malaysia)
Authorised Share Capital
Stamp
duty
RM
Not exceeding RM 100,000 1,000
RM 100,001 to RM 500,000 3,000
RM 500,001 to RM 1,000,000 5,000
RM 1,000,001 to RM 5,000,000 8,000
RM 5,000,001 to RM 10,000,000 10,000
RM 10,000,001 to RM 25, 000, 000 20,000
RM 25,000,001 to RM 50, 000, 000 40,000
RM 50,000,001 to RM 100, 000, 000 50,000
Exceeding RM 100,000,000 70,000
The maximum stamp duty payable is RM 70,000
85
Appendix IV
Visa Requirements to Enter Malaysia
Countries That Requires Visa:
• Afghanistan (Visa With • Ethiopia

Reference)
• Angola • Guinea-Bissau
• Bhutan • Hong Kong (C/I or D/i)
• Burkina Faso • India
• Burundi • Liberia
• Central African Republic • Mali
• China • Myanmar (normal passport)
• Colombia • Nepal
• Comoros • Niger
• Congo Democratic Republic • Rwanda
• Congo Republic • Serbia & Montenegro
• Cote D’ivoire • Taiwan
• Djibouti • United Nations (Laissez
Passer)
• Equat. Guinea • Western Sahara
• Eritrea
Commonwealth Countries That Requires Visa:
• Bangladesh • Nigeria
• Cameroon • Pakistan
• Ghana • Sri Lanka
• Mozambique
Countries That Requires Visa For a Stay Exceeding 3 Months:
• Albania • Lebanon
• Algeria • Lienchestien
• Argentina • Luxembourg
• Australia • Morocco
• Austria (Vienna) • Netherlands
• Bahrain • Norway
• Belgium • Oman
• Bosnia – Herzegovina • Peru
• Brazil • Poland
• Croatia • Qatar
• Cuba • Romania
• Czech Republic • St Marino
86
• Denmark • Saudi Arabia

• Egypt • Slovakia
• Finland • South Korea
• France • Spain
• Germany • Sweden
• Hungary • Switzerland
• Iceland • Tunisia
• Ireland • Turkey
• Italy • Turkmenistan
• Japan • United Arab Emirates
• Jordan • United Kingdom
• Kirgystan • Uruguay
• Kuwait • Yemen
• Kyrgyz Republic
Countries That Requires Visa For a Stay Exceeding 1 Month:
• Armenia • Madagascar
• Azerbaijan • Maldova
• Barbados • Mauritania
• Belarus • Mexico
• Benin • Monaco
• Bolivia • Mongolia
• Bulgaria • Nicaragua
• Cambodia • North Korea
• Cape Verde • North Yemen
• Chad • Panama
• Chile • Paraguay
• Costa Rica • Portugal
• Equador • Russia
• El Savador • Sao Tome & Principe
• Estonia • Senegal
• Gabon • Slovenia
• Georgia • Sudan
• Greece • Surinam
• Guatemala • Tajikistan
• Guinea Republic • Togo
• Haiti • Ukraine
• Honduras • Upper Volta
• Hong Kong SAR • Uzbekistan
• Kazakhstan • Vatican City
• Latvia • Venezuela
• Lithuania • Zaire
• Macao SAR • Zimbabwe
• Macedonia
87
Countries That Requires Visa For a Stay Exceeding 14 Days:
• Iran (15 days) • Sierra Leone

• Iraq • Somalia
• Libya • South Yemen
• Macao (Travel Permit / Portugal • Syria
CI)
• Palestine
No visa is required for U.S.A. citizens visiting Malaysia for social, business or
academic purposes (except for employment).
No visa required for a stay of less than one month for nationals of all ASEAN
countries except Myanmar. For a stay exceeding one month a visa will be
required, except nationals Brunei and Singapore.
For national Israel, visas are required and permission must be granted from
Ministry of Internal Security.
For national of Republic of Serbia and Republic of Montenegro, visas are

required and permission must be granted from Ministry of Home Affairs.
National of countries other than those stated above (with the exception of
Israel) are allowed to enter Malaysia without visa for a visit not exceeding one
month.
88
Appendix V
Double Taxation Agreements
Taxes on various payments by Malaysian residents to non-residents

under Double Taxation Agreements
Technical /
Management
Countries of residence Royalties Interest Fees Dividends
% % % %
Non – treaty countries 10 15 10 Nil
Treaty countries
1. Albania, Republic 10 Nil or 10 10 Nil

2. Argentina * 10 15 10 Nil
3. Australia Nil or 10 Nil or 15 Nil Nil
4. Austria 10 Nil or 15 10 Nil
5. Bahrain 8 Nil or 5 10 Nil
6. Bangladesh Nil or 10 Nil or 15 10 Nil
7. Belgium 10 Nil or 10 10 Nil
8. Bosnia & Herzegovina 8 Nil or 10 10 Nil
9. Canada Nil or 10 Nil or 15 10 Nil
10. Chile ** 10 15 5 Nil
11. China, People’s Republic Nil or 10 Nil or 10 10 Nil
12. Croatia Nil or 10 Nil or 10 10 Nil
13. Czech Republic 10 Nil or 12 10 Nil
14. Denmark Nil or 10 Nil or 15 10 Nil
15. Egypt 10 Nil or 15 10 Nil
16. Fiji 10 Nil or 15 10 Nil
17. Finland Nil or 10 Nil or 15 10 Nil
18. France Nil or 10 Nil or 15 10 Nil
19. Germany Nil or 10 Nil or 15 Nil Nil
20. Hungary 10 Nil or 15 10 Nil
21. India Nil or 10 Nil or 10 10 Nil
#
22. Indonesia 10 Nil or 15 10 Nil
23. Ireland 8 Nil or 10 10 Nil
24. Islamic Republic of Iran ** Nil or 10 Nil or 15 10 Nil
25. Italy Nil or 10 Nil or 15 10 Nil
26. Japan 10 Nil or 10 10 Nil
27. Jordan 10 Nil or 15 10 Nil
28. Kazakhstan ** 10 Nil or 10 10 Nil
29. Korea, Republic Nil or 10 Nil or 15 10 Nil
30. Kuwait 10 Nil or 10 10 Nil
31. Kyrgyz, republic 10 Nil or 10 10 Nil
89
32. Lebanon Nil or 8 Nil or 10 10 Nil

Technical /
Management
Countries of residence Royalties Interest Fee Dividends
% % % %
33. Luxembourg Nil or 8 Nil or 10 8 Nil
34. Malta 10 Nil or 15 10 Nil
35. Mauritius 10 Nil or 15 10 Nil
36. Mongolia 10 Nil or 10 10 Nil
37. Morocco ** Nil or 10 Nil or 10 10 Nil
38. Myanmar ** 10 Nil or 10 10 Nil
39. Namibia 5 Nil or 10 5 Nil
40. Netherlands Nil or 8 Nil or 10 8 Nil
41. New Zealand Nil or 10 Nil or 15 10 Nil
42. Norway Nil or 10 Nil or 15 10 Nil
43. Pakistan Nil or 10 Nil or 15 10 Nil
44. Papua New Guinea 10 Nil or 15 10 Nil
45. Philippines Nil or 10 Nil or 15 10 Nil
46. Poland Nil or 10 Nil or 15 10 Nil
47. Romania Nil or 10 Nil or 15 10 Nil
48. Russia 10 Nil or 15 10 Nil
49. Saudi Arabia –Old agreements * 10 15 10 Nil
Saudi Arabia –New agreements ** 8 Nil or 5 8 Nil
50. Seychelles 10 10 10 Nil
51. Singapore –Old agreements 10 Nil or 15 10 Nil
Singapore –New agreements 8 Nil or 10 5 Nil
52. South Africa 5 10 5 Nil
53. Spain 7 Nil or 10 10 Nil
54. Sri Lanka 10 Nil or 10 10 Nil
55. Sudan 10 Nil or 10 10 Nil
56. Sweden –Old agreement Nil or 10 Nil or 15 10 Nil
Sweden –New agreement Nil or 8 Nil or 10 8 Nil
57. Switzerland Nil or 10 Nil or 10 10 Nil
58. Syria 12 Nil or 10 10 Nil
59. Taiwan 10 10 7.5 Nil
60. Thailand Nil or 10 Nil or 15 10 Nil
61. Turkey 10 Nil or 15 10 Nil
62. United Arab Emirates 10 Nil or 5 10 Nil
63. United Kingdom 8 Nil or 10 8 Nil
64. United States of America * 10 15 10 Nil
65. Uzbekistan 10 Nil or 10 10 Nil
66. Venezuela 10 Nil / 15 10 Nil
67. Vietnam 10 Nil or 10 10 Nil
68. Zimbabwe 10 Nil or 10 10 Nil
90
Notes
1. Payments of approved royalties or approved industrial royalties and interest on

approved loans and long term loan (as defined in each double tax agreement) to non-
resident are usually tax exempt.
2. Where the rate of tax on the above payments is not specifically mentioned in the
respective double tax treaty, the applicable rate of tax as stated in the Income Tax Act
1967 (ITA 1967) is inserted herein.
3. Where the rate of tax as stated in the Income Tax Act 1967 is lower than the maximum
rate of tax as mentioned in the respective double tax agreement, the lower rate of tax
shall apply and is inserted herein.
4. For Taiwan, double tax relief was given to the Taipei Economic and Culture Office in
Malaysia by way of exemption orders.
* Limited double tax treaty
** Gazetted DTAs; not yet entered into force

#
Protocol which amends limited articles of the treaty has been gazetted but not yet
entered into force
91
Appendix VI
Tax Rates
Income Tax Rates - Resident Individuals
Chargeable Income Rate Tax

RM RM
%
On the first 2,500 0 0
On the next 2,500 1 25

On the first 5,000 25
On the next 15,000 3 450

On the first 20,000 475
On the next 15,000 7 1,050

On the first 35,000 1,525
On the next 15,000 13 1,950

On the next 20,000 19 3,800

On the next 30,000 24 7,200

On the first 100,000 14,475
On the next 150,000 27 40,500

On the first 250,000 54,975
====== ======
In excess of 250,000 28
======
92
Appendix VII
Personal Reliefs And Rebates
The following reliefs are available to a resident in Malaysia
PERSONAL RELIEFS
RM
Taxpayer – personal relief 8,000
Wife – if she has no total income or elects for combined assessment 3,000
Husband – if he has no total income or elects for combined assessment 3,000
Children:
Each child (below 18 years old) 1,000
Disabled child (unmarried) 5,000
Each child above 18 years old and studying:
-Overseas universities, colleges or similar establishments 4,000
-Local universities, colleges or similar establishments 4,000
Life insurance premiums/ Approved fund contributions:

Taxpayer (Maximum) 6,000
Further deduction for amount paid by wife under combined assessment -
(Maximum)
Insurance premiums on insurance for education or medical benefits:

(Maximum)
Annuity premium on annuity purchased through EPF Annuity Scheme:-

(Maximum)
Medical expenses for parents (Maximum) 5,000
Medical expenses for taxpayer, spouse and children on serious diseases 5,000
(include RM 500 for medical examination expenses) (Maximum)
Disabled person :
Taxpayer 6,000
Spouse 3,500
Supporting equipment for disabled taxpayer, spouse, children or parent 5,000

(Maximum)
Fee for acquiring technical, vocational, industrial, scientific or technological, 5,000

law, accounting, Islamic financing, skills or qualifications (Maximum)
93
Purchase of books, journals, magazines and other similar publications for the 1,000
use of taxpayer, spouse or children
Purchase of computer 3,000
(Once every three years)
Amount deposited into Skim Simpanan Pendidikan Nasional for his child 3,000
(Maximum)
Purchase of sports equipment 300
INCOME TAX REBATES FOR INDIVIDUALS
RM
REBATE GIVEN TO TAXPAYER
Individual
- chargeable income not exceeding RM 35,000 350
Additional rebate for wife

- if she does not elect for separate assessment or has no income or elects for 350
combined assessment with husband
Additional rebate for husband

- if he has no income or elects for combined assessment with wife 350
Rebate given to wife if she elects for separate assessment or does not elect for 350
combined assessment
ZAKAT, FITRAH OR ANY OTHER ISLAMIC RELIGIOUS DUES
Full rebate in respect of zakat, fitrah or any other Islamic religious

dues paid
ANY FEE PAID TO GOVERNMENT FOR THE ISSUE OF AN EMPLOYMENT PASS, VISIT
PASS OR WORK PASS
Full rebate of fee paid.
94
Appendix VIII
Rates of Levy for Foreign Workers
SECTOR Levy per

year
RM
Management / Professional
Technical 2,400
Professional 3,600
Middle Management 3,600
Higher Management 4,800
Agriculture / Estate
Unskilled worker 300

Semi – skilled worker 1,080
Skilled worker 1,440
Workers in paddy fields and sugar cane plantations Exempted
Manufacturing and construction

Semi-skilled worker 1,200
Housemaids 360
Other sectors

Semi-skilled worker 1,080
95
Appendix IX
Places to Stay In Malaysia

Name State Tel Contact Email
1 Putra Palace Perlis 604-976 7755 resv@putrapalace.com
www.putrapalace.com/index.php
2 Eastern Oriental Hotel Penang 604-222 2000 sales.hotel@e-o-hotel.com

604 261 2966 www.e-o-hotel.com
3 Cheong Fatt Tze Mansion Penang 604 262 5289 cftm@tm.net.my

www.cheongfatttzemansion.com
4 Genting Highlands Resort Pahang 603 211 1118 www.genting.com.my
5 Shangri-La Kuala Lumpur Kuala 603 2032 2388 slkl@shangri-la.com

Lumpur www.shangri-la.com
6 The Westin Kuala Lumpur Kuala 603 2731 8333 twkl.reservations@westin.com

Lumpur www.starwoodhotels.com/westin/
7 The Ritz Carlton Kuala 603-21428000 www.ritzcarlton.com/hotels/kuala_lumpur

Lumpur 603-27118143
8 Hilton Kuala Lumpur Kuala 603-2264 2264 www.hilton.com

Lumpur 603-2264 2266
9 Crowne Plaza Mutiara+B60 Kuala 603-21482322 www.crowneplaza.com/kualalumpur

Lumpur 603-21442157
10 Putrajaya Shangri-La Hotel Putrajaya 603-8887-8888 slpt@shangri-la.com

603-8887-8889 http://www.shangri-la.com/
11 Sheraton Labuan Labuan 6087-422000 s_labuan@Tm.net.my

6087-422222 www.starwoodhotels.com/sheraton/
12 Pan Pacific, KLIA Selangor (6)03-8787 3333 klairport@panpacific.com

(6)03-8787 5555 www.klairport.panpacific.com
13 Sunway Lagoon Resort Hotel Selangor (6)03-74928000 hotelrsvn@sunway.com.my

(6)03-74928001 www.sunway.com.my/hotel/html/index.asp
14 Royal Adelphi, Seremban Negeri (6)06-7666 666 info@royaladelphi.com

Sembilan (6)0-6-7666 600 www.royaladelphi.com/
15 Hotel Equatorial, Melaka Malacca (6)06-2828333 info@equatorial.com

(6)06-2829333 www.equatorial.com/mel
16 Renaissance Melaka Hotel Malacca www.melaka.ws/renaissance/rooms.htm
17 Hyatt Regency, Johor Bahru Johor (6)07-2221234 petrus@hrjb.po.my

(6)07-2232718 http://johorbahru.regency.hyatt.com/
96
18 Sofitel Palm Resort Johor (6)07-5996000 sofitel@palmresort.com

(6)07-5997027 www.palm-resort.com
19 The Zon Regency Hotel Johor (6)07-2219999 http://zonhotel.com.my/main.html

By The Sea (6)07-2210999
20 Renaissance, Kota Bharu Kelantan 609-7462233 www.marriott.com/

609-7461122
21 Miri Marriott Resort and Spa Sabah (6)085-421121 www.marriott.com

(6)085-402855
22 Hilton, Kuching Sarawak (6)082-248200 kuching@hilton.com

(6)082-428984 www.hilton.com/en/hi/hotels/
23 Hyatt Regency Kinabalu Sabah (6)088-221234 reservation.hrkinabalu@hyattintl.com

(6)088-225972 www.kinabalu.regency.hyatt.com/
24 The Royale Bintang Kuala (6) 03-2143 9898 resvn@royale-bintang-hotel.com.my

Lumpur (6) 03 2142 1807 http://www.royalebintang.com.my/kualalumpur/
25 Crown Regency Kuala 603-2162 3888 crss.kul@crown-hotelsresorts.com

Service Apartment Lumpur 603-2162 1333 http://www.crownregency.com.my/crown/
26 Cititel Express Kuala 603-2691 9833 infokul@cititelexpress.com

Lumpur 603-2691 3103 resvnkul@cititelexpress.com
http://www.cititelexpress.com
27 KL Plaza Suites Kuala 603 - 2145 6988 klps@streamyx.com

Lumpur 603 - 2148 1390 www.berjayahotels-resorts.com
28 Coliseum Cafe & Hotel Kuala 603-2692 6270

Lumpur
29 The City Bayview Hotel Penang 604-2633161 cbvpg@tm.net.my

604-2634124
30 Bayview Hotel Melaka Malacca 606 283 9888 bayviewmelaka@bayviewhotels.com

606 283 6699 www.bayviewhotels.com/melaka/
31 Balau Bay Resort Johor 607-822 8020 http://www.desarubalau.com

607-822 8021
32 Desaru Golden Beach Hotel Johor 607-8221101 hotel@desaruresort.com

607-8221480 http://www.desaruresort.com/
33 Seaview Resort Desaru Johor 607-827 0128

607-827 0128
34 Punggai Bayu Beach Resort Johor 607-8228016

607-8228016
35 Desaru Damai Hotel Johor 607-8224600

607-8221237 http://www.desarudamai.com/
36 Chalet Tanjung Balau Johor 607-8228260 http://www.kejora.gov.my/chalet_balau.htm
97
607-822 1216
37 Desaru Holiday Chalet Johor 607-8221212 http://www.desaruresort.com/

607-8221245
38 Crystal Crown Hotel Selangor 603-31654422 cchhr@po.jaring.com.my

603-31658408 http://www.crystalcrown.com.my
39 Crystal Crown Hotel Johor 607-3334422 cchpj@crystalcrown.com.my

607-3345505 http://www.crystalcrown.com.my
40 Berjaya Times Square Hotel Kuala 603-2117 8000 btshcc@timessquarekl.com

& Convention Centre Lumpur 603-2143 3352 http://www.berjayaresorts.com/
41 Putrajaya Marriott Hotel Putrajaya 603-89498888 sales.hotel@marriottputrajaya.com

603-89498999 www.marriott.com/kulpg
42 One World Hotel Selangor 603 7681 1111 www.oneworldhotel.com.my

603 7681 1188
43 Tiara Beach Resort Negeri 606 - 662 8888 reservation@tbr.com.my

Sembilan 606 - 662 8989 www.portdicksonresorts.com
44 Cititel Mid Valley Kuala 603-2296 1188 info@cititelmidvalley.com

Lumpur 603-2283 5551 http://www.cititelmidvalley.com/
45 Boulevard Hotel Kuala 603-22958000 resvnkul@blvhotel.com

Lumpur 603-22878551 http://www.blvhotel.com/
46 Impiana Casuarina Hotel Perak 605-255 5555 slsici@impiana.com

605-255 8177 http://ipohhotels.impiana.com/
47 Number 8 Guesthouse Kuala 603 - 21442050 reservations@numbereight.com.my

Lumpur 603 - 21444250 http://www.numbereight.com.my/
48 Lavender Inn Johor 607- 5114 509 enquiry@lavender-inn.com

607- 5114 639 www.lavender-inn.com
49 Pulai Springs Resort Johor (6)07-521 2121 reservation@psrb.com.my

(6)07-521 1818 http://www.pulaisprings.com
50 Sebana Cove & Marina Resort - 607-826 6688 sales@sebanacove.com

607-826 6622 http://www.sebanacove.com/
51 Impiana KLCC Hotel & Spa Kuala 603 2147 1111 resvn1impianaklcc@impiana.com
Lumpur 603 2147 1100 www.impiana.com
52 Impiana Cherating Resort Pahang 60(9) 581 9000 info.cherating@impiana.com

60(9) 581 9090 http://cheratinghotels.impiana.com/
53 The Pulai Desaru Beach Resort Johor 607-822 2222 http://www.thepulai.com.my/

607-822 2223
54 Putra Brasmana Hotel Perlis 604-985 5900 putrabrasmana@yahoo.com

604-985 2900 www.putrapalace.com
98
55 Bukit Ayer Jungle Park Resort Perlis 604-977 0710

604-977 7285
56 The Gardens Kuala 603-2268 1188 infokul@gardenshtlres.com

Hotel & Residences Lumpur 603-2284 8998 http://www.gardenshtlres.com/
57 Desaru Golf & Country Resort Johor 607-8222 333 desarug@po.jaring.my
607-8221 855 http://www.desarugolfclub.com.my/
58 Tune Hotel Kuala 6(03) 2692 3300 http://www.tunehotels.com/index.asp

Lumpur 6(03) 2691 3301
59 Prince Hotel & Residence Kuala 603-2170 8888 enquiry@princehotelkl.com.my

Lumpur 603-2170 8999 http://www.princehotelkl.com/
60 Crystal Crown Hotel Kuala 603-6259 4422 cchkl@crystalcrown.com.my

Lumpur 603-62593322 http://www.crystalcrown.com.my
99
Appendix X
Quantitative Listing Criteria on Bursa Malaysia

Aspect Main Board Second Board MESDAQ MARKET
Three (3) Alternative
Routes for Listing
a. Profit Track Uninterrupted Profit After Tax (PAT) Uninterrupted PAT of 3-5 For technology based companies,
Record Test of 3-5 full financial years (FY) with full FY with aggregate of no minimum period of business
aggregate of at least RM30 million; at least RM12 million; operation and profit record.
PAT of at least RM8 million for the PAT of at least RM4 million
most recent full FY for the most recent full FY Technology incubator companies
must have commenced its
business operations for at least
12 months and must have its
financial statements for the said
12 months audited
All other companies must have

been in operations and have
generated operating revenues
from their core business for at
least 3 full FY
b. Market A total market capitalisation of at

Capitalisation/ least RM500 million upon listing.
Profit Test
PAT of at least RM30 million for the
most recent full FY.
c. Infrastructure Must have the right to build and

Project operate an infrastructure project in
Company or
Test outside Malaysia:
- that contributes to the
overall economic growth of
Malaysia or which is in accordance
with national economic
objectives and policies;
- for which a concession or license
has been awarded by a government
or a state agency, in or outside
Malaysia, with remaining
concession
of license period of not less than
15 years; and with project costs
of not less than RM500 million.
Issued and Paid Up Minimum RM500 million Minimum RM40 million For technology incubator company,
minimum RM20 milllion.
For all other companies, minimum

RM2 million
IPO Price Minimum RM0.50 each Minimum RM0.50 each Minimum RM0.50 each
At least 25% of the

Public Spread At least 25% of the company's company's At least 25% but not more than 49%
share capital; and share capital; and of the company's share capital; and
minimum of 1,000 minimum of 1,000 minimum of 200
public shareholders holding public shareholders holding public shareholders holding
100
not less than 100 shares

not less than 100 shares each each. not less than 100 shares each.
Equity restrictions: Bumiputera equity participation of at least 30%. Bumiputera participation of at least
30% within 5 years of listing of 1
Compliance with Bumiputera equity participation can make up the 25% public spread. year
National
Development following the company achieving the
Policy (NDP) 2nd Board profit track record,
whichever is earlier.
Note: Multimedia Super Corridor (MSC) Companies are exempted from NDP requirements.
Company which has predominantly foreign-based operations is allowed to seek listing
on the MESDAQ Market provided the listing vehicle is incorporated in Malaysia.
101
Appendix XI
Integrated Bus and Rail Network
RapidKL is an integrated BUS & RAIL public transportation company in the Klang Valley. It
serves as the main service provider of mass public transportation in the Klang Valley via an
integrated rail and bus network. They operate the KELANA JAYA LINE and the AMPANG
RAIL LINE together with a network of 161 bus routes. The integrated transportation network
transports approximately 4 million passengers every week with 908 buses and 48 rail stations
operating
daily.
102
KLANG VALLEY INTEGRATED TRANSPORT SYSTEM MAP
103
KELANA JAYA LINE (Formerly known as PUTRA Line)
Kelana Jaya Line uses the state-of-the-art driverless system by Advanced Rapid Transit Mark
II technology from Canada.The alignment starts from the Depot in Subang and ends at
Gombak Station totaling to 29km in length with a total of 24 stations.
Monday - Saturday / Sunday & Public Holiday)

MONDAY - SATURDAY SUNDAY & PUBLIC HOLIDAY
STATION
OPENS CLOSES OPENS CLOSES
KELANA JAYA - 6.00am - - 11.40pm - - 6.00am - - 11.10pm -
TAMAN BAHAGIA - 6.00am - - 11.40pm - - 6.00am - - 11.10pm -
TAMAN PARAMOUNT - 6.00am - - 11.40pm - - 6.00am - - 11.10pm -
ASIA JAYA - 6.00am - - 11.45pm - - 6.00am - - 11.15pm -
TAMAN JAYA - 6.00am - - 11.45pm - - 6.00am - - 11.15pm -
UNIVERSITI - 6.00am - - 11.50pm - - 6.00am - - 11.20pm -
KERINCHI - 6.00am - - 11.50pm - - 6.00am - - 11.20pm -
ABDULLAH HUKUM - 6.00am - - 11.50pm - - 6.00am - - 11.20pm -
BANGSAR - 6.00am - - 11.55pm - - 6.00am - - 11.25pm -
KL SENTRAL - 6.00am - - 11.55pm - - 6.00am - - 11.25pm -
PASAR SENI - 6.00am - - 12.00am - - 6.00am - - 11.30pm -
MASJID JAMEK - 6.00am - - 12.00am - - 6.00am - - 11.30pm -
DANG WANGI - 6.00am - - 12.00am - - 6.00am - - 11.30pm -
KG. BARU - 6.00am - - 12.00am - - 6.00am - - 11.30pm -
KLCC - 6.00am - - 12.00am - - 6.00am - - 11.30pm -
AMPANG PARK - 6.00am - - 12.00am - - 6.00am - - 11.30pm -
DAMAI - 6.00am - - 11.55pm - - 6.00am - - 11.25pm -
DATO' KERAMAT - 6.00am - - 11.55pm - - 6.00am - - 11.25pm -
JELATEK - 6.00am - - 11.55pm - - 6.00am - - 11.25pm -
SETIAWANGSA - 6.00am - - 11.50pm - - 6.00am - - 11.20pm -
WANGSA MAJU - 6.00am - - 11.50pm - - 6.00am - - 11.20pm -
TAMAN MELATI - 6.00am - - 11.45pm - - 6.00am - - 11.15pm -
TERMINAL PUTRA - 6.00am - - 11.45pm - - 6.00am - - 11.15pm -
104
AMPANG LINE (Formerly known as STAR line)
Adtranz German is the make of trains and system for these two lines.Today these two lines
are carrying over 130,000 to 150,000 per day on a weekday basis and an average of 120,000
per day on weekends. It has 25 stations throughout the 27 km, transporting passengers from
the northern, north-eastern and south-western suburbs in the Klang Valley.
AMPANG LINE STATION OPERATION HOURS

MONDAY - SUNDAY & PUBLIC HOLIDAY
OPEN CLOSE
AMPANG 6.00am 11.30pm
(TO SENTUL TIMUR) 6.00am 11.30pm
CAHAYA
(TO AMPANG) 6.00am 11.30pm
CEMPAKA
PANDAN (TO SENTUL TIMUR) 6.00am 11.35pm
INDAH (TO AMPANG) 6.00am 11.45pm
PANDAN (TO SENTUL TIMUR) 6.00am 11.35pm
JAYA (TO AMPANG) 6.00am 11.45pm
MALURI
MIHARJA
CHAN SOW LIN 6.00am 11.40pm
PUDU 6.00am 11.40pm
HANG TUAH 6.00am 11.40pm
PLAZA RAKYAT 6.00am 11.40pm
(TO SENTUL TIMUR) 6.00am 12.00am
MASJID
JAMEK (TO AMPANG & SRI
6.00am 12.00am
PETALING )
BANDARAYA 6.00am 11.35pm
SULTAN ISMAIL 6.00am 11.35pm
PWTC 6.00am 11.35pm
TITIWANGSA 6.00am 11.35pm
SENTUL 6.00am 11.35pm
SENTUL TIMUR 6.00am 11.35pm
105
CHERAS 6.00am 11.35pm

SALAK SELATAN 6.00am 11.35pm
BANDAR TUN RAZAK 6.00am 11.30pm
TASIK SELATAN 6.00am 11.30pm
SUNGAI BESI 6.00am 11.25pm
BUKIT JALIL 6.00am 11.25pm
SRI PETALING 6.00am 11.25pm
106
RSM Robert Teo, Kuan & Co.

Penthouse, Wisma RKT, Block A
2 Jalan Raja Abdullah
Off Jalan Sultan Ismail
50300 Kuala Lumpur
Malaysia
Telephone: (603) 2697 2888
Fascimile: (603) 2691 7733; 2698 6600,
Email: audit@rsmi.com.my
rktax@rsmi.com.my
107
Audit & Advisory

RSM Robert Teo, Kuan & Co (AF-0768)
Penthouse, Block A, Wisma RKT
No. 2, Jalan Raja Abdullah,
Off Jalan Sultan Ismail, Strategic Partners
50300 Kuala Lumpur
MALAYSIA
Tax Consulting Corporate & Secretarial

RSM Tax Consultants Sdn Bhd (283706-D) Quest Corporate Services Sdn Bhd (209269-H)
RKT Tax Consultants Sdn Bhd (192832-T) Quest Secretarial Services Sdn Bhd (330840-T)
Penthouse, Block A, Wisma RKT Upper Penthouse, Block A, Wisma RKT
No. 2, Jalan Raja Abdullah, No. 2, Jalan Raja Abdullah,
Off Jalan Sultan Ismail, Off Jalan Sultan Ismail,
50300 Kuala Lumpur 50300 Kuala Lumpur
MALAYSIA MALAYSIA
Management & Finance Consulting Business Process Outsourcing

RSM Strategic Business Advisors Sdn Bhd (704502-V) Quest BPO Sdn Bhd (209269-H)
2nd Floor, Block E, Wisma RKT Upper Penthouse, Block A, Wisma RKT
No. 10, Jalan Raja Abdullah, No. 2, Jalan Raja Abdullah,
Off Jalan Sultan Ismail, Off Jalan Sultan Ismail,
50300 Kuala Lumpur 50300 Kuala Lumpur
MALAYSIA MALAYSIA
Corporate Recovery & Insolvency International Business Centre

RSM NWT Advisory Services Sdn Bhd (525583-K) Quest Business Centre Sdn Bhd (224669-D)
(formerly known as RSM Nelson Wheeler Teo 3rd Floor, Block A, Wisma RKT
Corporate Advisory Services Sdn Bhd) No. 2, Jalan Raja Abdullah,
Ground Floor, Block B, Wisma RKT Off Jalan Sultan Ismail,
No. 4, Jalan Raja Abdullah, 50300 Kuala Lumpur
Off Jalan Sultan Ismail, MALAYSIA
50300 Kuala Lumpur
MALAYSIA
Risk Advisory
RSM Corporate Consulting Sdn Bhd (564544-W)
Penthouse, Block A, Wisma RKT
No. 2, Jalan Raja Abdullah,
Off Jalan Sultan Ismail,
50300 Kuala Lumpur
MALAYSIA
108

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Business in Malaysia

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DOING SUCCESSFUL BUSINESS IN MALAYSIA

The material contained in this publication is not intended to provide comprehensive or

We strongly recommend that anyone intending to do business in Malaysia should seek

Dato’ Robert Teo Keng Tuan

RSM Robert Teo, Kuan & Co.

INTRODUCTION TO RSM INTERNATIONAL

Chapter 18 Labuan International

Chapter 1 Malaysia Chapter 19 Malaysia Multimedia

Chapter 2 Government policies SECTION D LABOUR

Chapter 4 Banking and Finance Chapter 20 Labour conditions

Chapter 5 Types of Business Chapter 21 Labour Legislations

Chapter 7 Company Chapter 23 Industrial relations

Chapter 9 Accounting and Chapter 24 Guidelines for striking

SECTION B TAXATION Chapter 25 Guidelines on winding

Chapter 13 Corporate Taxation Chapter 26 General guidelines on

Chapter 15 Withholding Taxes Appendix I Acronyms and

Appendix V Double Tax Agreements

Appendix VI Tax Rates

Appendix VII Personal reliefs and

Appendix VIII Rates of levy for foreign

Appendix IX Places to stay in

Appendix X Qualitative Listing

Appendix XI Integrated Bus and Rail

TO OUR VALUED CLIENTS AND ASSOCIATES

• Robert Teo, Kuan & Co.

Restructuring & Insolvency

Profit Improvement / Risk Management

Introduction to Robert Teo, Kuan & Co.

Every client, whether it is a large multinational company or a private individual, is given

Tax consultancy and planning

This service is extended to some of our clients either on a continuous or part-time

Receiverships Credit control review Provisional liquidation

Corporate finance services

Initial public offering Share valuation Loan dossiers

Management consultancy services

Our support to clients extends to related services as follows:

b. Business planning and appraisal

Investment consultancy services

a. Registration of a company in Malaysia

b. Application for manufacturing licence

c. Application for tax incentives such as:

d. Application for key posts/expatriate posts

e. Application for work permits

f. Assistance in identifying project sites

g. Arrangement of financing which include:

i. Application for Licensed Manufacturing Warehouse (LMW) status and

The RSMi International network covers countries in following regions:

Africa: Europe: Latin America North America:

Chapter 1: Malaysia - An Introduction

1.1 Geography and climate

About four-fifths of Malaysia’s approximate land area of 330,000 square km is covered by

1.5 Investment guarantee agreements

To encourage foreign investments, Malaysia has signed investment guarantee agreements

a. A guarantee that there shall be no expropriation or nationalisation except for a public

b. A permission to remit or repatriate in any convertible currency profits or capital on

1.6 Resources and primary products

Rubber 13% of the world output

Palm Oil 45% of the world output

1.7 Transport and communication

Roads, Railway and Public Transportation

There is ample supply of electricity throughout Malaysia.

Chapter 2: Government Policies Affecting Business

2.1 Ninth Malaysia Plan (9MP)