FAQs

  1. How do I set up a company in Malaysia? How long does it take and what are the documents needed?

Companies doing business in Malaysia would need to be registered with the Companies Commission of Malaysia (CCM) under the Companies Act 1965.

From the submission of all necessary paperwork to the CCM, it usually takes from 5 days to 2 weeks for the Business Registration Certificate to be issued.

 

Details of the process and documents needed to incorporate a local company are available at:

http://www.ssm.com.my/en/company/incorporation-of-local-company

 

Details of the process and documents needed to incorporate a foreign company are available at:

http://www.ssm.com.my/company/incorporation-of-foreign-company

 

For more detailed information about setting up a company in Malaysia, please visit the CCM website at www.ssm.com.my. Investors are also invited to visit the MIDA Business Information Centre (BIC) at Kuala Lumpur's MIDA Sentral for further advice and assistance or its website at www.mida.gov.my.

  1. Can a foreigner set up a sole proprietorship or partnership?

Foreigners with permanent residency can set up enterprises and sole proprietorships. Foreigners can only set up sole proprietorships or partnerships in specific professional industries like medical or engineering.

 

For more information about this, please refer to the CCM website at www.ssm.com.my or visit the MIDA website at www.mida.gov.my.

  1. What does services sector cover?

The services sector generally covers the following areas:

  • Business and Professional services (e.g. architectural, engineering, legal, accounting services)
  • Health related and social services (e.g hospital, health tourism)
  • Tourism and travel related services (activities such as eco-tourism)
  • Environment (Green Technology including renewable energy and energy conservation/efficiency, Sewage & Waste management)
  • Financial services (e.g integrated Islamic finance)
  • Distribution services (e.g wholesale trade, retailing & franchising)
  • Communication (e.g Postal, Courier, ICT such as telecommunication and mobile services)
  • Transportation services (e.g Maritime & air transport)
  • Education services (e.g Higher education, vocational & technical education)
  • Construction & related engineering
  • Recreational, Cultural & Sporting Services
  1. What is the contribution of the Services sector for Malaysia?

Services contributed 54.6% to the GDP in 2012.

Under the 10th Malaysia Plan, the services sector is expected to contribute 61% to the GDP by 2015. This will require services to grow by 7.2% p.a. 

The sector remains on track to meet that goal, growing by 6.4% to RM408.9 billion in 2012, contributing 54.6% to the country's GDP compared with 54.2% the previous year.

 

From Jan-June 2012, the services sector investment accounted for 67.5% (RM59 billion) of total investment of RM87.3 billion, compared to other sectors such as manufacturing with 29.5% (RM25.8 billion). From this, foreign investment accounts for 12% (RM7.1 billion) whilst domestic investment accounts for 88% (RM51.9 billion).

  1. Where has Malaysia undertaken to liberalise its services sector?

Liberalisation in the services sector is currently being undertaken in:

  • ASEAN: through the ASEAN Framework Agreement on Services – AFAS (full liberalisation to be undertaken by 2015 and logistics 2013);
  • WTO: through progressive liberalisation (General Agreement on Trade in Services -GATS); and
  • bilateral and regional FTAs: through progressive liberalisation and binding commitments in GATS.
  1. Why do we need to open or liberalise the services sector?

There are push and pull factor for services sector liberalisation.

  • Pull factor: commitments made in bilateral and multilateral agreements which have benefitted our country, since Malaysia is a trading nation.
  • Push factor: creation of a competitive environment that will benefit consumers and the Malaysia citizens through improvement in our quality of life, adherence to international standards, and accessibility to wider choice and competitive pricing, among others.

Generally, the services sector is liberalised to:

  • elevate Malaysia towards developed country status. The services sector's contribution has to be progressively increased;
  • create high value jobs for the increasing educated workforce. The services sector, which is based on skills and talents offer the best opportunity to move the country from a upper middle income to a high income country;
  • reform the economy and to enhance its competitiveness;
  • diversify into new sources of export as Malaysia is currently too dependent on the export of manufactured products; and
  • increase foreign investments in the services sector.
  1. What are the opportunities, risks and challenges in liberalising the services sector?

The liberalisation of the services sector brings with it opportunities for our investors/entrepreneurs to tap into and benefit from. The benefits & opportunities of liberalising the services sector include:

  • increasing the growth of the country;
  • encouraging FDIs;
  • creating new high-value employment opportunities;
  • attracting specialised expertise and technology;
  • allowing free movement of talent and professionals;
  • providing opportunities for domestic joint-ventures; expand out of the domestic market and enter into regional or global markets;
  • providing transparent and predictable business environment;
  • injecting competitiveness into the domestic services sector and providing wider choices for consumers; and
  • creating opportunities for local companies to become vendors and provid supporting services to foreign operations.

Meanwhile the risks and challenges attributed to the opening of the sector may include:

  • lack of capacity to take advantage of market openings;
  • intensification of competition from foreign services suppliers domestically;
  • lack of enforcement from regulators on conditions imposed in the investment approval for foreign services suppliers;
  • lack of skilled human capital to develop the industry;
  • domestic services suppliers being unaware of the availability of government support to promote and develop the services sector; and
  • the need to review domestic laws, regulations, administrative procedures and guidelines to make them more investor friendly.
  1. Are services sector included in our bilateral and regional FTA commitment?

Yes, a trade in services chapter is generally included in bilateral and regional FTAs apart from the chapters on trade in goods and investment.

 

For more information about the commitments in the bilateral and regional FTAs, please click http://myservices.miti.gov.my/web/guest/bilateral.

  1. What are our commitment for services sector under the WTO and AFAS?

Malaysia's existing commitments under GATS cover 10 services sectors:

  • business and professional;
  • communication services;
  • construction and related engineering services;
  • educational services;
  • financial services;
  • transportation services;
  • health-related services;
  • tourism and travel-related services;
  • recreational, cultural and sporting services; and
  • other services.

Under the ASEAN Framework Agreement on Services (AFAS), Member States including Malaysia have in 2012, completed eight packages of commitments in a wide range of services sectors.

 

In addition to the 10 listed, under AFAS, Malaysia has made commitments in Distribution Services and Environmental Services. These commitments follow the specific liberalisation targets and measures set in the ASEAN Economic Community Blueprint to achieve free flow of services by 2015 with flexibility.

  1. What is the difference between binding and autonomous liberalisation?

Binding commitments refer to agreements signed by Malaysia that are binding or legal in nature, such as those in our bilateral, regional FTAs and WTO. Under WTO (GATS), for example, countries make commitments on market access and national treatment through specific commitments.

 

Meanwhile, unilateral or autonomous liberalisation refers to actions or measures undertaken to liberalise selected economic sector even though there is no commitment to do so under GATS or any other regional trade agreements.

 

Malaysia undertakes autonomous or unilateral liberalisation as part of our overall development strategy of the services sector through relaxing some measures to expand market access to foreign services providers to attract more foreign investments and bring more professionals and technology as well as strengthen competitiveness of the sector.

  1. What are the areas being opened up under the liberalisation initiatives?

Under our binding commitments, sectors included in the commitments vary. Details of the above Free Trade Agreements (FTAs) can be accessed in the respective sections.

 

Unilaterally, in April 2009, 27 services subsectors were opened up and an additional 18 sub-sectors have progressively opened up to as much as 100% foreign ownership in 2012.  The decision to liberalise the first 8 broad sectors covering 27 sub-sectors was undertaken to strengthen the Malaysian economy to face the challenges of globalization, and restructure the economy to take advantage of the growth potential in the services sector.

 

For list of the 27 subsectors and 18 subsectors, please refer to the section on services commitments in MITI website.

  1. What are the services sectors being promoted under the National Key Economic Area (NKEA)?

To transform our economy, the Government has launched the Economic Transformation Programme (ETP). For this, the government worked together with the private sector to identify the National Key Economic Areas (NKEAs), the specific sectors and projects that will spur investment and economic growth where over the next 10 years, NKEA projects are expected to double per capita income to US$15,000, create 3.3 million medium-to-high income jobs and attract US$444 billion in new investments.

 

There are 12 NKEAs identified to kickstart the ETP which represent economic sectors that will drive the highest possible income over the next ten years, including 7 covering the services sector, ie: Oil, Gas and Energy; Palm Oil; Financial Services; Tourism; Business Services; Electronics and Electrical; Wholesale and Retail; Education; Healthcare; Communications Content and Infrastructure; Agriculture; and the Greater Kuala Lumpur/Klang Valley.

 

For more information about the NKEAs and the ETP, follow Twitter/etp_malaysia.

  1. Do I need to engage a consultant to set up a services firm in Malaysia?

Some companies do engage consultants to perform due diligence and research work prior to setting up a firm in Malaysia.

 

MIDA also provides assistance for companies to set up their firms in Malaysia.

 

You can visit MIDA One Stop Centre at the MIDA office in MIDA Sental or via its website at www.mida.gov.my.

  1. How is the process of services liberalisation conducted?

The process of services sector liberalisation undertaken by the Government can be categorised as a 2-fold process; one via binding commitments (through GATS, AFAS and bilateral/regional FTAs) and also through autonomous liberalisation.

  1. Are consultations held with stakeholders in the negotiation/process of liberalisation?

Yes. MITI as the coordinator of services liberalisation consults the respective Ministry and agency to identify the strategic sectors for liberasation. The respective Ministries engage with their stakeholders for comment and feedback on the identified subsectors.

  1. Where do I seek further information on services sector?

This web portal provides a background and overview of the services sector in Malaysia. Further information on services sector is available in the Ministry's website. You may also contact the respective officers at the Ministry/agencies concerned for spesific information needed.

  1. Which government agencies are involved in the services sector and who coordinates the work?

The services sector work is undertaken by various Ministries and agencies. MITI is responsible for coordination of the services sector as a whole; and relevant Ministries/agencies undertake policy development and enforcement work.

  1. Which are the agencies looking after sectoral liberalisation?

MITI is the main coordinator for the process of services sector liberalisation. MITI works with various Ministries and agencies involved in policy and implementation of the services sector.

 

Meanwhile, for the business people, the Government has established a one stop centre in MIDA to receive and approve investments in the services sector. This centre, as the focal point, will undertake coordination with all stakeholders in the public sector and will be able to provide a decision quickly.

 

19.   Which agency looks after the unregulated sectors?

The unregulated sectors are under the purview of the Ministry of Domestic Trade, Co-operatives and Consumerism.