DOING BUSINESS IN A GUIDEBOOK FOR INVESTORS B INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR C

WELCOME TO SELANGOR B INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR C

Welcome to Selangor, ’s most developed and progressive state. It is the country’s primary port of entry and strategically located around the capital city, .

As Malaysia’s largest economy, Selangor enjoys a highly developed infrastructure for major industry clusters and is a well-established investment haven backed by excellent state government support and an advanced commercial ecosystem.

Known for its highly skilled and innovative knowledge-workforce as well as an attractive cosmopolitan living standard, Selangor is a beacon of abundance and prosperity. Your journey begins here. D INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR E

A GLANCE CLOSE PROXIMITY to Kuala Lumpur Business OF THE Centre and GOLDEN Administrative Capital STATE OF MALAYSIA 11th 7.1% busiest container GDP growth port (Port ) 2 major airports 160 WORLD (KLIA, KLIA2 & institutions of CLASS Subang Skypark) higher learning cities & towns

More than 40,000 graduates per annum the national ICT Capital of Malaysia and 20 other cyber centres FREE from natural 3.4 disasters Literacy rate MILLION largest workforce 98.7% (skilled & multilingual) D INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR E FOREWORD

With a dynamic agency, we create a dynamic and smart future in Selangor. Our service-driven and industry-based economy currently contributes about 23.0% to Malaysia’s gross domestic product and is the leading investment destination by number of projects. To maintain this leading position and grow Selangor’s economy further, Invest Selangor has developed a new industrial master plan focused on 5 core clusters, namely Life Sciences, Food & Beverages Manufacturing, Transport Equipment, Electrical & Electronics as well as Machinery & Equipment. Through these clusters and our service-economy, the state of Selangor will become not only the first point of entry for companies interested in Malaysia, but even more a springboard to ASEAN.

In the digital age, Invest Selangor utilises many channels to advance the state’s economy and assist domestic as well as foreign entrepreneurs. The new Selangor Digital Creative Centre (SDCC) under Selangor Information Technology and E-commerce Council educates Malaysian business-owners to tap the vast potential of the internet. Furthermore, the Selangor International Business Summit organised by Invest Selangor offers new ways of expanding your business within the state and beyond.

Visit the Golden State of Malaysia and find out more about your business opportunities in Selangor.

The Honourable Dato’ Teng Chang Khim Executive Councillor (Chairman of Standing Committees for Investment, Industry & Commerce and Small & Medium Enterprise (SME)), Selangor F INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 01 FOREWORD

Invest Selangor is focused on your business success. We have learned from more than 18 years of investment promotion efforts, economic development and government relations that companies appreciate a reliable partner to ensure a seamless business setup and operation. This Guidebook will provide you with many insights on how we make your life and business operations easier in Selangor.

With a track record of more than RM144.2 billion (1999-2017) in investment projects (manufacturing sector), we are confident to find the best solution for you. Our focus on Transport Equipment (e.g. Aerospace), Life Sciences, Food and in particular Halal related manufacturing and services as well as certain niches in Electrical & Electronics and Machinery & Equipment open many opportunities. Furthermore, we encourage strong service sectors such as education, logistics and transportation, research, business outsourcing, ICT and others in driving and shaping the future of our state.

I also invite you personally to visit Selangor and experience the most advanced and diversed state in Malaysia offering the largest talent pool of the nation, a modern infrastructure consisting of the largest sea and airport as well as a dedicated investment promotion team always ready to support you.

Dato’ Hasan Azhari Bin Hj. Idris Chief Executive Officer, Invest Selangor F INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 01 CONTENTS CHAPTER 1: CHAPTER 4: A BRIEF INTRODUCTION TO SELANGOR COST OF DOING BUSINESS GEOGRAPHY 03 STARTING A BUSINESS 42 HISTORICAL DEVELOPMENT 04 TAXATION 42 DEMOGRAPHICS 05 HUMAN RESOURCES 42 POLITICS AND ADMINISTRATION IN SELANGOR 06 UTILITY 46 CULTURE AND ETIQUETTE 06 STATE FEES & CHARGES 49 LANGUAGE 07 TRANSPORTATION 50

CHAPTER 2: CHAPTER 5: WHY INVEST IN SELANGOR? WHAT REGULATORY REQUIREMENTS DO MALAYSIA’S MOST PROGRESSIVE STATE 08 I HAVE TO CONSIDER? INDUSTRIAL PARKS IN SELANGOR 09 LICENSING AND OTHER REQUIREMENTS 52 FREE INDUSTRIAL ZONES (FIZ) 11 GOOD MANUFACTURING PRACTICE AND GOOD DISTRIBUTION PRACTICE 56 DIGITAL FREE TRADE ZONE (DFTZ) 11 ENVIRONMENTAL REQUIREMENTS IN MALAYSIA 56 CYBER HUB OF INNOVATION 13 DEPARTMENT OF OCCUPATIONAL SAFETY AND HEALTH (DOSH) 60 THE 5 CORE CLUSTERS 13 REGULATION OF FOOD AND BEVERAGE (F&B) INDUSTRY 64 INITIATIVES BY INVEST SELANGOR 18 HALAL CERTIFICATION 65 SECTOR-SPECIFIC INFORMATION 21 REGULATION OF INSURANCE INDUSTRY 68 GOVERNMENT INCENTIVES FOR INVESTMENTS 25 REGULATION OF MEDICAL DEVICES INDUSTRY 68 LABELLING AND PACKAGING REQUIREMENT 69 CHAPTER 3: REGULATION OF PHARMACEUTICAL INDUSTRY 69 HOW CAN I SET UP MY BUSINESS IN SELANGOR? REGULATION OF ELECTRICAL AND ELECTRONICS (E&E) INDUSTRY 70 FOREIGN OWNERSHIP RESTRICTIONS 34 GOVERNMENT TENDERS AND PROCUREMENT 71 STARTING A BUSINESS 36 REGULATION OF OIL AND GAS INDUSTRY 71 COMPANY LIMITED BY SHARES 36 IMPORT, EXPORT, AND SHIPPING 72 FOREIGN COMPANIES IN MALAYSIA 39 VISA AND WORK PERMITS 75 SMALLER BUSINESS MODELS 41 REAL ESTATE 80 02 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 03

CONTENTS

CHAPTER 6: CHAPTER 8: WHAT LAWS SHOULD I KNOW ABOUT? LET’S GO TO SELANGOR! LABOUR LAW 92 PUBLIC TRANSPORTATION 140 PROTECTION OF INTELLECTUAL PROPERTY (IP) 95 TOURISM 142 INDUSTRIAL DESIGNS (ID) 97 LEISURE 143 GEOGRAPHICAL INDICATIONS (GI) 97 EDUCATION 143 COMPETITION LAW 98 HEALTHCARE 143 PERSONAL DATA PROTECTION ACT 2010 (PDPA) 99 SAFETY 143 ANTI-MONEY LAUNDERING, ANTI-TERRORISM FINANCING, AND HOUSING 144 PROCEEDS OF UNLAWFUL ACTIVITIES 100 UTILITIES 144 FRANCHISING LAWS IN MALAYSIA 101 INSURANCE 144 OFFENCES AND ENFORCEMENTS 103 SETTLING DOWN IN MALAYSIA PERMANENTLY 145 ACCOUNTING STANDARDS IN MALAYSIA 103 LAST WILL AND TESTAMENT 147 LET’S GO TO SELANGOR! 148 CHAPTER 7: WHAT CAN I EXPECT FROM THE GOVERNMENT AND CIVIL SERVICE IN SELANGOR? POLITICAL SYSTEM IN MALAYSIA 106 LEGISLATURE 106 EXECUTIVE 107 JUDICIARY 107 SELANGOR STATE POLITICAL SYSTEM 109 OFFICES IN SELANGOR 109 LOCAL AUTHORITIES IN SELANGOR 128 WHO’S WHO IN GOVERNMENT AGENCIES 132 TABULAR OVERVIEW OF GOVERNMENT AGENCIES, MINISTRIES, AND REGULATORY BODIES 138 02 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 03

CHAPTER 1: A BRIEF INTRODUCTION TO SELANGOR

Welcome to Selangor, Malaysia’s most developed and progressive state, which offers a multitude of investment opportunities, apart from being a great place to work and live. In this chapter, we explore what makes Selangor culturally unique and a premier investment destination in Malaysia.

GEOGRAPHY of 4.95% since 2013, and has been to the east, to the As the 41st most populous country forecasted to grow at the rate of 4.85% south and the Straits of to the with a population of over 32 million1, in 20184. west. Its capital city is . Malaysia is overall ranked as the 34th best country in the world (out of 80 Traditionally fuelled by its natural Would you have guessed that a state countries)2, and is one of the top 4 best resources, Malaysia now has a newly mainly associated with tin and ore countries to invest in3. industrialised economy, ranked mining activities would grow to become third largest in Southeast Asia and the most progressive state in Malaysia? Located in the tropics, it has land 27th largest in the world based on borders with , and Purchasing Power Parity valuation5. Let us turn back the clock and start , as well as maritime from the beginning of this remarkable boundaries with Vietnam and the It is a founding member of the state - Selangor! Philippines. In addition, it is linked to Association of Southeast Asian Nations by a narrow causeway and (ASEAN), the East Asia Summit, and the a bridge. Organisation of Islamic Cooperation; as well as a member of Asia-Pacific As a result, many investors find that the Economic Cooperation (APEC), the strategic placement of the peninsular Commonwealth Nations and the Non- TRIVIA and Borneo islands makes Malaysia an Aligned Movement. Kuala Lumpur and Putrajaya, two of ideal business destination. Malaysia’s three federal territories, Selangor is one of the 13 federal states were actually once a part of Selangor. Since its independence in 1957, in the country, often referred to with its Malaysia has had one of the best honorific ‘Darul Ehsan’ or “Abode of economic records in Asia. Its Gross Sincerity”. Situated on the west coast Domestic Product (GDP) has been of , Selangor is steadily growing at the average rate bordered by to the north,

1 Obtained from Department of Statistics Malaysia: https://www.dosm.gov.my/ 2 “Best Countries 2018: Global rankings, international news and data insights”. U.S. News & World Report L.P. 2018. 3 “Best Countries to Invest In”. U.S. News & World Report L.P. (https://www.usnews.com/news/best-countries/invest-in-full-list) 4 “Malaysia”. The World Bank Group. (https://data.worldbank.org/country/malaysia) 5 https://www.cia.gov/library/publications/the-world-factbook/rankorder/2001rank.html 6 “Najib: Selangor’s success due to pro-investment approach”. Star Media Group Berhad. 27 August 2005. (https://www.thestar.com.my/news/nation/2005/08/27/najib-selangors-success-due-to-proinvestment-approach/) 04 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 05

CHAPTER 1: A BRIEF INTRODUCTION TO SELANGOR

HISTORICAL DEVELOPMENT success in achieving developed status The development of a successful state is mainly due to its leaders’ pro- does not happen overnight. It all began investment approach6. in the 16th century, when Selangor was ruled by the Sultanate of Malacca. TRIVIA In addition, Selangor is also the richest In 1896, Selangor united with Negeri state in the country in terms of GDP In 1511, the area was disputed by the Sembilan, Perak, and Pahang to form per capita. It holds the highest Human Portuguese, , Aceh and Siam. the , which Development Index record among all The present hereditary sultanate was evolved into the in the states in Malaysia. established in 1641. 1948. The Federation of Malaya became independent in 1957, but Malaysia was Due to the exploitation of huge only officially formed in 1963. tin reserves, Selangor’s economy developed at a fast pace and boomed In 1963, Kuala Lumpur was both the in the 19th century. In 1854, the national capital of Malaysia and the of Selangor granted Raja Abdullah the state capital of Selangor. However, in control of Klang, bypassing Raja Mahdi, 1974, Kuala Lumpur was relinquished the son of the chief who previously to the federal government and Shah ruled Klang. Alam became the capital of Selangor. “Selangor: Pragmatic, This led to the Selangor Civil War of While it appeared as if Selangor 1867 to 1874, which was essentially Practical, Multi- had given up major parts of its land, a struggle for control of the revenues it proceeded to grow and thrive from tin. Tin mining also attracted an cultural, Welcoming, economically, becoming the first fully influx of Chinese migrant labourers, developed state in Malaysia due to a Connected and leading some of them to form secret progressive market economy in the core clan societies that fought for control Convenient.” sectors of commerce and agriculture. of the tin mines alongside Selangor Chiefs, causing conflicts between Mr. James De Caluwe On 27 August 2005, the Shah Alam Malay and Chinese factions in Perak (Managing Director) International Fair 2005 was held in and Selangor. conjunction with the official declaration Oleon Sdn Bhd of Selangor as the first developed During this time, the British grew state in Malaysia. Then Deputy Prime increasingly involved in the affairs of Minister of Malaysia, Datuk Seri Najib the Malay states. In 1874, Sultan Abdul Tun Razak stated that Selangor’s Samad of Selangor arranged for the British to hold joint governing power with the monarch. With this coalition, Selangor again prospered. Selangor is colloquially known as “THE GOLDEN STATE” of Malaysia 04 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 05

Malaysia’s Basic Demographics Peninsular Malaysia Malay Malay Malay Chinese Chinese Chinese Indian Indian Indian Serani (descendants of Portuguese Tribes: Tribes: settlers in Malacca) • Kadazan-Dusun (largest) • Iban (largest) • Bajau • Bidayuh • Murut • Melanau (strong presence in politics) • Orang Sungai • Orang Ulu • Rungus and more Source: 2010 Population and Housing Census of Malaysia, p. 5.

DEMOGRAPHICS Selangor’s Population by Ethnic Malaysia is Islam, other religions are The illustrious history of the country Group (2017) also practiced – mainly , has produced a remarkably diverse Hinduism, and Christianity. (Majority 53.03% multicultural and multilingual ethnic Malay) makeup, with significantly different Since the majority of Selangor’s Chinese 24.34% demographics in Peninsular Malaysia population are Muslim, it is not Indian 11.3% and East Malaysia. surprising that there are more than 400 Other / Non- 11.33% mosques, and more than 2,000 surau The and the indigenous people Source: Department of Statistics, Malaysia. (an Islamic assembly building that is were officially awarded “bumiputera” smaller than a mosque) in Selangor. status, recognising their special position In 2017, Selangor had the highest as provided in the Federal Constitution percentage of population in Malaysia Religions in Selangor of Malaysia, Article 153. They remain as by states at 19.9% with constantly Muslim – 57.9% “bumiputera”s to this day. increasing numbers in recent decades, Buddhist – 24.4% largely resulting from the development Hindu – 11.6% of the , Malaysia’s largest commercial hub. As Malaysia’s Christian – 3.8% transportation and industrial hub, Other / Unknown – 1.4% Selangor has a large job market that religions has attracted more and more migrants Taoist or Chinese – 0.5% TRIVIA from other states as well as those from religion adherent Citizens of Malaysia are called overseas over the years. Non-religious – 0.4% “Malaysians”, not “Malays”. Malays Source: 2010 Population and Housing Census refer to the people of the Malay race, Recent data from 2017 shows that of Malaysia, p. 94. who are generally Muslims and make Selangor’s population has quadrupled up the majority of the country’s since 1980 – a remarkable increase. The largest mosque in Malaysia as population. With Malaysia’s diverse demographics, well as Southeast Asia, the iconic it is no wonder that its constitution Sultan Salahuddin Abdul Aziz Shah provides for freedom of religion. mosque, is also situated in Selangor. Though the official religion of Additionally, Muslim prayer rooms 7 “List of Hindu Temples in Malaysia : Selangor”. Wikipedia Foundation Inc. 2 February 2018. (https://en.wikipedia.org/wiki/List_of_Hindu_temples_in_Malaysia#Selangor) 8 “Malaysian Buddhist Directory Online : Selangor”. Parami – The Buddhist Home Since 1999. (http://www.parami.org/malaysian-buddhist-directory-online/#SEL) 9 Council of Churches of Malaysia. 06 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 07

CHAPTER 1: A BRIEF INTRODUCTION TO SELANGOR

can be found in most malls, airports, Similar to the Parliament, the convention centres, and venues with State Assembly has two legislative public access. There are also more components: the Sultan, and the than 70 Hindu temples7, more than State Council, or Dewan Negeri. 20 Buddhist temples8, more than 15 However, unlike the Parliament, the TRIVIA churches and many more Christian State Assembly is limited to making The indigenous people of the Peninsular community buildings in Selangor9. laws relating to the state, known as can be found in , still enactments. maintaining their culture and language POLITICS AND ADMINISTRATION while adapting to the modern way IN SELANGOR The matters in which it can enact of life.Interestingly, there are also On 26 February 1959, the Constitution laws on are cited in List II of the Ninth discussions and plans to build Carey of the State of Selangor came into Schedule of the Federal Constitution, Island port, the push for a third port in force. According to it, Selangor is a which includes land matters and local Klang! hereditary constitutional monarchy, administration. Once a bill has been in which an elected or hereditary approved by the State Council, it shall CULTURE AND ETIQUETTE monarch acts as within be signed by the , The traditional culture of Selangor’s the parameters of a written, unwritten then gazetted in the Selangor Malay majority is influenced by or blended constitution. Government’s Gazette. several ancestries, which include Bugis, Minangkabau, Banjarese, and Currently, Sultan Sharafuddin Idris Before or once the State Assembly Javanese. Javanese was particularly dominant in the west coast district Shah Al-Haj is the reigning Sultan expires, it must be dissolved for a such as in , Klang, and of Selangor. His majesty ascended fresh election to elect its members. . Ethnic Chinese and Indian the throne on 22 November 2001, Currently, the Chief Minister of cultures have also made their mark succeeding his father, Sultan Selangor is The Right Honourable on Selangor’s society, as these two Salahuddin Abdul Aziz Shah. (YAB) Dato’ Seri groups have larger populations among of the People’s Justice Party (PKR) the minorities. The people of Selangor As the constitutional Ruler of Selangor, which belongs to the political coalition are known for their courteousness and the role, powers, and duties of the known as the People’s Alliance friendliness. Most Muslims prefer to Sultan of Selangor are clearly stated (). greet other Muslims, as well as non- in the aforementioned constitution. Muslims with the ‘salaam’, by placing The office of the Sultan is vested with There are nine main in the tips of their fingers briefly to their the executive power of the state, and Selangor including Petaling, Hulu chest to indicate that the greetings come from the heart. he is the head of the religion of Islam, Langat, and ; and twelve local as well as the “fountain of honour and authorities in Selangor including the Dialogues on matters of religion or faith dignities” in the state. City Council, the Shah can be sensitive, but asking someone Alam City Council, and the Klang what their religion is or how they According to the constitution, the Municipal Council, among others. practice it is perfectly acceptable as Sultan, along with the State Executive showing interest and curiosity to learn Council, are Selangor’s executive is greatly welcomed. Generally, as a branch of government. The council state in an Asian and Muslim-majority is composed of the Chief Minister or country, there is a presumption that Menteri Besar, who is its chairman the business etiquette in Selangor is and Selangor’s head of government, more conservative than its Western with 10 other members who were counterparts. This couldn’t be further TRIVIA from the truth - it is not very different appointed by the Sultan of Selangor Members of the State Assembly are from common global practices! Since from the State Assembly - the state’s elected in elections, usually held Selangor is the most progressive state legislative branch. simultaneously with federal elections. in Malaysia, it is definitely more open to The term of each member is limited to the cultures of other countries, and this five years. is one of the many reasons investors are particularly attracted to it. 06 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 07

LANGUAGE It is made up of mostly English It is fascinating to think about how the vocabulary with a touch of local colour. aforementioned diverse ethnic groups One of the simplest forms of Manglish grew to converse with each other. is the addition of the suffix ‘lah’ to the end of sentences. For example, “Can Although the official and national lah,” means “Sure, fine by me,” and language of Malaysia is Bahasa “No lah,” means “No, of course not.” Malaysia, English is the active second language that is taught in school, As the state continues to advance widely spoken and used across economically, it is essential that popular media. information, advisory services, and assistance are provided for potential The majority of Selangor citizens are as well as existing investors. With this in able to speak both languages fluently, mind, the Selangor State Government allowing investors no trouble to has Invest Selangor, which plays a vital communicate at establishments such role in leading the state as a prime as hotels, shopping malls, cafés, and investment solution centre in Malaysia most restaurants. and ASEAN.

For those looking to learn a new language, Bahasa Malaysia is an easy enough language to pick up and understand, as most words are pronounced as they are spelled. TRIVIA Even so, the most common form of Some Malaysians in Selangor are also communication in Selangor would able to speak different Malay, Chinese, most likely be ‘Manglish’, especially and Indian dialects, as well as native among the younger generations. Borneo languages. Different Malay Malaysian English, as its moniker dialects are used in most Malaysian suggests, is a mix of Bahasa Malaysia states, particularly in the North, such and English that may be confusing as in Perak, , and . at first, but once it grows on them, Chinese dialects such as Mandarin, investors find it to be endearing and , Hokkien, and Hakka are practical. also widely used whilst Tamil is a more popular Indian dialect in Selangor. 08 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 09

CHAPTER 2: WHY INVEST IN SELANGOR

MALAYSIA’S MOST PROGRESSIVE STATE Selangor is Malaysia’s most developed and progressive state. Apart from being the country’s primary port of entry, it is also free from natural disasters and has excellent connectivity.

Investors adore its strategically optimal location around Kuala Lumpur and Putrajaya. With approximately 3.4 million highly skilled and multilingual workforce1, and more than 40,000 graduates per annum2, Selangor is Malaysia’s largest economy with 98.7% literacy rate3 as well as world class cities and towns4.

With excellent support by the State Government via Invest Selangor, it is no surprise that Selangor has become a well-established and preferred destination for investors.

1 “Selangor @ a Glance”. Department of Statistics Malaysia. 2018. 2 “Why Selangor : Reasons to Invest”. Invest Selangor Official Website. 2018. 3 Ibid above. 4 Ibid above. 08 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 09

The figures speak for themselves; At present, a commonly used • Spirit AeroSystems to expand Selangor has nearly a quarter of tool for recruitment online manufacturing facilities in Subang; share in the national GDP, driven by is a website called Jobstreet • GE opens first dedicated tooling performances in the services and (https://www.jobstreet.com.my). Other centre in PKFZ; manufacturing sectors. options include the major daily English • RUAG opens regional component newspapers in the country, such as The repair centre at the International Selangor remains the main contributor News Straits Times and , the Aerospace Centre in Subang. to the national economy in 2017 latter having its own dedicated online • IKEA to set up world’s third-largest Overall share of 23% (a 0.3 percentage job portal: http://mystarjob.com/. distribution centre in , point increase from 2016) Selangor More than RM 191 billion worth of These types of services allow investors investment value – manufacturing sector to employ quality employees without (1987-2017) much hassle – and even from the 7,694 manufacturing projects (1987-2017) convenience of their desktops in DID YOU KNOW? Invest Selangor has in 2017 signed Investments from over 65 countries overseas offices! a Memorandum of Understanding Home to Malaysia’s largest well-educated With all of the above benefits in place with Bayern International; the state and multilingual workforce in Selangor, it is no surprise then that government of Victoria, Australia; 98.7% adult literacy rate investors are eager to do business in Mara Aerospace & Technologies Sdn Over 150 institutions of higher learning the state. Some of the up and coming Bhd and Malaysia Airport Holdings key investment projects in Selangor Bhd respectively. Over 40 foreign international schools include5: Producing around 40,000 tertiary • Toyota’s Second Manufacturing educated graduates per annum. Plant in Industrial Estate INDUSTRIAL PARKS IN SELANGOR Source(s): Department of Statistics, Malaysia. (announced in 2016, with production The increasing numbers of investors Invest Selangor’s Official Website. expected in early 2019); each year has prompted many “World Data Atlas > Malaysia”. Knoema. • World’s third largest IKEA developers to develop industrial parks (https://knoema.com/atlas/Malaysia/Selangor) distribution centre in Pulau Indah in Selangor. Industrial parks are areas “After 60 years of national (announced in 2017); zoned and planned for the purpose independence, Selangor continues to • UMW manufacturing plant in UMW of industrial development; such a lead the nation in contributing to its High Value Manufacturing Park, park can be thought of as a more GDP. Hence, Selangor is also known (producing fan case for “heavyweight” version of a business as the Golden State of Malaysia and Rolls Royce’s 1000 engine); park or office park. the economic powerhouse of the • Volvo’s Shah Alam plant nation,” restructuring to expand production Here are some examples of the up and capacity (from current 1,500 units coming industrial parks in Selangor. Dato’ Seri Mohamed Azmin Ali per year to 5,000 by 2020); Former Menteri Besar • DHL to further develop its IT services Selangor International Business data centre in Cyberjaya; Summit 2017 • Linde’s expansion at Shah Alam site (Linde is investing €30m to construct Finding good employees in Selangor a new gas and liquid producing air is relatively easy, affordable and quick, separation unit at its site in Hicom as most vacancies are now advertised Industrial Estate); online.

5 Source: Invest Selangor internal information. 10 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 11

CHAPTER 2: WHY INVEST IN SELANGOR?

Industrial Parks in Selangor Industrial Park Developer Special Feature Source

Nouvelle Industrial Exsim Group of Companies Well-designed, 4 in 1 “Nouvelle Industrial Park @ ”. EXSIM Group of Park, Kota Puteri Function Semi-D Factories. Companies. 2015. (http://exsim.com.my/development/nouvelle-industrial- park-kota-puteri/) Pulau Indah Central Spectrum (M) Sdn. Convenient connectivity via “Pulau Indah Industrial Park”. Central Spectrum (M) Sdn. Industrial Park Bhd. Road, Rail, Sea and Air. Bhd. 2017. (PIIP) (http://www.centralspectrum.com.my/pulau-indah- industrial-park/) Avant Industrial Parkwood Developments Bungalow Factory - fully “Avant Industrial Park, A Premier Parkwood Project”. Park, Sdn. Bhd. customisable space, up to Parkwood. 2016. Shah Alam 150,000 sf. (http://www.parkwood.my/index.php#avant)

UMW High Value UMW Land Sdn. Bhd. Flexible workspaces “UMW High Value Manufacturing Park Serendah”. UMW Manufacturing Park, – adapts to changing Land. 2017. Serendah requirements to address (http://www.umwhvmpark.com.my/) market dynamics and evolving business trends. Cipta Serenia Property A state-of-the-art, 143- “Cipta Serenia”. . 2017. Business Park Berhad acre green technology park (https://www.simedarbyproperty.com/serenia-city/cipta- and light industrial zone. serenia)

Serenia City Sime Darby Property Sustainable development “Serenia City”. Sime Darby Property. 2017. Industrial Park Berhad within a park. (https://www.simedarbyproperty.com/serenia-city)

Selangor Cyber Selangor State Utmost strategic location. “A Revamped Selangor Cyber Valley On The Cards”. Invest Valley Development Corp Cyberjaya. 2016. (PKNS) (http://investcyberjaya.com/a-revamped-selangor-cyber- valley-on-the-cards/) Tanjung Industrial Tanjung Balai Group Focused on industrial “Tanjung Industrial Park”. Invest Sepang. 2017. Park development, including (http://invest.mpsepang.gov.my/prospect/taman- warehouses. perindustrian-tanjung/)

Bernam Jaya Selangor State Business model is being “City & Country: PKNS moves into second stage of business Industrial Park Development Corp built up by Keipr Inc’s Dr. plan”. EdgeProp. 2015. (PKNS) Armen Papazian – A Nobel (https://www.edgeprop.my/content/citycountry-pkns- Prize Finalist. moves-second-stage-business-plan) Worldwide I-Zone, Cekal Unggul Sdn. Bhd. Freehold Industrial Park. “ Bestari”. Worldwide Property. 2016. Kapar (http://worldwideproperty.com.my/kapar-bestari/) Selangor Halal Hub Central Spectrum (M) Sdn. Introduction of a Halal “Selangor Halal Hub”. Central Spectrum (M) Sdn. Bhd. 2017. Bhd. Eco-system, ensuring a (http://www.centralspectrum.com.my/selangor-halal-hub/) hassle-free procedure and practice in obtaining halal certification. Free Zone Port Klang Free Zone Sdn. A wide range of products “About PKFZ”. Port Klang Free Zone Malaysia. 2015. Bhd. and services are permitted (http://www.pkfz.com/) in the free zone without any customs duty. Mahkota Industrial LTC Group One of the best logistics “Mahkota Industrial Park”. LTC Group. 2015. Park networks in the country (http://www.ltcgroup.com.my/project.php?id=8) with connectivity to KLIA, West Port, Cyberjaya and Putrajaya. 10 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 11

Apart from industrial parks, the state In Selangor, the most well-known FIZ is also fronting projects in education, is the Port Klang Free Zone (PKFZ), a health, and more. 1,000 acre commercial and industrial zone situated in Klang. A key project is (MWC) in , Established in 2004, PKFZ is a regional Selangor – Malaysia’s first Wellness WANT TO KNOW MORE? distribution hub as well as a trade and Hub. Developed by Stay up to date – check out logistics centre. It offers, amongst Holdings Berhad, MWC is poised to http://mineswellnesscity.com other things, extensive distribution to learn of any progress on the project. become the Region’s leading health and manufacturing facilities, including tourism destination and landmark. various investment incentives, Malaysia itself has more than subsidies and free repatriation of The expansion of the city is part 500 industrial parks, and 18 Free capital and profits. of the government’s Economic Industrial Zones (FIZs) throughout the Transformation Plan (ETP) which is country. State governments, as well Reputed companies such as spearheaded by the Performance as private developers, continuously Schlumberger Asia Support Sdn. Management and Delivery Unit develop new sites, fully equipped with Bhd., Cargill (M) Sdn. Bhd., and (PEMANDU), under the Prime infrastructure facilities and utilities. Baker Hughes (M) Sdn. Bhd. have Minister’s Department. The These include roads, electricity, water, successfully established themselves development of MWC will lead and and telecommunications. in PKFZ. contribute to increased economic activity, job opportunities and Gross FREE INDUSTRIAL ZONES (FIZ) Another FIZ in the state is the Sungai National Income (GNI). FIZs are export processing zones, Way Free Trade Industrial Zone in developed to cater to the needs of Petaling Jaya. It is home to renowned Other than serving as a stepping-stone export-oriented industries. Companies companies such as Western Digital (M) in fulfilling the country’s vision of located in these zones are provided Sdn. Bhd., and NXP Semiconductors bettering standards of living as well as duty free imports of raw materials, Malaysia Sdn. Bhd. creating sustainable jobs for the local components, parts, machinery, and community, MWC believes that health equipment that are required in the DIGITAL FREE TRADE ZONE (DFTZ) services, residential homes, and other manufacturing process. In November 20176, the Digital Free daily commodities need to incorporate Trade Zone (DFTZ) was launched in a conscious living footprint for the Sepang, Selangor – eight months future. after the official announcement of the initiative7. MWC also offers several tax incentives for its developer, managers and With two key thrusts, – Physical and operator under the Malaysian TRIVIA Virtual – it is a step forward for the Investment Development Authority In areas where FIZs are not available, country in becoming a regional hub (MIDA). Find out more by visiting companies may set up Licensed and fulfilment centre for e-Commerce. http://www.mida.gov.my/home/ Manufacturing Warehouses (LMWs), E-Commerce is a substantial part of forms-&-guidelines-for-mines- which are accorded facilities similar to the budding multi-billion USD worth wellness-city/posts/ those enjoyed by companies in FIZs. of Digital Economy in the flourishing economic region of Southeast Asia, and DFTZ is designed to specifically boost its growth.

6 “DFTZ a game changer; will make Malaysia more accessible to the world: SMEs”. New Straits Times. November 3, 2017. (https://www.nst.com.my/business/2017/11/298838/dftz-game-changer-will-make-malaysia-more-accessible-world-smes) 7 “DFTZ takes off this Friday with 1,900 SMEs participating”. Free Malaysia Today. November 2, 2017. (http://www.freemalaysiatoday.com/category/nation/2017/11/02/dftz-takes-off-this-friday-with-1900-smes-participating/) 12 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 13

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As it benefits Small and Medium Zone Features Enterprises (SMEs), marketplaces, Physical, • 17.5 hectares eFulfillment Hub by Alibaba Group, Cainiao, Lazada, and monobrands, it is expected to Phase I and POS Malaysia, located in Sepang, Selangor. generate over RM 7 billion worth of • Expedite the import and export process for e-traders domestic and foreign investments. around the region. • A warehousing and fulfilment centre. • Centralised customs checkpoint. • State-of-the-art warehouses with sorting, shelving, and pick-pack facilities. • Light Industrial Units (LIU) to allow for minor repairs or assembly prior to shipping goods; customs inspection and TRIVIA quarantine area; and facilities such as secure warehouses, The DFTZ is the first free trade zone on a temperature controlled storage, and more. digital level – no other country has ever • Expected to roll out before the end of 2017, with the formal launch of done something like this to date. Alibaba’s facility at the end of 2019. Physical, • 500,000 square foot Satellite Service Hub in the Kuala Lumpur Phase II Internet City (KLIC). As the government provides easy and • Will be developed by Catcha Group with a Gross Development Value convenient services for DFTZ, there is (GDV) of approximately USD 1.1 billion. potential to: • Facilities include office and co-working spaces, offline to online • Boost Malaysia’s position in the (O2O) showrooms, MICE facilities, eco-friendly buildings, and other global Digital Economy; community-centric amenities. • Promote cross-border activities; • Offers integrated, streamlined, and efficient services for DFTZ users. • Double nation’s e-Commerce • Expected to be ready by 2019. growth; • Raise national GDP to RM 211 billion Virtual • Establishment of a unified government services platform. • Integrated digital eServices platforms to access leading global by 2020; and service providers. • Generate 60,000 direct and indirect • Global logistics and fulfilment service providers will also be there to jobs by 2025. further provide convenience for users.

What DFTZ is all about? Source: https://www.sitec.com.my/the-digital-free-trade-zone-a-roundup/ The DFTZ consists of three main components that combine both Additionally, within DFTZ, the purchase of goods via e-Commerce worth RM physical and virtual zones. The former 1,200 and below will be exempted from paying tax. Previously, this exemption comprises the eFulfillment Hub and only applied to goods worth RM 500 and below. This should entice more cross- Satellite Services Hub, whilst the latter border importation activity. consists of the eServices Platform.

TRIVIA The Alibaba OneTouch e-services platform is a huge bonus as it allows users in the DFTZ to be directly connected to Alibaba’s HQ in Hangzhou. 12 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 13

The OneTouch platform digitises “The establishment of the Multimedia Super Corridor (MSC Malaysia) and various logistics and operational Cyberjaya in particular, will enable Malaysians to leapfrog into the Information procedures such as customs Age. We hope to create the ideal environment that will attract world-class clearances, finance, and forex, allowing companies to use it as a regional multi-cultural information age hub.” traders to better focus resources on marketing and selling instead of the Tun Dr. day-to-day grind of operations. Prime Minister of Malaysia Cyberjaya’s ground-breaking ceremony on 17 May 1997. CYBER HUB OF INNOVATION Speaking of technological Currently, there are 1,511 active ‘Multimedia Super Corridor’ status companies developments, Selangor prides itself located in the state. This is one of the many reasons why locals and foreigners as a Cyber Hub of Innovation with 16 alike prize Selangor as an excellent place to live in as well as do business, in cyber-centres and is home to national terms of its developed living conditions and amenities provided. ICT Capital Cyberjaya which is often dubbed “Malaysia’s ”. In addition, Malaysian Prime Minister Datuk Seri announced 11 major projects and initiatives to turn Cyberjaya into a smart city model in May Cyberjaya’s story began during the 2017. These projects are to include: the Cyberjaya City Centre, the Cyberjaya mid-1990s on a former palm oil Innovation Fund for the Future, the Financial Technology Regional Hub, the plantation, with 2,800 hectares of Cyberjaya Futurise Centre, the Blue Ocean Entrepreneurs Township, the Asian mostly undeveloped land, 35km south Big Data Centre, the Klang Valley Data Centre, high-speed internet facilities, the of Shah Alam – the capital of Selangor Cyberjaya Hospital, the Sensor Applications Innovation Centre, and CBJ4Annex – and 40km south of Kuala Lumpur. Data Centre expansion8.

In 1996, Japan’s Nippon Telephone and Undoubtedly, the efforts by both the federal and state government will continue Telegraph (NTT) started a research to add value to the investment and residential eco-system in Cyberjaya. and development facility in Cyberjaya. THE 5 CORE CLUSTERS After that, companies like Dell, HP, Invest Selangor is positioning Selangor in 5 core industry clusters – the most DHL and Shell began to follow suit, promising clusters in the state’s manufacturing sector based on the GDP resulting in the natural formation of contributions and share of investments: an entirely new ecosystem. Contribution Contribution to Cyberjaya was then officially launched to Selangor’s 5 Core Clusters Selangor’s Overall Manufacturing GDP in on 17 May 1997 as a fully integrated GDP in 2016 (%) city, and Malaysia’s pioneer tech hub. 2016 (%) Machinery and Equipment 3 1 Two decades later, the city is now Food and Beverages Manufacturing 11 3 moving to the next level, positioning Transport Equipment 11 3 itself as a more encompassing global Life Sciences 25 7 tech hub. Electrical and Electronics 22 6 TOTAL 72 20

Source: DOSM, RMK11 & MIER 2018.

8 http://www.themalaymailonline.com/malaysia/article/najib-announces-11-projects-initiatives-to-turn-cyberjaya-into-smart- city#7E5L3s0Dw0DmgBXD.99 14 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 15

CHAPTER 2: WHY INVEST IN SELANGOR?

Life Sciences Share of Projects Share of Investment Let’s imagine Selangor as a vehicle 5 Core Clusters within the State in Value within the State that is accelerating towards steady 2017 (%) in 2017 (%) economic growth, driven by a vision of a smart state. Machinery and Equipment 11 5 Food and Beverages Manufacturing 13 16 This is where the Life Sciences cluster Transport Equipment 15 15 comes in. It represents a leading Life Sciences 19 17 engine for Selangor’s aspiration, Electrical and Electronics 7 9 contributing a quarter of the state’s TOTAL 65 62 total manufacturing GDP.

Source: MIDA 2018. Due to the state’s strong economic growth, well-established While Selangor continues to support the key sectors in the aforementioned infrastructure, easy access to an 5 industry clusters to thrive, it intends to move up the cluster value chain by educated workforce, an influx of attracting new forms of investments in terms of research and development medical tourists as well as close (R&D) and innovation. proximity to Kuala Lumpur – Malaysia’s Business Centre and 4 Main Service Focus Areas Putrajaya – Malaysia’s Administrative Capital, this cluster’s activities are Logistics concentrated in the central region. Education

Information and Communication Technology With a vast potential in development, Selangor already has plans to advance Global Business Services the cluster so high quality investments Source: Corporate Strategic Planning Department, Invest Selangor Berhad. 16 May 2017. (such as those investments that will provide a consistent stream of Investors are also encouraged to delve into the services sector, particularly in the returns and have a good prospect main service focus areas. for the long run) may bear fruit. For example, the chemicals sector, a In line with these positioning efforts and investment focus, about two-thirds i.e. part of the Life Sciences cluster, has 65% - of approved manufacturing projects in Selangor in year 2017 were from the recorded more than RM 15.6 billion 5 core clusters. worth of investments over the years with a Compound Annual Growth Rate In terms of investment value, the core clusters achieved 62% of the total direct (CAGR) of 12.26%, and has generated investments in 2017 within Selangor’s manufacturing sector. more than 25,000 employment opportunities.

Apart from the basic chemical WANT TO KNOW MORE? industry, the cluster focuses on areas For more information, please refer to our updated Industrial Brochure at: involving pharmaceuticals, medical http://investselangor.my/data/ckfinder/files/ISB-BOOKLET-ENGLISH-12042017-FA.pdf devices, specialty chemicals, and biotechnology.

Based on National Pharmaceutical Regulatory Agency’s data (updated as of April 2018), Selangor had a 36.5% share of pharmaceutical manufacturers in Malaysia, making it a majority among other states. 14 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 15

For decades, many large companies Electrical and Electronics have been producing food products Another important element that drives in Selangor, successfully catering to Selangor’s manufacturing sector is both domestic and overseas markets. the Electrical and Electronics (E&E) In recent times, a large number of cluster, which contributes about 22% small and medium enterprises (SMEs) of the state’s manufacturing output. have also been exporting their food products to regional markets. Over the past three decades, the cluster has successfully attracted The cluster’s growing achievements more than RM 37.3 billion investments in Selangor are driven by its into Selangor, creating over 180,000 advantageous business environment, employment opportunities. which includes strong physical infrastructure, presence of large local Under the current structure, large “Malaysia offers a favourable and foreign multinational companies multinational companies and their business climate. The country is (MNCs), access to skilled workforce, subsidiaries dominate the local E&E politically stable while we have huge domestic demand for food as sector, along with a few mid-tier access to well-trained and reliable well as diverse SMEs. local companies, but the majority of workforce, good infrastructure and corporations are still focused on low- customs facilities. All these attributes At the moment, Selangor’s F&B cluster end manufacturing and assembly. have enabled us to fully optimise our is focusing on halal food. According production facility here.” to the Halal Industry Development With the goal of moving up the value Mr. Ryu Seong Joo Corporation in Malaysia, the state held chain in mind, the Selangor State Former Managing Director the highest share for halal certified Government recognises the need Hanwha Q Cells Malaysia Sdn. Bhd. companies (26%) and halal certified for specialisation and continuous products (31%). talent development. The areas they Food and Beverages Manufacturing want to put more focus into are Now that the engine to Selangor’s semiconductors, solar or green economic development has been technology, light-emitting diode (LED) identified, let’s take a look at the other technologies, as well as industrial / important parts that make up the integrated electronics. whole dynamic. Based on the Malaysian Solar The Food and Beverages (F&B) Industry Report 2012 / 2013 published Manufacturing cluster supports and by Malaysian Industry-Government stimulates the state’s economic Group for High Technology (MIGHT), growth, generally revolving around the Selangor holds the majority share of primary activity of food processing and solar related companies, at 52%. manufacturing. It accounts for about “Invest Selangor has been providing 11% of Selangor’s total manufacturing professional, effective, and strong output. support to MONIN in the past few years. Indeed, Invest Selangor Over the years, food manufacturing is playing an important role to has attracted more than RM 14.9 connect MONIN with the relevant billion worth of investments into administrations and associates when Selangor, producing more than 36,000 required. Their staffs have always job opportunities; whereas beverage provided quick and professional manufacturing has attracted more advice.” than RM 1.4 billion of investments Mr. Christopher Bernard – Bacot (including tobacco products). Former Managing Director Monin Asia KL Sdn. Bhd. 16 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 17

CHAPTER 2: WHY INVEST IN SELANGOR?

“Invest Selangor has been supportive In order to understand the significance “Quality workforce, rapidly expanding of our very large investment and of this cluster in Selangor, it is vital aviation industry and friendly freight presence in Selangor for more than to take a look at Malaysia’s overall environment in Selangor has enabled 40 years. We are proud to have grown ambition as a major aerospace hub in SR Technics to establish its footprint together with Selangor.” the ASEAN region, which started as in the heart of Asia Pacific.” early as the 1990s when the National Mr. Christian Meyer Mr. Thomas Fong Aerospace Blueprint was formulated. Former Managing Director Senior Director Finance SR Technics Malaysia. Western Digital (Malaysia) Sdn. Bhd.

Transport Equipment Selangor’s journey to a cultivated commercial expansion would not have reached its destination without the Transport Equipment cluster, which TRIVIA has attracted more than RM 30.4 Although Malaysia’s leading airport billion worth of investments into the have ‘Kuala Lumpur’ in its name, it is state; supporting over 77,000 jobs for actually located in Sepang, Selangor, the past 30 years. and not Kuala Lumpur, making Selangor the country’s main port of entry. It accounts for approximately 11% of the state’s total manufacturing output, assisted by the influx of both domestic and foreign direct investments. Selangor is strategically located in Meanwhile, under the automotive the centre of Malaysia, and currently sector, among the main automotive For now, the state is focused has two key airports – Kuala Lumpur brands being manufactured or on developing the aerospace International Airport (KLIA) and the assembled in Selangor include Beijing and automotive, and maritime expanded Kuala Lumpur International Automobile Works (BAW), CAMC, transportation areas. Airport 2 (KLIA2) as well as Subang Nissan, Perodua, Proton, Renault, Skypark Terminal a.k.a. Subang Scania, Toyota and Volvo11. Airport. 62% of all aerospace organisations in Passenger Malaysia were located in the state of vehicles Selangor,9, whilst also the majority Over the years, the state has benefited of automotive manufacturing and from various strategic national assembly plants in Malaysia were programmes, such as transforming BAW located here (37%)10. Subang Skypark into a regional PROTON PERODUA aerospace MRO hub, the establishment Based on Malaysian Shipbuilding / of the Aerospace Malaysia Innovation Ship Repair Industry Report 2017/2018 Centre which intensifies aerospace published by MIGHT, 26% of maritime research and technology activities, TOYOTA related companies in Malaysia are and more. The conducive investment NISSAN VOLVO located in Selangor. The types of environment and advanced ecosystem maritime activities focused in Selangor have already shown major results. include maritime support services (34%), marine equipment / product There are many well-known manufacturing (27%), maintenance, aerospace players operating in SCANIA CAMC repair and overhaul (MRO) operations Selangor, including Augustawestland, RENAULT (17%) as well as design services (10%). Airbus, Airfoil Services, GE Aviation, Rolls-Royce, Ruag, Safran, Spirit Aerosystems and SR Technics. Commercial vehicles

9 “Transport Equipment”. Invest Selangor Official Website. 2018. (http://investselangor.my/Core-Clusters/) 10 Based on the Member Listing of Malaysian Automotive Association. 2018. (http://www.maa.org.my/listing_map.htm) 11 Based on the Member Listing of Malaysian Automotive Association. 2018. (http://www.maa.org.my/listing_map.htm) 16 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 17

To encourage sustainable mobility, Machinery and Equipment Malaysia is targeting to have 2,000 The last core cluster which completes electric buses, 100,000 electric cars, the dynamics of Selangor’s economy and 100,000 electric scooters or contributes around 3% of the state’s motorcycles on the roads by year 2020. manufacturing output and plays an important role in most manufacturing At the moment, the electric vehicles WANT TO KNOW MORE? activities. (EVs) market is a niche one, and the For more information, visit: potential of producing EV related http://www.investselangor.my/Core-Clusters/ products may enhance automotive The Machinery and Equipment (M&E) cluster supports various industries manufacturing within the state. Additionally, through Invest Selangor, such as oil and gas, automotive, the Selangor State Government Furthermore, Selangor State agricultural, packaging, aerospace, commissioned Monash University Government also promotes Automotive E&E, and more. Malaysia at the end of 2014 to conduct Diversification Programme, encouraging the Selangor Industrial Master Plan automotive industry players to It is this supporting function that Study, focusing on the potentials of stay competitive and diversify into influences the dominant palm these 5 core industrial clusters. new markets with vast business oil industry in agriculture, or the opportunities such as the aerospace massively successful oil and gas sector. In Selangor, UMW Group is This study was officially launched sector, driving growth and exports in a successful pioneer in automotive on 14 March 2017, with a dialogue products as well as expertise. diversification. session that was held on the same day to generate feedback, ideas and Other than that, M&E promotes recommendations from industry and facilitates developments in the stakeholders. manufacturing sector. Over the past three decades, M&E has attracted Aimed to serve as a guideline for more than RM 10.2 billion worth of TRIVIA the Selangor State Government, investments in Selangor and created UMW Group signed a 25-year agreement particularly Invest Selangor, the over 46,000 jobs. with Rolls Royce Plc to manufacture and study is essential in the formulation assemble fan cases for Rolls-Royce’s of a future action plan to advance the Right now, the state is focusing Trent 1000 aero engine on state’s economy. 12 August 2015. on several areas including power generating M&E, metalworking M&E, specialised M&E for specific The aforementioned initiatives, industries, general industrial M&E, together with long-term commitment components, and parts. and support from the state government, have ultimately made Selangor more attractive, helping “The infrastructure and logistics WANT TO KNOW MORE? provided are very good without transport equipment manufacturers For more information, visit: thrive. doubt; Selangor State takes care of http://www.investselangor.my/?cat=324 Panasonic very well.” “Gyproc chose Selangor as its Mr. Toshiro Okamoto regional hub for manufacturing Managing Director and distribution attributable to Panasonic Management Malaysia its strategic centralised location, Sdn. Bhd. accessible links of roads and ports, as well as mature industrial infrastructures.” Mr. Hemant Khurana Managing Director Saint-Gobain Malaysia Sdn. Bhd. 18 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 19

CHAPTER 2: WHY INVEST IN SELANGOR?

INITIATIVES BY INVEST SELANGOR Selangor’s booming economy provides a fertile investment climate for companies both large and small, because higher growth is an arm’s length away with the state government’s incentives.

Particularly note-worthy to investors is the fact that the state’s standard of living is higher than other states in Malaysia, yet its cost of living is still relatively low – which may facilitate any new investment plans, whether it is to purchase premises or to assign expatriates to a project in Selangor. means such as via a website, or through In order to stay ahead and maintain an online marketplace. the state’s position as one of the preferred investment destinations Through Invest Selangor, the Selangor in the region, Invest Selangor has Information Technology & E-Commerce spearheaded a number of initiatives, Council, SITEC, was established in WANT TO KNOW MORE? including establishing special May 2015 with the aim to develop Visit http://www.sitec.com.my councils for targeted industries or Selangor as the regional trading hub for more information. clusters, inspiring transformation for e-commerce and to uplift the start- and innovation, introducing Invest up ecosystem. Selangor Aerospace Council Selangor Talent Initiative, Globalisation Good transportation has always been and Trade Initiative, Invest Selangor To further enhance the creative and an important component in a developed Advisory Network as well as modern digital economy scene, the Selangor city. What’s more, Selangor is also the industrial park management models Digital Creative Centre (SDCC), an hub of low-cost (affordable), quality along with respective standards to 11,000 square ft incubator and co- and time-saving transportation that improve industrial park readiness and working space located in i-City, Shah connects to the rest of the world: infrastructure. Alam, was officially launched on 5 namely air travel. October 2015. The following useful initiatives have The Selangor State Government been undertaken by Invest Selangor Chaired by Selangor State Senior successfully established the Selangor to improve the quality of investment Executive Councillor Y.B. Dato’ Teng Aerospace Council via Invest Selangor. frameworks in Selangor: Chang Khim, SITEC continually Its inaugural council meeting was offers various events, conventions, held on 11 August 2016, chaired by Selangor Information Technology and conferences, accelerators and Y.A.B. Dato’ Seri Mohamed Azmin Ali, E-Commerce Council (SITEC) programmes in the areas of Former Menteri Besar (Chief Minister) Today’s fast-paced and constantly e-commerce, startups and smart of Selangor. evolving technological world cities. These programmes have encourages more young entrepreneurs helped thousands of up and This initiative aims to further drive the to start their own businesses, coming entrepreneurs, SMEs, and development of the aerospace sector in commonly known as ‘startups’. While startups by providing mentoring, Selangor, while enhancing recognition startups are involved in various guidance, seminars, and networking of the state’s capabilities as a leading industries and sectors, many choose opportunities. aerospace hub in the ASEAN region. to engage in e-commerce, and deliver their goods and services through online 18 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 19

Bio Bay will be the state-of-the- art biotechnology hub in the region furnished with eco-friendly and high technology infrastructure, housing all kinds of bioscience pursuits including research institutes, laboratories and biotech-related companies. 12

Selangor Bio Bay was officially launched by Y.A.B. Dato’ Seri Mohamed Azmin Ali, Former Menteri Besar (Chief Minister) of Selangor on 24 September 2017 at the Selangor Bio Bay Show Gallery. The entire project has an estimated gross development value of RM 5.5 billion13 and is divided into three phases – Precinct 1, 2 and 3, which include the biotechnology centres, biotechnology shared facilities, industrial and commercial zone, residential areas as well as recreational parks.14

There is also RM 10 million seed capital available by the state government to fund biotechnology research and development at the Selangor Bio Bay15, as mentioned during the announcement of 2018 budget for Selangor.

Selangor Halal Council Three dedicated industrial locations in The Selangor Bio Council looks to As a state in a Muslim-majority country, Serendah, Subang, and Sepang have follow in SFBA’s footsteps. Established it is pertinent for halal products and been identified as the main growth on 18 March 2016 by the Selangor services to be adequately available. centres of Selangor for aerospace State Government through Invest Halal products and services do not only related activities, strategically forming Selangor, the council plans to develop a refer to F&B, but include financing, the ‘3S’ Aerospace Belt of Selangor. Selangor Bio Bay at Pulau Indah. toiletries, textile, stationery, and more.

Selangor Bio Council Intending to offer a great environment The successful establishment of the Ever heard of San Francisco Biobay? for biotechnology companies to thrive Selangor Halal Council by the Selangor Not to be confused with a sea that and advance, the Selangor Bio Council State Government through Invest glows at night (bioluminescent bay), will advise on facilities and other Selangor aims to introduce a global this Biobay – also known as the relevant necessities. Invest Selangor halal ecosystem for smooth and hassle- San Francisco Bay Area (SFBA) – is also plans to invite international experts free operations. Hence, waiting periods regarded as an epicentre of technology to support the council in the future. for the setting up of halal businesses in and a leading biotech cluster. At the span of 1,012 acres, Selangor Selangor will be reduced.

12 http://www.centralspectrum.com.my/the-grand-launching-of-selangor-bio-bay-project/ 13 http://selangorbiobay.com/about-us/ 14 http://www.centralspectrum.com.my/the-grand-launching-of-selangor-bio-bay-project/ 15 http://www.selangor.gov.my/index.php/pages/view/2128 20 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 21

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The council held its inaugural meeting Invest Selangor strongly believe that in supporting globalisation, embracing on 6 October 2016, chaired by Y.A.B. being the early adopters of these new new technologies and exploiting Dato’ Seri Mohamed Azmin Ali, Former trends with partners from leading ASEAN’s potential as a huge integrated Menteri Besar (Chief Minister) of industrial nation could create more market. Selangor. highly paid jobs for ‘Selangorians’ and reduce our reliance on foreign labour. Selangor International Business Upon realisation of the vast opportunity Summit is the fast access lane for that surrounds the halal market, the companies to meet international Selangor State Government entrusted business partners and marketing Central Spectrum (M) Sdn. Bhd. to DID YOU KNOW? Invest Selangor has signed channels. To enhance the value and undertake the project of Selangor Halal experience of the summit participants, Hub in Pulau Indah. Memoranda of Understanding (MoUs) with Bayern International Invest Selangor also continually refines the programmes of the 10- The hub’s main role is to assist in and the State Government of days summit. The summit currently receiving, processing, and expediting Victoria, Australia, in 2017 comprises of three main components, the approvals in obtaining global to facilitate the industry as shown below: Halal Status from relevant authorities transformation process in Selangor • Selangor International Expo – such as the Department of Islamic towards Industry 4.0. Focusing on F&B Development Malaysia (JAKIM), • Selangor ASEAN Business Selangor Islamic Religious Department Invest Selangor also actively promotes Conference – Focusing on ASEAN (JAIS), (MAIS) and the national and supports industrial transformation, Economic Community (AEC) and standards development agency, SIRIM. upgrading and innovation within the Halal state. Potential and existing companies • Selangor Smart City and Digital in Selangor are encouraged to reform Economy Convention – Focusing on their core business as well as adapt to Smart City, Industrial Revolution 4.0 the ever-changing market and business and E-commerce environment through innovation and R&D. WANT TO KNOW MORE? Find out more about the Globalisation and Trade Initiative Selangor Halal Hub in Pulau Indah at: To promote Selangor as the regional http://www.centralspectrum.com.my/ trading hub and the gateway to ASEAN selangor-halal-hub/ WANT TO KNOW MORE? for international markets, the Selangor Find out more about Selangor State Government initiated a trade International Business Summit at: Inspire Transformation and platform called Selangor International www.selangorsummit.com Innovation within Selangor Expo in 2015, which will be organised Acknowledging the current global by Invest Selangor on an annual basis. Invest Selangor Talent Initiative trends of Industry 4.0, Big Data, With more than 150 institutions of Internet of Things and other new Over the past three years, the event higher learning, Invest Selangor technologies, Selangor is embarking has grown even bigger, leading to a is confident that the talent pool in on a transformational leap with the rebranded Selangor International Selangor can cater to every investor’s vision to introduce not just the concept Business Summit, which was held needs and requirements. In order to of smart cities, but becoming a smart over a period of 10 days from 7 to 17 further enhance, match and develop state in the future through the Smart September 2017. the state’s local talent pool, Invest Selangor Vision, as announced by Selangor has established the Invest Selangor Talent Initiative in 2014. Y.A.B. Dato’ Seri Mohamed Azmin Ali, By opening the door to international Former Menteri Besar (Chief Minister) businesses through this international To kick-off the initiative, Invest of Selangor in 2015. trade platform, Selangor is fully Selangor targets to organise the committed to work with other countries education roundtable on an annual 20 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 21

Invest Selangor strongly encourages service providers in Klang Valley to join the Invest Selangor Advisory Network. Registration is free of charge.

WANT TO KNOW MORE? View the advisory network directory or register as a member service provider at: http://investselangor.my/?cat=58

basis, connecting industry players and experienced and quality assured education / training providers within service providers in Klang Valley, SECTOR-SPECIFIC INFORMATION the state to achieve synergy. offering a wide range of professional Selangor – An International support or services for investors. These Trading Hub Invest Selangor understands that service providers cover a wide range of Due to the dedication that Invest joint efforts and support between the services, including: Selangor has put into Selangor’s state government, industry players, development, the state has been a education providers, vocational training Accounting, Auditors, major trading hub in Malaysia since 16 providers, talent development centres Tax and Bookkeepers 2015 . as well as any related stakeholders are crucial in establishing a robust talent Advertising & Involvement in many trade visits and pipeline within the state to ensure Public Relations fairs may have kick-started the growth, business continuity and viability. Hence, but by creating the annual Selangor Invest Selangor will continue to explore Architectural, International Expo, more investors opportunities for collaboration and Engineering & Technical have discovered Selangor as a regional strongly encourage higher learning and international trading hub. institutions or relevant organisations to Business become partner of this initiative. Consultancy & Advisory The excellent infrastructure combined with business-friendly policies have Construction & led to attracting yet more trade, as Engineering many use Selangor as a gateway to the ASEAN region. Executive Search & Personal Recruitment Furthermore, the launch of Selangor International Business Summit (SIBS), WANT TO KNOW MORE? Inspection, Safety & has led to Selangor making a name Learn more at Security for itself in the private sector, whether http://investselangor.my/?cat=55 among small local companies or Property & Real multinational corporations. Estate Services Invest Selangor Advisory Network SIBS has become a perfect avenue Invest Selangor aims to constantly Transportation, for marketing, collaborations, and create better value for its investors. Logistics & Relocation In 2013, Invest Selangor established partnerships; providing exposure and its advisory network, which features a Others web directory of more than 120 highly

16 “Selangor Set to be Malaysia’s Global Trading Hub”. Smart Investor. November 27, 2015. (http://www.smartinvestor.com.my/ selangor-international-expo-2015/) 22 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 23

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information on the latest technologies Consequently, new range of industries emerged from textiles, chemicals, and happenings in the business world. telecommunications, and food products, to electrical and electronic machinery or appliances, car assembly, as well as heavy industries such as iron and steel. Big names such as Nestle and Pharmaniaga, along with other Ever since then, Malaysia has grown to be one of the biggest exporters of noteworthy companies from ASEAN, semiconductors along with electronic goods and services. Japan, China, Taiwan, and Spain hosted exhibition booths at the event in 2017. Today, the manufacturing sector continues to develop rapidly; its importance lies in its contribution to the GDP, external trade, and job creation. In order to sustain growth as well as endure challenges in this sector, the government has implemented the Third Industrial Master Plan (IMP3) to ensure that it remains competitive and innovative.

According to Malaysia’s Economic Census 2016 by Department of Statistics Malaysia, Selangor recorded the highest number of manufacturing establishments WANT TO KNOW MORE? in Malaysia with 10,027 establishments, a national share of 20% in 2015 . It is also Discover more by visiting interesting to note that more than 40% of these manufacturing establishments are http://selangorexpo.com/en/home/ from the 5 core industry clusters of Selangor:

Selangor’s Manufacturing Sector Core Clusters Number of Percentage Share (%) In the past, the former British colony of Manufacturing Malaysia was focused on commodities Establishments such as tin, rubber, and palm oil. Food & Beverages 1,163 12% Life Sciences 655 7% Since Malaysia’s political independence in 1957, freedom to explore new Electrical & Electronics 662 7% avenues of economic growth allowed for Machinery & Equipment 1,308 13% the realisation that these commodities Transport Equipment 323 3% are no longer the only ones that are Manufacturing Establishments in Selangor by Core Clusters; Source: DOSM 2017 important to the country. Selangor’s manufacturing sector also remained as the largest contributor to The manufacturing sector contributed 23% the state’s value of gross output with RM 308 billion in 2015, whereby the 5 core GDP to the Malaysian economy in 2017; while Selangor’s manufacturing sector clusters contributed more than 65% of this value: contributed about 29.0% to the state’s GDP.

Selangor contributes about 28.6% to Electrical & Electronics RM 72.9 billion Malaysia’s manufacturing GDP in 2017. Food & Beverages RM 50.6 billion Malaysia’s manufacturing sector recorded Transport Equipment RM 35.1 billion a solid growth of 6.0% in 2017; while the manufacturing sector in Selangor Life Sciences RM 22.9 billion experienced an even stronger growth of Machinery & Equipment RM19.8 billion 7.9%, way above the national average.

Source: DOSM, MIER 2018 Because of the above, the prospects of Selangor’s manufacturing sector are continually deemed as very promising by more and more investors. As it diversifies into an industrialised nation with a GDP that has grown at a Selangor’s Services Sector rate of almost 8% to 9% from years 1991 Besides manufacturing, the services sector in Malaysia is also fundamental in to 1997, the production of consumer stimulating the economy, affecting all aspects of the country’s growth. products like batteries, paints, tires, and pharmaceutical products have been constantly developing. 22 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 23

to enhance efficiency as well as to inspire confidence among The services sector contributed 54.5% GDP to the Malaysian economy in 2017; while Selangor’s services sector contributed about investors, the business community, and consumers. 60.3% to the state’s GDP.

Selangor contributes about 25.1% to Malaysia’s services GDP in Upon recognising the sector’s vast potential, the services 2017. sector in Malaysia was liberalised by the Malaysian government on 22 April 2009 in order to attract more Malaysia’s services sector recorded a solid growth of 6.2% in 2017; while the services sector in Selangor grew by 6.8%, slightly above foreign investments, bring in more professionals and the national average. technology as well as strengthen competitiveness of the sector. Liberalisation was undertaken in 27 service sub-sectors with Source: DOSM, MIER 2018 no equity condition imposed, meaning full foreign ownership is allowed. These sub-sectors cover the areas of health and As evidenced by its 6.8% increase in revenue in the fourth social services, tourism services, transport services, business quarter of 2017 (as compared with the same quarter in services as well as computer and related services.20 2016)18, With a GDP growth of 6.2% in 2017, this sector is constantly gaining momentum and needs to be sustained through synergistic collaboration agreements – unilaterally, bilaterally, regionally, and multilaterally19.

As defined in the Malaysia’s Economic Census 2016 – Services Sector by Department of Statistics Malaysia, services sector includes the following main sub-sectors: TRIVIA A National Committee for Approval of Investments in the Services Sector has been established under MIDA to act as a Main Sub-sectors that Define the Service Sectors focal point to receive and process applications of investments in Malaysia in the services sector, excluding investments in financial Electricity, Gas, Steam & Air Water supply, Sewerage, Waste Conditioning Supply Management & Remediation services, air travel utilities, Economic Development Corridors, Activities Multimedia Super Corridor (MSC), Bionexus status companies 22 Wholesale and Retail Trade Transportation and Storage and distributive trade services .

Accommodation Food and Beverages Information and Communication Finance and Insurance In 2012, the government further liberalised additional 7 Real Estate Professional, Scientific & broad services sectors to allow up to 100% foreign equity Technical participation in phases. The 7 broad services sectors include Administration & Support Education telecommunications, healthcare, professional services, Service environmental services, distributive trade services, education Health and Social Work Arts, Entertainment and services and courier services, comprises of 18 sub-sectors in 21 Recreation total.

Personal Services & Other The liberalisation of the sector brings opportunities with Activities greater market access that investors and entrepreneurs alike Source: “Malaysia’s Economic Census 2016 – Services Sector”. may tap into and benefit from. Department of Statistics, Malaysia; 2017 Following the liberalisation initiative, the Malaysian For the economy to fully benefit in global services trade, government has also established several institutions and seamless movement across is vital and restrictions on organisations to provide support in the form of incentives for trade should be reduced or removed. Hence, regulatory exports and investments, as well as access to financing plus improvements that will encourage competition are necessary capacity building programmes.

18 “Quarterly Volume Index of Services : Fourth Quarter 2017”. Department of Statistics, Malaysia. 19 “Services Commitment”. Official Portal of the Ministry of International Trade and Industry, Malaysia. (http://www.miti.gov.my/index.php/pages/view/4247) 20 “Liberalisation of the Services Sector”. Malaysian Investment Development Authority. (http://www.mida.gov.my/home/liberalisation-of-the-services-sector/posts/) 21 Ibid above. 22 Ibid above. 24 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 25

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Referring to Malaysia’s Economic Census 2016 – Services Sector, Selangor with 164,295 establishments recorded the highest share (20%) of establishments in the services sector within Malaysia.

Halal Industry The word ‘halal’ is defined as ‘permissible’ or ‘lawful’ in Arabic.

When used commercially, it refers to products or services that have been labelled ‘halal’ – this means that all stages of production and supply chain, including procurement of raw materials, logistics, packaging and labelling of the particular product conform to the Islamic Syariah law, making it suitable for use by Muslim consumers.

Looking at the global picture, the halal industry is currently one of the fastest growing industries with an estimated market value worth USD 2.3 trillion (excluding Islamic Finance). With a population of about 1.8 billion Muslims worldwide today and at least 2.6 billion in 2050, the halal industry is bound to grow at an estimated annual rate of 20% and the opportunities seem endless.23

Globally, the two STRONGEST markets for halal products are:

Asia Pacific

Middle East

Global Muslim Middle East & North Africa South Asia & Asia Pacific Population 19.9% 62.1% 1.8 BILLION number of Muslims are number of Muslims are (2.2 billion in 2030; expected to grow by more than expected to reach 2.6 billion in 2050) 33% in next two decades 1.3 billion by 2030

Source: Global Islamic Finance Report 2013

The global halal market is not only limited to food and food related products, but also include pharmaceuticals, cosmetics, toiletries, medical devices, health supplements and products as well as service sector components such as logistics, packaging, marketing, branding and financing. In recent years, the halal industry has further expanded into lifestyle elements including halal travel, modest fashion, halal media and recreation.24

23 Global Islamic Finance Report 2013 (http://gifr.net/gifr2013/ch_13.PDF) 24 Ibid above. 24 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 25

It is also interesting to highlight that Besides exporting halal products, halal products and services are no Malaysia has been assisting numerous longer just a demand by Muslim countries, including China, to set up their consumers as the industry has gained own halal industry. Both Malaysia and increasing acceptance among non- Selangor exports halal expertise and TRIVIA Muslim consumers who relate halal services, achieving a win-win situation According to HDC, Malaysia is the only with ethical consumerism.25 with their partners. Malaysia has also country in the world whose government been championing the development provides full support in promoting the According to Global Islamic Finance and comprehensive application of Halal Certification process on products Report 2013, Asia is the fastest growing Halal standards. Hence, Malaysian and services. Halal certification bodies region for halal products. The Halal halal standards are adopted by many in other countries are either developed market value in Asia is estimated at USD world most-renonwed multinational by the individual provinces, states, 418 billion, with countries including companies such as Ajinomoto, Colgate or backed by their non-governmental Indonesia, Malaysia, Pakistan, China Palmolive, Nestlé and Unilever. On the organisations. and driving growth. Malaysia national level, Jabatan Kemajuan Islam itself offers a respectable halal market Malaysia (JAKIM) is in charged of the valued at USD 1.9 billion with excellent overall halal policies and guidelines As mentioned earlier, the Selangor connectivity and access to all other in Malaysia; on state level, Jabatan State Government has established its major key Asian markets. Agama Islam Selangor (JAIS) and own Selangor Halal Council through Majlis Agama Islam Selangor (MAIS) Invest Selangor and aims to introduce Based on export statistics, Malaysian are responsible for Halal certification, a global halal ecosystem for smooth Halal exports formed about 5% of the application approval and any related and hassle-free operations. Selangor country’s total export and reached groundwork. also hopes to develop the state into a USD 10.8 billion (RM 43.4 billion) in key halal ingredients hub, in line with 2017. According to Halal Industry Malaysia’s overall vision to become a Development Corporation (HDC) in Global Halal Hub. Malaysia, the major halal products SUCCESS STORY being exported were food and beverage Nestlé chose to locate its Global In terms of investment destination, (USD 5.0 billion), halal ingredients Halal Centre of Excellence – Selangor offers two ideal halal locations (USD 3.9 billion), palm oil derivatives Nestlé Malaysia in Selangor. within the region for the manufacture of (USD 900 million), as well as cosmetics halal products and provision of halal- and personal care products (USD related services, namely Selangor 720 million). The major Halal export HDC was established by the federal Halal Hub and Port Klang Free Zone, destinations of Malaysia include government in September 2006 to both situated in Pulau Indah, Selangor. China, Japan, United States, Indonesia support the halal industry in Malaysia. GOVERNMENT INCENTIVES Netherlands, Thailand, Australia, The corporation is located in Bandar FOR INVESTMENTS Indonesia and South Korea.26 Utama, Selangor. With the vision to Malaysia offers a wide range of tax transform Malaysia into a Global Halal incentives to promote investments in Hub, HDC assists halal businesses selected industry sectors. These tax to access new markets both locally incentives appear in various forms, and globally, provides training such as exemption on income, extra and consultancy services on Halal allowances on capital expenditure certification as well as supports Halal incurred, double deduction of specific brand promotion. expenses, preferential tax treatments, and more.

25 Global Islamic Finance Report 2013 (http://gifr.net/gifr2013/ch_13.PDF) 26 https://themalaysianreserve.com/2018/03/19/rm43-4b-halal-products-exported-in-2017/ 26 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 27

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Some of the incentives come with The main requirement would be that added non-monetary benefits – for the Company must achieve 30% of example, long-term approval of an the commercial production within 3 expatriate post, which eases work consecutive months (based on mass permit applications for the company. production) and the company’s first sales invoice (based on customer INVESTOR TIP! A couple of the major tax incentives order/demand) should be submitted for Verify which industry-specific available in Malaysia are the Pioneer the determination of production date. requirements could apply to you under: Status (PS) and Investment Tax http://www.mida.gov.my/home/ Allowance (ITA). The former is an forms-&-guidelines-for-licensing-and- incentive in a form of tax exemption incentive-applications/posts/ for a period of 5 or 10 years, which is FIND OUT MORE ABOUT granted to companies participating MIDA IN CHAPTER 7! Formally apply within 24 months in promoted activities or producing Discover more about the promoted products. The latter is an from the date of incentive approval different approvals/licenses letter. Forms can be downloaded on investment incentive granted based needed in Chapter 5! on the capital expenditure incurred the MIDA website at http://www. on industrial buildings, plants, and mida.gov.my machinery used for the purpose of Submit documents at MIDA promoted activities or the production of The main requirement would be that headquarters and application will promoted products, and is also usually the Company must achieve 30% of be processed within 4 weeks after given for a period of 5 or 10 years. Both the commercial production within 3 complete information received at no incentives are mutually exclusive. consecutive months (based on mass extra charge. production) and the company’s first The power to determine the qualified sales invoice (based on customer Renewal application due within 2 “promoted products” or “promoted order/demand) should be submitted for years. 30 days of notice will be given activities” lies with the Minister of the determination of production date. before withdrawal of the incentive International Trade and Industry. As should conditions not be met during a general guide, a company which is Some of the documents required for tenure. granted “pioneer status” obtains very the application of the Pioneer Status More information can be requested favourable fiscal treatment in respect are as follows: via email to investmalaysia@mida. of income derived from “promoted • MIDA’s Approval Letter gov.my (generally replied to within 48 activities” or “promoted products”. • Manufacturing Licence and its hours) or by calling +603 2267 3633 to Companies that acquire pioneer status Conditions/Appendix ‘A’ speak with the relevant industries can be exempted from paying the total • Form ‘A’ EPF and the last payroll officer. or allowed to pay partial income tax for statement of company’s full a period of five years. time employees and company’s Principal Hub organisation chart In 2015, Principal Hub was introduced The initial steps would be to contact • Certificate of Fitness (CF) from as incentive for locally incorporated the Malaysian Investment Development BOMBA companies that use Malaysia as a Authority (MIDA) to discuss intention to • Approval letter from the Department base for conducting regional as well apply for the incentive. They will direct of Environment (DOE) as global businesses and operations the company to the relevant industrial • Approval letter from the Department to manage, control, and support key division and relationship manager. The of Occupational Safety and Health functions within a group of companies. formal application should be made (DOSH) The said key functions include, inter within 2 years from the date of Incentive • Brochure on company’s products alia, management of risks, decision Approval Letter. making, strategic business activities, trading, finance, management, and human resource. 26 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 27

Income tax exemption offered to a Principal Hub goes Details on the application procedure, timeline for application according to 3-tier preferential tax rates of 0%, 5%, or 10%, and documents required are set out below: based on a certain criteria. Documents required for submission include: 3-tier Incentive Tier 3 Tier 2 Tier 1 Company’s registration documents from Malaysian Companies Register; Blocks (years) 5 (+) 5 (+5) 5 (+5) Company brochure and flyers;

Tax Rate 10% 5% 0% Proposed organisation chart of the principal hub;

Group corporate structure; PRINCIPAL HUB Latest annual report; QUALIFYING CRITERIA Copy of Manufacturing Licence or other relevant approvals of Minimum paid-up capital of RM 2.5 million; affiliated/related companies;

Minimum annual sales of RM 300 million; Details of expatriate posts;

Monitoring and providing services to at least 3 related Detailed explanation of proposed qualifying services; companies locating and operating outside Malaysia; Flow chart of products in terms of procurement and sales – if Carrying out qualifying services activities which applicable; includes strategic services, business services, and Contractual agreements for network companies. shared services; and Acquire local professionals and local financial services. Forms can be downloaded on MIDA website at http:// www.mida.gov.my. Complete documents will be The current position for Principal Hub is tax exemption for 5 processed within 12 weeks (if complete documents + 5 years on statutory income for applications received until provided). No processing fees will be levied. 30 April 2018. 30 days of notice will be given before withdrawal of the incentive if fail to submit yearly report. However, in the announcement of Malaysia’s 2018 Budget, it was proposed that the exemption would be extended for 3 More information can be obtained via email enquiry years. This will apply for applications received by MIDA from to [email protected] (reply within 48 hours 1 May 2018 to 31 December 2020. guaranteed) or contact +603 2267 3633 to speak with the relevant industries officer. 28 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 29

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Automotive Sectors Type Incentive Period

• Pioneer Status with tax exemption of 100% on 5 years Company participating in or producing statutory income; or automotive component modules • Investment Tax Allowance of 60% on qualifying capital expenditure 5 years set off against 100% of statutory income • PS with tax exemption of 100% on statutory income; or 10 years Manufacturing of selected critical and high • ITA of 100% on qualifying capital expenditure set off against 100% value added parts and components 5 years of statutory income • PS with tax exemption of 100% on statutory income; or 10 years • ITA of 100% on qualifying capital expenditure set off against 5 years 100% of statutory income Assembly or manufacturing of hybrid and electric vehicles • Training and R&D grant n/a • 50% excise duty exemption for locally assembled or manufactured vehicles; or provision of Industrial Adjustment Fund grant n/a

Biotechnology Type Incentive Period

BioNexus Status Company: • PS with income tax exemption of 100% of statutory income 5 years (for expansion of approved business) / 10 years • New business / expansion of approved business • ITA of 100% on qualifying capital expenditure set off against 100% 5 years of statutory income • Industrial building allowance of 10% 10 years • Upon expiry of the tax exempt period • Concessionary tax rate of 20% on statutory income 10 years Company or individual investor investing in • Single deduction equivalent to the value of investment in seed n/a BioNexus company capital and early stage financing

Cold Chain Facilities Type Incentive Period New companies / existing companies • PS with tax exemption of 70% on statutory income 5 years (providing / reinvesting in cold room • ITA of 60% on qualifying capital expenditure set off against 70% of 5 years facilities for prescribed perishable statutory income agriculture produce)

Education and Training Type Incentive Period

Education Tax exemption in respect of statutory income from the provision Kindergarten 5 years and maintenance of the kindergarten business Non-profit oriented school / international Tax exemption in respect of statutory income derived from the n/a school management of the school Double deduction for expenses incurred for overseas promotion Private / international school n/a 28 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 29

Type Incentive Period • ITA of 100% on qualifying capital expenditure set off against 70% of statutory income (Private higher education institution in the 10 years science field undertaking additional investment to upgrade or expand their capacity) Private higher education institution • Further deduction for promotion of export of higher education n/a • Single deduction equal to one-third of the expenses incurred for 3 years the development and compliance of new courses • Import duty exemption for educational equipment n/a Allowance equal to 50% of the value of increased exports deducted Export of education services n/a against 70% of statutory income Single deduction on expenditure incurred for the provision of Company providing / sponsoring scholarships n/a scholarship Training Deduction for consultation and training cost for the n/a implementation of Flexible Work Arrangements Double deduction for provision of internship programme / Structured Internship Programme (“SIP”) approved by Talent n/a Corporation Malaysia Berhad Double deduction for training cost under the Skim Latihan n/a 1Malaysia for unemployed graduates Single deduction for expenditure incurred for the provision of n/a practical training of non-employees Single deduction for pre-commencement of business training n/a expenses for potential employees Double deduction for approved training undertaken by manufacturing companies which do not contribute to the Human n/a Resources Development Fund (HRDF) Further deduction for approved training undertaken by all other n/a companies which do not contribute to HRDF ITA of 100% on qualifying capital expenditure against 70% of statutory income for establishing new or upgrading of the technical 10 years and vocational training institute Withholding tax exemption on royalty payment to non-resident n/a franchisor in relation to an approved programme

30 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 31

CHAPTER 2: WHY INVEST IN SELANGOR?

Halal Incentives Type Incentive Period

Halal food production outside halal parks:

• New companies • Existing companies diversifying ITA of 100% on qualifying capital expenditure set off against 100% 5 years production or upgrading / expanding statutory income of existing plant

Halal industry players located in designated halal parks: • 100% tax exemption on qualifying capital expenditure; or 10 years • Tax exemption on export sales 5 years New companies producing • Double deduction for cost of obtaining international quality n/a prescribed halal products standards • Import duty exemption on raw materials used for the n/a development and production of halal promoted products • 100% tax exemption; or 10 years

• 100% tax exemption on qualifying capital expenditure 5 years Halal park operators (HALMAS status) • Import duty exemption on equipment, components and n/a machinery used in cold room operations • 100% tax exemption; or 5 years

• 100% tax exemption on qualifying capital expenditure 5 years Halal Logistics • Import duty exemption on equipment, components and n/a machinery used in cold room operations Double deduction for expenses incurred in obtaining the Halal certification n/a certification issued by a certification body

Green Incentives Type Incentive Period

Green technology

New or existing company undertaking green ITA of 100% on qualifying capital expenditure set off against 70% From YA 2013 to technology project / purchase of green of statutory income YA 2020 technology assets listed on MyHijau Directory

New or existing company undertaking green ITA of 100% on qualifying capital expenditure set off against 70% From YA 2013 to technology services of statutory income YA 2020 New or existing company undertaking green From YA 2013 to Income tax exemption of 100% on statutory income technology services YA 2020 Waste Eco Parks (WEPs) Income tax exemption of 70% on statutory income derived from rental Effective from YA 2016 to WEP developer of building, waste receiving and separation facility and waste water YA 2025 treatment located in WEP Income tax exemption of 70% on statutory income derived from services Effective from YA 2016 to WEP manager activities related to management, maintenance, supervision and YA 2025 marketing of the WEP • Income tax exemption of 100% on statutory income derived from the WEP operator 5 years qualifying activities undertaken in WEP; or • Income tax exemption equivalent to 100% of qualifying capital 5 years expenditure incurred and to be set off against 70% of statutory income 30 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 31

Healthcare and Wellness Type Incentive Period

Private healthcare For the purpose of promoting medical tourism: New facilities or expansion, Tax exemption equivalent to ITA of 100% of qualifying capital modernisation, or refurbishment 5 years expenditure incurred to be set off against 100% of statutory of existing facilities income Export of healthcare services to Allowance equal to 50% of the value of increased exports n/a foreign clients deducted against 70% of statutory income Mines Wellness City (MWC) • Income tax exemption of 100% on statutory income from From the first YA the disposal of any rights over any land; or disposal of building or MWC developer derives rights over a building or part of a building located in MWC; or statutory income until YA 2023 • Income tax exemption of 100% on statutory income from rental From the first YA the MWC developer (undertaking new of a building or part of a building located in MWC MWC developer derives development in MWC) statutory income until YA 2026 Stamp duty exemption of 50% on instruments of transfer or lease of land or building in the MWC executed from 1 January 2013 until n/a 31 December 2023. PS with tax exemption of 100% on statutory income derived from From the first YA the providing management, consultancy, supervisory, or marketing MWC developer derives MWC development manager services to MWC Developer in the MWC statutory income until YA 2023 • PS with tax exemption of 70% on statutory income derived from MWC operator 5 years qualifying activities carried out in the MWC; or • ITA of 60% on qualifying capital expenditure set off against 70% 5 years of statutory income for each YA. Professional services Further deduction of qualifying expenditure incurred primarily Export of medical and dental services and principally for the purpose of promoting the export of n/a professional services

Logistics & Shipping Type Incentive Period Income tax exemption of 70% of statutory income derived from the business of transporting passengers or cargo by sea on a Shipping company or partnership n/a Malaysian ship; or letting out on charter a Malaysian ship owned by him on a voyage or time charter basis Withholding tax exemption on income from: Non-resident person who receives income • Rental of a ship on a voyage, time charter or bare boat basis; or n/a from a Malaysian shipping company • Rental of International Standard Organisation containers Company providing chartering services of Income tax exemption of statutory income 5 years luxury yacht Company providing repair and maintenance Income tax exemption of statutory income 5 years services for luxury boats in • Income tax exemption of 70% of statutory income; or 5 years Company undertaking or intending to expand / diversify into integrated logistics services • ITA of 60% on qualifying capital expenditure set off against 70% 5 years of statutory income 32 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 33

CHAPTER 2: WHY INVEST IN SELANGOR?

Manufacturing Type Incentive Period

Main incentives • PS with tax exemption of 70% on statutory income; or 5 years Manufacturers producing promoted • ITA of 60% on qualifying capital expenditure set off against 70% products or engaged in promoted activities 5 years of statutory income Enhanced incentives • PS with tax exemption of 100% on statutory income 10 years Manufacturer of selected M&E and specialised • ITA of 100% on qualifying capital expenditure set off against M&E 5 years 100% of statutory income • PS with tax exemption of 100% on statutory income 5 years High technology projects • ITA of 60% on qualifying capital expenditure set off against 5 years 100% of statutory income Locally owned company acquiring a foreign Annual deduction of 20% of the acquisition cost 5 years company for high technology Further / double deduction on the promotional expenditure Manufacturers incurred in seeking opportunities or in creating or increasing n/a demand for the exports

Multimedia Super Corridor (MSC) Type Incentive Period

MSC multi-tiered incentives for MSC status company: • PS with tax exemption of 100% of statutory income; or Up to 10 years • Located within MSC cyber cities or cyber • ITA of 100% on qualifying capital expenditure set off against 5 years centres 100% of statutory income • Import duty exemption for multimedia equipment n/a

• Located outside MSC cyber cities or • Partial exemption of 70% of statutory income 5 + 5 years cyber centres • Import duty exemption for multimedia project n/a Owner of a building in Cyberjaya Flagship Zone used for his business or rent out to an approved Industrial building allowance at the rate of 10% 10 years MSC status company Non-resident company who receives income (from technical advice or service fees, licensing fees in relation to technology Withholding tax exemption under Section 109 and Section 109B of development, and interest on loan for n/a the Income Tax Act 1967 technology development) from MSC status company engaging in selected activities and located in designated areas 32 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 33

Research and Development (R&D) Type Incentive Period ITA of 50% on qualifying capital expenditure set off against 70% of In house R&D project 10 years statutory income • PS of 100%; or 5 years Contract R&D company • ITA of 100% on qualifying capital expenditure set off against 10 years 70% of statutory income • ITA of 100% on qualifying capital expenditure set off against 10 years 70% of statutory income R&D company • Industrial building allowance (initial allowance of 10% and n/a annual allowance of 3%) Approved research company / institute Tax exemption on adjusted income 5 years Double deduction for R&D payments: • Cash contribution to an approved research institute Any related (non-related company of a R&D • Payment for use of services of an approved research institute / n/a company) company • Payment for use of services of a R&D company or a contract R&D company In house R&D (includes IT & software) Double deduction for approved in-house R&D expenditure n/a Scientific research undertaken by Single deduction for scientific research n/a a person or on his behalf Qualifying company undertaking Tax exemption on statutory income derived from the commercialisation of public R&D findings commercialisation of public R&D findings: resource based or 10 years (investee company) non-resource based Tax exemption on income consisting of the development or Approved New Technology Based Firm (NTBF) 5 years commercialisation of technological innovations

Regional Operations Type Incentive Period Single deduction equivalent to the value of investment made in Investor company investing into a related financing a project on commercialisation of public R&D findings n/a company (resource based or non-resource based) Malaysian International Trading Companies Income tax exemption equivalent to 20% of the value of increased 5 years (MITC) exports to be set off against 70% of statutory income for the business • Income tax exemption on 70% of the statutory income arising Treasury Management Centre (TMC) 5 years providing treasury management services from qualifying services rendered to related companies to its group of related companies (within or • Withholding tax exemption on interest on borrowings from non- 5 years outside Malaysia) resident for the purpose of providing qualifying services • Reduced corporate income tax rate of 0%, 5% or 10% for tier 1,2, or 5 + 5 years 3 respectively (extendable for another 5 years subject to approval); Principal Hub undertaking qualifying • Expatriate post based on requirements of applicant’s business plan; services and serving minimum 3 to 5 n/a and countries outside Malaysia • Customs duty exemption for raw materials, components of finished n/a products (applications received from 1 May 2015 to 30 April 2018)

As of reporting date, may subject to change without prior notice. 34 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 35

CHAPTER 3: HOW CAN I SET UP MY BUSINESS IN SELANGOR?

Now that we have looked at the POSSIBLE FOR FOREIGN AND DOMESTIC COMPANY OR PERSON (SUBJECT TO QUALIFYING CRITERIA): many benefits and incentives SDN BHD + BHD + Foreign Company + LLP + Offshore for investments POSSIBLE FOR MALAYSIAN POSSIBLE FOR FOREIGN in Selangor, let’s CITIZEN OR PERMANENT COMPANY ONLY (SUBJECT RESIDENT ONLY TO QUALIFYING CRITERIA) look at the types of business vehicles SOLE BRANCH OFFICE PROPRIETORSHIP that exist in the REPRESENTATIVE / state. This will PARTNERSHIP REGIONAL OFFICE depend on several FOREIGN OWNERSHIP Act 1975 will be necessary. The factors, such RESTRICTIONS applications for manufacturing license For a foreign person or company, are processed and regulated by the as whether the certain foreign ownership restrictions Malaysian Investment Development may be applicable. Authority (MIDA), a governmental investor is: agency under the purview of the Since 2009, foreign persons or Ministry of International Trade and companies no longer require Industry (MITI). The present policy A MALAYSIAN CITIZEN / approval from the Foreign Investment for these companies is that 100% PERMANENT RESIDENT; Committee (FIC) to invest in Malaysia, foreign equity will be allowed for all due to the reversal of the former FIC new investments, including existing investment guidelines. However, in the licensed manufacturers that may opt A FOREIGN COMPANY; case of distributive trade, this approval for expansion and diversification. is still necessary. However, this does not apply to certain OR A FOREIGN PERSON. For manufacturing companies with sensitive industries or activities related a capital of RM 2.5 million and above to security, safety, health, environment, or engaging at least 75 full-time paid and religious considerations1, where employees, a manufacturing license evaluation and approval are still under the Industrial Coordination required in the process of obtaining a manufacturing license.

1 “Measures to Address Impact of Global Economic Slowdown on Malaysia’s Trade and Industry”. Official Portal of the Ministry of International Trade and Industry of Malaysia. (http://www.miti.gov.my/index.php/pages/view/1361) 34 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 35

The holder of a manufacturing license For example, companies related to Under the terms of the Petroleum may pursue a waiver of the equity external trade which focuses on the Development Act of 1974, the upstream conditions by applying to MITI. MITI has export of manufactured as well as oil and gas industry is controlled the sole discretion in approving such semi-manufactured products and by Petroliam Nasional Berhad applications. services, fall under the purview of the (PETRONAS), a government-owned Malaysia External Trade Development company, as well as the sole entity with Moreover, investors appreciate that Corporation (MATRADE), another legal title to Malaysian crude oil and Malaysia’s gradual liberalisation of governmental agency under MITI. gas deposits. foreign participation in the services sector is allowing them to pursue Apart from this, some limits on PETRONAS sets the terms for upstream more opportunities in the country. As foreign ownership remain for projects with foreign participation on mentioned in Chapter 2, limitations on telecommunications, transportation, a case-by-case basis, and there are foreign participation were removed in oil and gas, and the financial services extensive requirements for involved the following industries: sectors. foreign parties in downstream projects as well. On the surface it may seem • IT Consultancy In certain instances, Malaysia has like investors are limited from investing • Courier allowed a greater share of foreign in the oil and gas sector, but foreign • Healthcare ownership. For example, in April 2012, participation tends to happen in the • Education the country began allowing 100% form of production sharing contracts, • Environmental foreign equity participation for joint ventures, or appointment of a • Tourism Applications Service Providers; but Malaysian company as an exclusive • Freight Transportation a limit of 70% foreign participation agent, amongst many other options2. • Professional Services remains in effect for Network Facilities Providers and Network Service Providers licenses.

TRIVIA 27 service subsectors and a further 18 subsectors that are being liberalised in phases now allow for 100% foreign ownership.

On the other hand, certain types of companies may be under the purview of different government bodies that are responsible for such industries.

2 Refer to PETRONAS’ Licencing and Registration General Guidelines for further information: http://www.petronas.com.my/partnering-us/licensing-registration/application-information/Documents/PETRONAS%20Licensing%20 and%20Registration%20General%20Guidelines%20%28English%20Version%20%E2%80%93%20As%20at%201%20June%202017%29.pdf 36 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 37

CHAPTER 3: HOW CAN I SET UP MY BUSINESS IN SELANGOR?

STARTING A BUSINESS An unlimited company is usually This type of company can bring forward Before a business is founded in established as a private company and a legal action as well as own property Malaysia, it is important to understand may choose whether to have share in its own name, whereas its members’ that any person or establishment capital. personal liability is limited to the intending to conduct any business amount unpaid on shares held by said activities in Malaysia must be registered Private unlimited companies will member – if any. under any of the following legislations: have names that end with the words ‘Sendirian’ or ‘Sdn.’, while its members Therefore, the shareholders or • Registration of Businesses Act 1956 or shareholders (including past members are not personally liable for (ROBA 1956); members, subject to certain conditions) the debts and losses of the company. • Companies Act 2016 (CA 2016); or hold an unlimited responsibility – they • Limited Liability Partnerships Act can be sued personally for the debts of Minimum Requirements of 2012 (LLP 2012). the company. It has to be said that the Incorporation of a Company establishment and utilisation of this Limited by Shares A merger between the Registrar of form of company is very rare. One (1) Director – Companies (ROC) and the Registrar Must have a principal place of of Businesses (ROB) resulted in As for a company limited by guarantee, residence in Malaysia the formation of the Companies – usually a public company, identified One (1) Shareholder / Member – Commission of Malaysia (SSM), through the words ‘Berhad’ or ‘Bhd.’ May be corporate or individual a statutory body that regulates – the liability of its members is limited NOTE: The company must appoint companies and businesses. to such amount as the members a licensed company secretary, undertake to contribute in the event of it registered in Malaysia, within SSM serves as an agency to incorporate being wound up, as agreed and provided thirty (30) days from the date of companies, register businesses; act as for in the company constitution. Public incorporation. a custodian and provider of corporate companies are required to make their or business information; administer as financial information publicly available Private Limited Company well as enforce the law it governs. for the general public to access. When a company limited by shares is a private limited company, it is identified Three Types of Companies It is imperative to note that although through the words ‘Sendirian Berhad’ in Malaysia the duration for any business formation or ‘Sdn. Bhd.’ appearing together with Company Limited by Shares in Selangor can usually be completed the company’s name. within hours or a matter of days, the Unlimited Company gathering of relevant documentation Several restrictions with this type of Company Limited by Guarantee and specific company requirements is company include the restriction of a not always as straightforward. At times maximum of fifty (50) members or these requirements may be updated shareholders; the restricted right of – therefore a consultation with Invest its members to transfer their shares; Selangor is highly recommended. and the prohibition of any invitation to the public to subscribe for its shares or COMPANY LIMITED BY SHARES debentures. In Malaysia, a company limited by Among the various types of shares – which may be a private limited establishments or forms of businesses company or a public limited company available in Malaysia, the most common – is a legal entity that is separate type for the purpose of conducting and distinct from its members and business in Malaysia is by way of shareholders. company limited by shares. 36 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 37

The following are the current SSM fees charged to incorporate this type of company, It is important to note before a company based on the amount of its authorised share capital. name is proposed, a name search must be done to check if the name in question Authorised Share Capital (RM) SSM Fees (RM) has been taken. Nonetheless, even Up to 400,000 1,000 if the company’s name has not been 400,001 – 500,000 3,000 taken, approval of proposed names are 500,001 – 1 million 5,000 not guaranteed. 1,000,001 – 5 million 8,000 5,000,001 – 10 million 10,000 Also, once any of the three proposed 10,000,001 – 25 million 20,000 names have been approved, the 25,000,001 – 50 million 40,000 50,000,001 – 100 million 50,000 company must be incorporated within 100,000,001 and above 70,000 three (3) months, otherwise the name would no longer be available. The name Once the authorised share capital and SSM fees are determined, certain specific may be proposed again, with additional information as well as documentation will be necessary to incorporate a Sdn. Bhd. costs incurred.

Below is a simplified graphic journey of the mentioned process. Once the company is incorporated, a company registration number will be provided by SSM. This number must 1 2 be indicated in all official documents, REQUIRED INFORMATION HIRE A COMPANY SECRETARY correspondences, and business cards. FOR INCORPORATION • SSM requires the • Name of proposed company appointment of a Company The company will then be required (3 names are recommended). Secretary within thirty (30) to officially appoint directors, • Principal Business Activity. days of incorporation. shareholders, provide an allotment of • Information on Identification • Necessary for the preparation shares, and other secretarial matters Card / Passport of of Directors’ Circular by lodging to SSM. For these purposes, Shareholder / Director. Resolutions, Shareholders’ a certified Company Secretary must be • Residential address of all Resolutions, etc. appointed. shareholders and directors • Necessary to lodge Annual with proof of address such Returns and other relevant as utilities (if different from documents to SSM, such as above). Appointment of Directors, • Paid up capital (min. RM 2, Allotment of shares, etc. max. RM 2,500). • Percentage of shareholding INVESTOR TIP! (if there are multiple 3 Certain instances may require unilateral shareholders). OPEN A BANK ACCOUNT agreement in writing from all directors before being enforced. However, there • Necessary for clean have been cases whereby directors and accurate bookkeeping. APPOINT AN AUDITOR 4 refuse to comply, even when there is a • To provide a clear audit trail for contractual framework. Therefore, be • SSM requires appointment Malaysia’s Internal Revenue sure to choose your directors wisely! of an auditor within eighteen Board, for taxing purposes. (18) months of the company • May be difficult to set up a bank incorporation date. account for a 100% foreign • Most Sdn. Bhd. companies owned company – extensive need to lodge audited financial due diligence process. statements to SSM each year. 38 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 39

CHAPTER 3: HOW CAN I SET UP MY BUSINESS IN SELANGOR?

Such companies usually proceed on to seek listing of their shares on the Malaysian stock exchange, namely Bursa Malaysia Securities Berhad.

INVESTOR TIP! While foreign shareholders may be Enquire with your home bank used at your HQ if they have outlets or network allowed to hold all the shares in a partners, recommendations for your Malaysian banking needs. Sometimes this Malaysian company, certain business will help to make the bank account opening a quicker and simpler process. areas are regulated through licensing which may be subjected to certain equity requirements. After appointing a company secretary, a business bank account must be set up. For instance, there may be This may take more time for foreign-owned companies as some local banks do requirements of minimum paid not have these services for foreign entities. Furthermore, from time to time there up share capital when applying can be restrictions on signing rights for foreigners. It helps to be prepared to go for certain licenses or tenders to through a detailed due diligence process similar to other jurisdictions. The types of conduct businesses in regulated documentation required differ from bank to bank. business areas.

The next step to complete the incorporation of a Sdn. Bhd. company would be to appoint auditors to audit the company’s annual financial statements. READY FOR MORE? Chapter 5 has more information However, since the enforcement of Companies Act 2016, certain companies are about conducting businesses in exempted from the requirement to lodge audited financial statements to SSM. regulated business areas.

Qualifying Criteria for Audit Exemption Type of Private Companies Definition Limited Liability Partnership • Companies that do not carry on business, with no accounting transactions. Regulated under the Limited Liability • Dormant since incorporation; or Partnerships Act 2012 (LLPA), a limited Dormant Companies • Dormant throughout the current financial year and the liability partnership (LLP) offers a immediate preceding financial year. business structure that combines the

Companies that do not have revenue and do not exceed total operational flexibility of a conventional assets of RM 300,000: partnership with the limited liability Zero-Revenue Companies features of a company, which is designed • During the current financial year; and • In the immediate past two financial years. for all lawful business purposes with a view to make profit. Its registration is Companies that have: carried out via the MyLLP Customer Portal under the purview of SSM. • Revenue not exceeding RM 100,000 during the current and the immediate past two (2) financial years; Threshold-Qualified • Total assets that do not exceed RM 300,000 during the Companies To be more specific, an LLP is a body current and the immediate past two (2) financial years; and • Not more than five (5) employees at the end of its current corporate that has a legal personality and the immediate past two (2) financial years. separate from that of its partners, and enjoys perpetual succession. With Public Limited Company unlimited capacity, an LLP is capable Meanwhile, a public company limited by shares will have ‘Berhad’ or ‘Bhd.’ at of bringing legal action, acquiring, the end of its name. Furthermore, the public company is not subjected to the owning, holding and developing, restrictions applicable to a private company. or disposing of property, as well as 38 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 39

creating and suffering other acts The intended users or beneficiaries An important thing to note is that some and things that body corporates may of LLP are small businesses, regulated business areas, for example lawfully experience. professional groups, joint ventures, wholesale and retail trade, only allow and venture capitals. foreign involvement through a company Therefore, an obligation of the LLP incorporated in Malaysia. shall be its own, whether arising in FOREIGN COMPANIES IN MALAYSIA contract, tort, or otherwise. Any partner A foreign company planning to invest in of the LLP shall not be personally liable Selangor has the following additional except for his or her own wrongful act options to register the foreign company or omission. in Malaysia, without the need to incorporate as a local company. Every LLP must have at least two want to know MORE? partners, which can be an individual Branch Office of Foreign Company Find out more about the registration process and or a body corporate. An LLP must A foreign company, or more specifically relevant legal forms at: also appoint at least one compliance a company incorporated outside https://www.ssm.com.my/en officer, from amongst its partners or Malaysia, may consider an extension of persons qualified to act as secretaries the company by registering with SSM Representative Office / under the Companies Act 2016 (CA). and establishing a branch office. Regional Office The Compliance Officer must always A foreign company may wish to explore be a citizen or permanent resident Appointment of at least one agent the viability of doing business in Malaysia of Malaysia and ordinarily reside in who is ordinarily resident in Malaysia before establishing or incorporating Malaysia. is required at the branch office, so any new company. For this reason, they that he or she may receive notices to may set up a Representative Office (RE) The LLPA will apply to an LLP unless a be served on the company, ensuring or a Regional Office (RO). formal agreement has been drawn up compliance of the applicable provisions setting out the rights or obligations of in the Companies Act and relevant A RE or RO allows a foreign entity to the partners. regulations. assess the business environment in Malaysia before deciding to set up a Since the branch office is an extension permanent structure. However, a RE or of the foreign company, it shall not RO must not undertake any commercial be treated as a separate legal entity. activities – its role is to only represent Instead, the foreign company, which its head office or principal to undertake is the parent company, will be the designated functions. TRIVIA engaging party; liable for all the debts The compliance officer shall be and liability of the branch office. answerable for the doing of all acts, matters, and things as are required to be done by the LLP under specified provisions of LLPA or CA. He or she shall also be personally liable to all penalties including administrative TRIVIA penalties imposed on the LLP for any The branch office is considered a non- contravention of those sections, unless resident entity because the control and the court is satisfied during a hearing management of it is vested with the that he or she should not be held liable. parent company. 40 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 41

CHAPTER 3: HOW CAN I SET UP MY BUSINESS IN SELANGOR?

Functions of a RE or RO Representative Office Regional Office Collects relevant information on investment and business opportunities to: Serves as the coordination centre for its affiliates, subsidiaries and agents within the South-East Asia and i. develop bilateral trade relations; Asia Pacific region. ii. promote the export of Malaysian goods and products; and iii. carry out research and development. Serves as the coordination centre for its affiliates, subsidiaries and agents within the South-East Asia and Asia Pacific region. Responsible for conducting designated activities within Responsible for conducting designated activities within the region it operates. the region it operates. The operation of a RE or RO is completely funded from sources outside Malaysia, and they are not required to be incorporated under the Companies Act. The setting up of a RE or RO, however, requires the approval of the Government of Malaysia.

TRIVIA Presently, the required minimum expenditure needed for obtaining a RE or RO status is RM 300,000 per year.

The following is the simplified application process to set up a RE or RO in Malaysia.

STEP 1 1 STEP 2 2 STEP 3 3 STEP 4 4 (OPTIONAL) Complete Prepare the following documents, in Submit the Visit MIDA three (3) sets its original version as well as English forms and with support of Application translation (if applicable): documents to from Invest Form RE/RO-1. MIDA. Selangor to • Certificate of Incorporation of Parent Company, Certified assist in the 4 registration True Copy by Notary Public or process. Commissioner For Oaths • Latest Audited Financial Statements of Parent Company (2 years) • Company Profile of Parent Company (including any product brochures)

Once the application is submitted, it will take approximately 35 to 40 business days for MIDA to complete reviewing it.

MIDA will then set a meeting with a representative of the parent company, after which the company has two (2) weeks to provide a physical business address to MIDA.

Approval for the RE or RO is usually for a period of two or three years; any extension of the period thereafter would be subjected to justifications submitted before the expiry of the approved period.

WANT TO KNOW MORE? Visit http://mida.gov.my/home/ for more information on RE and RO. 40 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 41

SMALLER BUSINESS MODELS The sole proprietor shall notify ROB If you are a Malaysian citizen or within thirty (30) days of any changes in Permanent Resident, there are simpler any of the following: options for you concerning business models. • Business Address TRIVIA • Type of Business A partnership shall not have Sole Proprietorship • Particulars on Branches more than 20 partners. A sole proprietorship is a business • Information of Owner wholly owned by a single individual owner who will be personally liable The certificate issued upon the As with sole proprietorship, for all the debts and obligations of the successful registration of the business partnerships in Malaysia must be business. must be renewed at any time before its registered with the ROB, and only expiry date or up to twelve (12) months Malaysian citizens or Permanent All income generated by the business after the expiry date. The renewal may Residents of Malaysia may register as is the income of the sole proprietor, be made for a period of one (1) year to a partnership. thus he or she is taxed on an individual not more than five (5) years. basis. As is the case with sole proprietorship, A sole proprietorship may develop into similarly any partner in a partnership Sole proprietorships in Malaysia must a Sdn. Bhd. shall notify ROB within thirty (30) days be registered with the Registrar of of any changes in any of the following: Businesses (ROB). Its business may be Partnership conducted using the sole proprietor’s Defined as a relationship which • Business Address personal name as per his or her identity subsists between two or more persons • Type of Business card or by using a trading name duly carrying on a business in a common • Particulars on Branches approved by the ROB. view to profit, a partnership does not • Information of any Partner have a separate legal existence. The renewal terms for a partnership’s All partners are both jointly and registration of business certificate are severally liable for the debts and the same as with a sole proprietorship. obligations of the partnership; whilst A partnership may develop into a its profits are attributed to the partners, limited liability partnership (LLP). TRIVIA who are taxed on an individual basis. Currently, only Malaysian citizens or Permanent Residents of Malaysia Unless a formal agreement has are allowed to register as a sole been drawn up setting out the proprietor. rights or obligations of the partners, the Partnership Act applies to all partnerships. 42 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 43

CHAPTER 4: COST OF DOING BUSINESS

STARTING A BUSINESS TAXATION Main fees to be paid to the Companies Commission of Malaysia (SSM) Rate Company Tax 18% - 24% RM USD Personal Tax 1% - 28% Reservation of a name 50 12 Sales & Service Tax (SST) 0% - 10% Application for incorporation under section 14 of the Act: Note: As announced in budget 2019, corporate (a) Company limited by share 1000 242 tax rate is 24% and corporate tax rate for SMEs (b) Company limited by guarantee 3000 725 is 17%, from the year of assessment 2019 (c) Unlimited company 1000 242 Source: MIDA For registration of a company with share capital:

• Not exceeding RM 1,000,000 (USD 241,546) 5,000 1,208 HUMAN RESOURCES • RM 1,000,001 to RM 10,000,000 (USD 241.5K) to (USD Minimum Conditions of Employment 2.42 Million) 20,000 4,831 The Employment Act, 1955 is the main • RM 10,000,001 to RM 50,000,000 (USD 2.42 Million) to legislation on labor matters in Malaysia. (USD 12.08 Million) 40,000 9,662 • RM 50,000,001 to RM 100,000,000 (USD 12.08 Million) to (USD 24.15 Million) 60,000 14,493 Paid maternity 60 days • Exceeding RM 100,000,000 (USD 24.15 Million) 70,000 16,908 leave For registration of a company without share capital 70,000 16,908 Normal Not exceeding eight hours in Effective as of 18-Dec-2017 work one day or 48 hours in one For the full range of fees, please go to SSM’s website at www.ssm.com.my hours week At least 11 gazetted public Rental Rates for Prime Office Space holidays (inclusive of five RM USD compulsory public holidays; Location National Day, Birthday of From To From To the Yang Dipertuan Agong, , Kedah 19.00 27.00 4.59 6.52 Paid Birthday of Ruler/Federal Georgetown, Pulau Pinang 30.00 43.00 7.25 10.39 holiday Territory Day, , Perak 17.00 24.00 4.11 5.80 and ) in one Kuala Lumpur* 65.00 108.00 15.70 26.09 calendar year and on any day declared as a public Petaling Jaya, Selangor 48.44 59.00 11.70 14.25 holiday under section 8 of , Negeri Sembilan 20.00 32.00 4.83 7.73 the Holiday Act 1951 Melaka 26.00 38.00 6.28 9.18 , Johor 34.45 57.00 8.32 13.77 , Pahang 16.00 24.00 3.86 5.80 Kuala , Terengganu 21.50 27.00 5.19 6.52 Kota Bharu, Kelantan 13.00 28.00 3.14 6.76 , Sabah 27.00 43.00 6.52 10.39 , Sarawak 25.00 38.00 6.04 9.18

The rental above are gross rentals per sq. metre per month inclusive of service charge. * Rental excludes Petronas Twin Towers

Source: CBRE/WTW Research, May 2018 (via MIDA) 42 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 43

Paid annual leave for employees Statutory Contributions Employees Provident Fund Less than two years of service 8 days The compulsory contributions under the Employees Two or more but less than 5 years of service 12 days Provident Fund (EPF) Act 1991: Over five years of service 16 days Age Group Employers Employees * Minimum paid annual leave to be provided for employees 60 years (i) Monthly wages RM5,000 Minimum of Paid sick leave per calendar year and below (USD1,200) and below 11% of the - Minimum of 13% of the employees' Less than two years of service 14 days employees' monthly wages monthly wages Two or more but less than (ii) Monthly wages exceed 18 days five years of service RM5,000 (USD1,200) – Minimum of 12% of the Over five years of service 22 days employees’ monthly wages Where hospitalization is necessary up to 60 days (inclusive of the 60-75 Minimum of 4% of the employees' None paid sick leave entitlement years monthly wages stated above)

All foreign workers and expatriates and their employers Payment for overtime work are exempted from compulsory contributions. They can, Normal working days 1.5x hourly rate of pay however choose to contribute and the applicable rates are Rest days 2.0x hourly rate of pay as follows: Public holidays 3.0x hourly rate of pay Age Group Employers Employees Minimum Wages Order (Amendment) 2018 60 years RM5.00 (USD 1.21) per 11% of the employees' The Minimum Wages Order (Amendment) 2018 had laid and below employee per month monthly wages down the minimum wages to be paid for all employees who 60-75 RM5.00 (USD 1.21) per 5.5% of the employees' fall within the First Schedule of the Employment Act 1955 is years employee per month monthly wages RM1,100 (USD266) per month. Minimum wages are defined Source: MIDA as basic wages, excluding any allowances or other payments. Social Security Organisation (SOCSO) Shift Work SOCSO administers two social security schemes for workers An employee who is engaged under his contract of service in earning wages not exceeding RM4,000 (USD960) per month. shift work may be required by his employer to work more than eight hours in any one day or more than forty-eight hours in Once covered, workers remain covered irrespective of their any one week but the average number of hours worked over wages. However, the maximum contribution is based on any period of three weeks, or over any period exceeding three wages of RM4,000 (USD960) per month. weeks as may be approved by the Director General, shall not exceed forty-eight per week. All Malaysian employees and permanent residents who have been employed by an employer under a contract of service or Source: International Labour Organization http://www.ilo.org/dyn/natlex/docs/WEBTEXT/48055/66265/ apprenticeship are liable under SOCSO’s act. Categories of E55mys01.htm#c60c employees exempted from SOCSO’s coverage are: USD 1.00 = MYR 4.14 as of 15-Jan-2019 Government employees

Domestic servants

Self-employed persons

Foreign workers (covered under Workmen’s Compensation Act 1952)

Spouse/s of a sole proprietor or partners 44 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 45

CHAPTER 4: COST OF DOING BUSINESS

Contribution for Local Employees Employment Insurance System 2017 - Act 800 (EIS) First category Second category • Employment insurance system adminstered by the Social Security Organization is to provide certain benefits and Scheme Employment Injury Employment Injury Scheme Scheme re-employment placement program for insuraed persona Invalidity Scheme in the event of loss of the employment. Age <60 years 60 years and above • Beginning Jan 1, 2018, employers and employees will each have to contribute 0.2% of the employees’ wages towards an accumulated EIS fund. Contribution Employer (1.75%) Employee (1.25%) • The contribution to the fund is capped at wage level of Employee (0.5%) Based on employee’s Based on employee’s monthly wages RM4,000 (USD960) a month, although a person may earn monthly wages more than RM4,000 (USD960) a month, his contribution is Note All employees who For eligible new fixed at 0.2% of RM 4,000 Employment of Expatriates An have not reached employees who are 55 employment pass is issued to expatriate to enable him to the age of 60, must years of age, they must stay and work legally in the country. There are two types contribute under the be covered under the First Category except Second Category. of passes issued by the Immigration Department subject for those who have to the period of employment’s contract and the monthly attained 55 years of salary received by the expatriates. age and have no prior contributions before they reach 55 due to Type of Passes Payment of Fees non-eligibility under the Employee’s Social A Employment Pass (PG) i. Employment Pass: Security Act, 1969. This pass is issued for key- a. Key Post – RM300 post and term- (USD72) *Monthly contribution is subject to the ceiling of the insured wage of post position subject to the b. Term Post – RM200 RM4,000.00 per month following conditions: (USD48) • minimum period of ii. Processing Fees – RM125 Contribution for Foreign Workers employment’s contract is (USD30) The rate contribution is 1.25% of the insured monthly wages (2) years and stamping; and iii. Journey Perform Visa - RM • salary not less than RM 500 (USD 121) and to be paid by the employer. 5,000 (USD 1,208) Per post/application (subject to visa entry Source: SOSCO https://www.perkeso.gov.my/index.php/en/ USD 1.00 = requirement according to MYR 4.14 as of 15-Jan-2019 each country of origin) iv. No levy Human Resources Development Fund (HRDF) B Visit Pass [VP(TE)] - PLKS i. Levy - RM 410 (USD 99) HRDF operates on the basis of a levy/grant system. Employers Visit Pass (Temporary ii. Processing Fees - RM 125 who have paid the Human Resources Development levy Employement) is issued only (USD 30) will qualify for training grants from the HRDF to defray or for domestic helpers (maid) iii. Journey Perform Visa (if applicable) - RM 500 (USD subsidise training costs for their Malaysian employees. 121)

Source: MIDA USD 1.00 = MYR 4.14 as of 15-Jan-2019 Manufacturing companies cover under the Human Resources Development Berhad Act, 2001 are as follows:

Categories of Employers Rate of Levy Contributions Employers with 10 employees Mandatory 1% of employees' and above monthly wages Employers with 5 to 9 0.5% of employees' monthly employees regardless of paid- wages up capital, are given the option to register with HRDF

Source: MIDA 44 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 45

Wage Rates (Monthly) Minimum Maximum Position Qualification Experience RM USD RM USD Finance Financial Analyst Degree 3-4 years 4,600 1,111 7,800 1,884 Accountant Degree/Professional Cert 4-5 years 6,200 1,498 8,400 2,029 Office Support Administrator Diploma/Degree 3-5 years 3,600 870 5,300 1,280 Sales, Marketing & Advertising Customer Service Executive Diploma/Degree 2-3 years 3,000 725 4,000 966 Marketing Executive Diploma/Degree 2-4 years 3,100 749 4,800 1,159 Marketing Manager Higher Diploma/Degree 8 years 7,200 1,739 10,500 2,536 Human Resources HR Manager Diploma/Degree 6-8 years 8,000 1,932 12,000 2,899 HR Officer/Executive Diploma/Degree 2-3 years 3,100 749 4,700 1,135 HR Assistant Higher Diploma/Degree 1-2 years 2,100 507 3,200 773 Information Technology IT Executive Degree 2 years 3,600 870 4,700 1,135 Programmer Degree 1-2 years 3,900 942 4,800 1,159 Help Disk Analyst Degree 2-3 years 4,600 1,111 5,800 1,401 Web Designer Degree 2 years 4,600 1,111 5,300 1,280 Software Engineer Degree 2-3 years 6,400 1,546 6,300 1,522 Systems Analyst Degree 3-5 years 6,200 1,498 9,000 2,174 Business Development Degree 3-5 years 6,000 1,449 8,500 2,053 Manager Project Manager Degree 3-5 years 8,000 1,932 14,000 3,382 Helpdesk Tech Support Degree 2-3 years 5,200 1,256 8,400 2,029 (Foreign Language) Logistics & Warehousing Shipping Supervisor Diploma/Degree 3-5 years 2,600 628 4,900 1,184 Warehouse Executive Diploma 2-3 years 2,300 556 4,200 1,014 Buyer Diploma/Degree 2-3 years 3,600 870 5,300 1,280 Logisitc Coordinator Diploma/Degree 3-5 years 3,100 749 5,300 1,280 Warehouse Manager Diploma/Degree 4-5 years 6,200 1,498 8,400 2,029 Engineering & Technical QA Inspector Degree 4-5 years 3,500 845 5,000 1,208 Sales Engineer Technical Diploma/Degree 3-4 years 3,000 725 6,000 1,449 Mechanical Engineer Engineering/Degree 3-4 years 3,000 725 6,000 1,449 Electrical & Instrument Degree 4-6 years 6,000 1,499 8,000 1,932 Engineer Product Engineer Engineering/Degree 4-6 years 5,000 1,208 8,000 1,932 Service Engineer Degree 3-4 years 3,500 845 5,500 1,329 Technical Engineer Technical Diploma/Degree 4-5 years 8,000 1,932 12,000 2,899 Maintainance Engineer Degree 3-4 years 3,000 725 6,000 1,449 Assembly Engineer Degree 2-3 years 3,000 725 6,000 1,449 Chemical Engineer Diploma/Degree 3-4 years 3,000 725 6,000 1,449 R&D Engineer Diploma/Degree 2-3 years 3,000 725 6,000 1,449 Note: Salary figures are industry average. Figures may vary according to depth of expertise and experience.

Source: Malaysia Employment Outlook & Salary Guide 2018/19 by Kelly Services USD 1.00 = MYR 4.14 as of 15-Jan-2019 46 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 47

CHAPTER 4: COST OF DOING BUSINESS

UTILITY Energy Water Supply Tenaga National Berhad (TNB) is the largest most experienced Syarikat Bekalan Air Selangor Sdn. Bhd. (SYABAS) is energy payer in Malaysia, responsible in keeping the lights on responsible for the distribution of water services to more for all residents of peninsular Malaysia, Sabah and Labuan. than 10 million people in Selangor, Kuala Lumpur as well as Putrajaya. SYABAS maintains over 2 million consumer Electricity Rates (Peninsular Malaysia) accounts, including domestic consumers, factories, TARIFF CATEGORY CURRENT RATE commercial and industrial buildings, of which 85% are TARIFF D – LOW VOLTAGE from domestic consumers and 15% are from commercial RM USD INDUSTRIAL TARIFF consumers. For the first 200 kWh (1 -200 kWh) per 0.38 /kWh 0.09 /kWh month For the next kWh (201 kWh onwards) per 0.441 /kWh 0.11 /kWh month SYABAS OPERATES The minimum monthly charge 7.20 1.74 AND MAINTAINS : TARIFF E1 - MEDIUM VOLTAGE GENERAL INDUSTRIAL TARIFF For each kilowatt of maximum demand 29.6 /kW 7.15 /kW 27,420km per month A stretch of 27,420km water pipes that are made For all kWh 0.337 /kWh 0.08 /kWh of mild steel, ductile iron, asbestos cement, The minimum monthly charge 600 144.93 HDPE, uPVC and cast iron ranging from 100mm to TARIFF E2 - MEDIUM VOLTAGE PEAK/OFF-PEAK INDUSTRIAL 2200mm diameter TARIFF For each kilowatt of maximum demand 37.00 /kW 8.94 /kW 1565 per month during the peak period Service reservoirs, tower reservoirs and suction For all kWh during the peak period 0.355 /kWh 0.09 /kWh tanked For all kWh during the off-peak period 0.219 /kWh 0.05 /kWh The minimum monthly charge 600 144.93 638 TARIFF E3 - HIGH VOLTAGE PEAK/OFF-PEAK INDUSTRIAL TARIFF Booster pump stations For each kilowatt of maximum demand 35.5 /kW 8.57 /kW per month during the peak period 138,759 For all kWh during the peak period 0.337 /kWh 0.08 /kWh Valves ranging from 100mm to 2200mm For all kWh during the off-peak period 0.202 /kWh 0.05 /kWh The minimum monthly charge 600 144.93

per m3 (Source: Tenaga National Berhad on Jan 2019)

RM US $ Sewerage Industrial/Commercial Sewerage services in Malaysia were privatised in 1994 0-35 m3 2.07 0.65 and are managed by Indah Water Konsortium Sdn. Bhd., a More than 35 m3 2.28 0.71 company wholly owned by Minister of Finance Incorporated. Minimum charge (inclusive public swimming 36.00 11.25 pool, service apartments and shop houses) It operates in 86 Local Authorities areas except those in Johor Bahru, Kelantan, Sabah and Sarawak. 46 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 47

Industrial Customers Premises Receiving Sewerage Services RM2.50 (USD 0.6) per head per month Premises With Individual Septic Tanks RM2.00 (USD 0.48) per head per month Industrial customers will be charged based on the total number of employees

Scheduled Waste Treatment Rates Kualiti Alam Sdn. Bhd. is a designated company providing off-site scheduled waste treatment disposal services in Peninsular Malaysia. Its waste management centre is located at Bukit Nanas in Negeri Sembilan. Scheduled wastes must be disposed through department of environment licensed scheduled waste with recovery contractors. For non-scheduled wastes, collection and disposal rates vary according to location and contractor.

Waste Group Waste Type Mineral Oils Wastes A Wastes containing lubricating oil, hydraulic oil, etc. Organic Chemical Wastes Containing Halogens and/or Sulphur > 1% B Freon, PVC wastes, chloroform, solvents, capacitors and transformers containing PCB, etc. Waste Solvents Containing Halogens and/or Sulphur < 1% C Acetone, alcohols (eg. ethanol, methanol), benzene, turpentine, xylene, etc. Waste should be pumpable, containing < 50% water and 18MJ/kg calorofic value Organic Chemical Wastes Containing Halogens and/or Sulphur < 1% H Glue, latex, paint, phenol, printing ink, synthetic oils, soap, epoxy, etc. Wastes Containing Mercury K Mercury, vapour lamps, COD-fluids, mercury batteries, etc. Pesticide Wastes T Insecticides, fungus and weed killers, rat poison, etc Inorganic Wastes X Acids, alkaline, sodium hypochlorite, inorganic salts, metal hydroxide sludge, chromate and cyanide waste, etc. Miscellaneous Z Medicine wastes, lab-packs, asbestos wastes, mineral sludges, isocyanates (MDI,TDI), batteries, etc.

Organic Wastes for Incineration Packaged Wastes* Bulk Wastes Waste Pumpable liquid Solid Pumpable liquid Solid Group (per tonne) (per tonne) (per tonne) (per tonne) RM USD RM USD RM USD RM USD A 810 196 - - 630 152 - - B 3,150 761 3,600 870 - - - - C 1,350 326 ------H/Z 1,890 457 2,790 674 1,800 435 2,700 652 T 3,150 761 3,600 870 - - - -

*Note: Packaged wastes refers to wastes packed in standard 200-litre drums or 1m3 PP Bags.

(Source: MIDA) USD 1.00 = MYR 4.14 as of 15-Jan-2019 48 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 49

CHAPTER 4: COST OF DOING BUSINESS

Liquid Inorganic Wastes for Physical Chemical Treatment 800-litre Pallet Tank (per tonne) 200-litre Drum (per tonne) Waste Group RM USD RM USD Acid Wastes Without Chromate (X) 1,440 348 1,620 391 Alkaline Wastes Without Cyandie (X) 1,440 348 1,620 391 Chromate Wastes (X) 1,800 435 1,980 478 Cyanide Wastes (X) 1,800 435 1,980 478 Mercury Wastes (K) 3,600 870 3,780 913

Inorganic Wastes for Solidification Packaged Wastes* Waste in Bulk Waste Group (per tonne) (per tonne) RM USD RM USD X/Z 810 196 765 185

Inorganic Wastes for Direct Landfill Packaged Wastes* Waste in Bulk Waste Group (per tonne) (per tonne) RM USD RM USD X/Z 495 120 450 109

Encapsulation Packaged Wastes* (per tonne) Waste Group (Z) RM USD Contaminated Crushed Drum and Other Contaminated Waste 1,500 362

Cementation Packaged Wastes* (per tonne) Waste Group (Z) RM USD Dry Cell Batteries and Other Miscellaneous Wastes 900 217

Source: MIDA USD 1.00 = MYR 4.14 as of 15-Jan-2019

Gas Gas Malaysia, a member of MMV Group provides clean, efficient and stable supply of Natural Gas as well as Liquefied Petroleum Gas to homes, commercial businesses and industries. 48 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 49

Natural Gas Tariff - Industrial Tariff Price (RM/MMBtu) Applicability Range No Category RM USD MMBtu/year 1 Tariff C 30.74 7.43 601 - 5,000 2 Tariff D 31.04 7.50 5,0001 - 50,000 3 Tariff E 32.38 7.82 50,001 - 200,000 4 Tariff F 32.38 7.82 200,001 - 750,000 5 Tariff L 33.46 8.08 > 750,000

Effective 1 Jan 2019 until 30 June 2019, inclusive of GCPT surcharge of RM0.23/MMBtu

Source: Gas Malaysia Berhad - www.gasmalaysia.com USD 1.00 = MYR 4.14 as of 15-Jan-2019

STATE FEES & CHARGES • Agriculture Quit Rent • Vacant Land for Development Quit rent is defined as: • Residence 1. Any amount of money that should be paid to the State Authority as annual rent tax; The power of Local Authorities to impose Assessment Tax is 2. Any annual payments owed to the State Authority as described in the below provisions: according to any written laws should be collected as land revenue or quit rent; The Local Authority may, with the approval of the State 3. Any debt to the State Authority as quit rent arrears. Authority, from time to time as is deemed necessary, impose either separately or as a consolidated rate, the annual rate or rates within a local authority area for the purposes of this Act or for other purposes which it is the duty of the Local Authority to perform under any other written law - Section 127 of the Local Government Act 1976 (Act 171)

Quit Rent Example: Local Authority X will impose tax on all ownerships and rateable properties that are within its administrative areas. Who Should Pay? When To Pay? • Every registered land • Once A Year owners • Starting from 1st • Any representative January-31st May on behalf of the land every year owners

Notes: Assesment Penalties can apply for late payment Rent In case of non-payment, the state authority may take legal actions on the land owner Who Should Pay? When To Pay? • Every registered • Twice A Year For more information, kindly contact Selangor Land and Mines Office at owners of the • First Payment http://ptg.selangor.gov.my/ residential, 1st January-20th commercial, February every industrial and year Assessment Tax agricultural • Second Payment Assessment Tax is a tax imposed on all ownerships and properties, as well 1st January-31st as vacant land August every year rateable properties that are located within the administrative areas of respective Local Authorities. The types of ownerships Notes: include: Penalties can apply for late payment. In case of non-payment, the state authority may take legal actions on the land owner • Industrial • Commercial 50 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 51

CHAPTER 4: COST OF DOING BUSINESS

Calculating your Assessment Tax Important Formulas: Annual Assessment Tax = Annual Valuation X Approved Rate For The Year (%) Assessment Tax Per Term = Annual Assessment Tax / 2 Terms Annual Valuation (Property) = Gross Rental Estimation Per Month X 12 Months Annual Valuation (Vacant Land) = Market Price Of The Land X 10%

EXAMPLE: Approved Assessment Rates for year 201X – by Local Authority X

Rates (%) Type of Ownership Building Vacant Land Residential (Landed) 4.0 3.5 Residential (Storeyed) 3.5 3.5 Serviced Apartments 5.0 5.0 Commercial 7.0 6.5 Industrial 7.5 7.0 Agricultural 2.0 1.0 Vacant Land for Development - 3.5 Note: • Assessment rates may vary between different administrative areas • Assessment rates are subject to change over time • All examples and rates listed in this document are for illustration purposes only and do not reflect actual data

TRANSPORTATION Container Haulage Rates Haulage base: Port Klang (North Port)

Road Toll – Total Haulage Rates Actual at cost FAF 12.47% Area 20’ & 40’ (Effective 1st Jan (period from 1st 20’ & 40’ 2007) June 2011) RM RM RM USD PORT KLANG - Shah Alam 533.00 19.80 86.29 639.09 154.37 PETALING JAYA - 605.00 23.20 97.95 726.15 175.40 SELANGOR - 677.00 0.00 109.61 786.61 190.00 PERAK - Tanjong Malim 1,515.00 59.80 245.28 1,820.08 439.63 - Butterworth/ 2,883.00 194.80 466.76 3,544.56 856.17 KEDAH - Kulim 2,847.00 240.00 460.93 3,547.93 856.99 - Kangar 3,488.00 240.00 564.71 4,292.71 1036.89 NEGERI SEMBILAN - 1,162.00 56.40 188.13 1,406.53 339.74 MELAKA - Air Keroh Industrial 1,762.00 103.40 285.27 2,150.67 519.49 Area KELANTAN - Kota Bharu 3,963.00 197.80 641.61 4,802.41 1160.00 PAHANG - Kuantan 2,328.00 197.80 376.90 2,902.70 701.14 TERENGGANU - Kerteh 2,782.00 197.80 450.41 3,430.21 828.55 JOHOR - 2,818.00 211.00 456.23 3,485.23 841.84 Source: MIDA 50 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 51

Ocean Freight Rates Rates quoted are subject to: • THL/THD/DOC and EDI. • BAF/ CAF/WAR RISK/ PEAK SEASON surcharges as per Conference announcement.

20-ft container 40-ft container From Port Klang to: USD USD AUSTRALIA 450 900 Main ports CHINA 100 200 Shanghai EUROPE 1,625 3,400 Main ports USA 1,800 2,200 Los Angeles INDIA 600 1,200 Nava Sheva JAPAN 400 800 Main ports KOREA 400 800 Busan WEST MEDITERRANEAN 2,000 4,100 Main ports NEW ZEALAND 950 1,900 SOUTH AFRICA 1,300 2,500

Source: MIDA USD 1.00 = MYR 4.14 as of 15-Jan-2019

Courier Service Rates Various Malaysian and international companies provide courier services in Malaysia.

Documents Merchandise Destination First 500 gm Next 500 gm First 200 gm Next 200 gm Max. Weight Limit (kg) Country RM USD RM USD RM USD RM USD Australia 70 17 25 6 80 19 7 2 Germany 80 19 32 8 105 25 9 2 Japan 55 13 15 4 80 19 7 2 30 UK 80 19 32 8 105 25 9 2 USA 70 17 25 6 105 25 9 2

Source: MIDA USD 1.00 = MYR 4.14 as of 15-Jan-2019 52 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

CHAPTER 5: WHAT REGULATORY REQUIREMENTS DO I HAVE TO CONSIDER?

LICENSING AND OTHER During the validity period of the IL, Now that we know REQUIREMENTS a company has the time to comply Depending on the core business of an with the standard requirements or how to set up a establishment, various licenses and additional compliance set by the local approvals from governmental agencies council. business and the costs or statutory bodies must be obtained. The conditional terms of the IL typically involved, it is pertinent Different industries and sectors may include seeking a letter of support require consideration of other industry- from the Department of Health and that all regulatory specific registration, approvals, and Environment, Department of Fire and licenses. Rescue, and approvals on planning and requirements are renovation of the premise. Business Premise License considered before and Signboard License The local council will then carry out Once a company is registered with an audit after this period to ensure establishing any SSM and has managed to establish full compliance before the company is a physical office, it must obtain qualified to apply for the ‘permanent’ business. a business premise license and license. signboard licenses. Companies with foreign equity will Applications for the mentioned licenses have to consider requesting for a This is to ensure are to be submitted to the respective letter of approval from the Ministry of local council where the physical office Domestic Trade, Co-operatives, and a smooth process is to be based at. The requirements Consumerism (MDTCC). for the licenses vary according to each in establishing the local council. Fortunately, most local councils company as well as provide Instant Licenses (IL), which can usually be issued within 24 running a business in hours upon submission of complete documentation. This license is Application for Fire Malaysia. essentially a conditional license Fitness Certificate with minimal requirements and has Companies wishing to undertake a validity period of several months. renovations or alterations in any buildings, whether rented or purchased, must apply for a Fire Fitness Certificate from BOMBA, the Malaysian firefighting association. TRIVIA Initially, the renovation/architectural drawings need to first be approved An Instant License (IL) enables by BOMBA, in which case a Letter businesses to begin operations of Approval would be issued to the whilst complying with other standard applicant. requirements, which would have been pre-requisite to the approval of the main license. A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 53

The first step would be to obtain the following documents from the consultant, architect, interior designer, engineer or other contractor who is assisting in the project: INVESTOR TIP! • The Approval Letter, showing a It is important to note that the latest WANT TO KNOW MORE? Reference number (example: rates should be verified with BOMBA The MDTCC Guidelines are instructive, thorough, Ruj Kami: JMPM:SK/ZB/005/3/8/73) beforehand as fees vary according to and available at: and date. number of fire fittings and individual http://www.kpdnkk.gov.my/kpdnkk/wp- • The Bomba Approved & Stamped buildings. content/uploads/2017/05/guidelines-on-foreign- Drawings which display the location participation-in-the-distributive-trade-services- of all the Fire Fittings in the bulding. malaysia.pdf This would include Fire Doors, To make things easier, one can visit the Emergency Lightings, Exit Signs, BOMBA office and ask them to assist Fire Extinguishers, Hose Reels, with calculation of fees so that an on- Where foreign participation in a Emergency Fire Pumps, etc. the-spot payment can be made! company doing distributive trade in • The Blue Form needs to be signed Malaysia is at 51% or more, approval must be obtained from MDTCC before and stamped by the consultant, After the submissions of the above, the business commences. the architect, and the engineer a date and time would need to be respectively (each person one set). coordinated with BOMBA for the Joint • Also needed are Forms C1, C2, C3 Inspection of the building premises. Definitions in MDTCC Guidelines available from BOMBA. Form C3, for During this visit one should be prepared Term Definition example, refers to fire fittings, so for to hanlde field tests. Therefore, all Foreign Any interest, associated each fire fitting one separate form Participation group of interests, or parties contractors, fire fittings vendors and acting in concert, which would be required. The different relevant persons need to be present. comprises of: forms are meant to be signed by • An individual who is not a Malaysian citizen – different persons, for example the Once BOMBA is satisfied with the contractors, suppliers and vendors including Permanent functionality of the fittings, the Resident; who would be in charge of Form C1 certificate will be issued. However, • AA foreign company or and C2. if there are pending issues, BOMBA institution; or • AA local company or • The Contractor and vendors also would advise rectification works and need to supply the Fire Fittings institution whereby the a re-inspection, as well as re-testing parties as stated in the Certificates. would be required. above two points hold • A form for schedule of payment more than 50% of the (“Permohonan Pemeriksaan voting rights. Wholesale, Retail, and dan Ujian”) should be filled in Trade (WRT) Sector Distributive All linkage activities that by contractor or vendor who will Trade channel goods and services For non-resident companies intending accompany the BOMBA personnel down the supply chain to to set up a wholesale, retail, and trade intermediaries for resale or onto the project site. (WRT) business in Malaysia, MDTCC to final buyers, excluding: has issued the Guidelines on Foreign • Manufacturing The second step would involve the companies; and Participation in the Distributive Trade Consultants, Architect and Engineer, • Companies granted Services Malaysia (MDTCC Guidelines) the status of regional each respectively writing an original as a manual. establishments by the letter to BOMBA enclosing all the Malaysian Industrial above documentation and calling for Development Authority the official inspection for issuance of (MIDA). Fire Fitness Certification. Distributive Wholesalers, retailers, Traders franchise practitioners, direct sellers, suppliers, A bank draft of local cheque for the and others who channel BOMBA Inspection & Testing should be their goods in the domestic market, as well as included. commission agents or other representatives – including those of international trading companies. 54 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

CHAPTER 5: WHAT REGULATORY REQUIREMENTS DO I HAVE TO CONSIDER?

Unregulated Services Sector a minimum capital investment of RM 1 in respect of bonus shares to the Other types of businesses that require million, subject to other pre-conditions extent they were issued out of capital approval from MDTCC are those in the and exemption criteria depending on reserve created by revaluation of unregulated services sector. the core business of the companies. fixed assets. • Reserves shall be reserves other This sector refers to services sectors Failure to comply with the conditions than any capital reserve created that are not regulated by any legislation, and approval requirements may result by revaluation of fixed assets regulation, government guidelines or in administrative sanctions against and provisions for depreciation, licensing requirements, and are not the company such as rejection by the renewals, or replacements and supervised by any government agency. Malaysian immigration authorities of lessening in value of assets. At the time of writing, MDTCC has not any application by foreigners for an • Balance of share premium account published any guidelines on this sector. employment pass, rejection of other shall not include any amount licensing applications, and more. credited therein at the instance of issuing bonus shares at premium LIST OF UNREGULATED Manufacturing License out of capital reserve by revaluation SERVICES (NON-EXHAUSTIVE) The requirement to apply for a of fixed assets. manufacturing license depends on the Transport, storage, and structure of the company. Even so, it should be noted that the communication services such as manufacturing license is generally freight and passenger transportation The Industrial Coordination Act 1975 granted to businesses and companies services and parking services. (ICA) requires person(s) engaging incorporated with the Companies in any manufacturing activity with Commission of Malaysia. Leasing or rental services such as shareholders’ funds of RM 2.5 million leasing or rental of equipment and goods transport vehicles without and above; or employing 75 or more Companies not meeting the above an operator and leasing or rental of full-time paid employees to obtain a threshold are encouraged to file personal and household goods. Manufacturing License. an application to obtain a letter of exemption from manufacturing Management consulting services Under the ICA, “manufacturing activity” license. such as general management has been defined to mean the making, consulting services, production altering, blending, ornamenting, The application for a manufacturing management consulting services, finishing, or otherwise treating or license will be filed with the Malaysian and public relations services. adapting any article or substance Investment Development Authority with a view to its use, sale, transport, (MIDA) – a division under the purview Business services such as building delivery or disposal; including the of the Ministry of International Trade cleaning services, photographic services, packaging services, and assembly of parts and ship repairing and Industry (MITI). telephone answering services. (but shall not include any activity normally associated with retail or Details normally required for the Repair services incidental to metal wholesale trade). application includes, but are not products, machinery and equipment limited to: such as repairs of radio, television, Concurrently, the definition of and motor vehicles. “shareholders’ funds” is the aggregate • Company structure amount of a company’s paid-up capital, • Company financing The above requirement to seek prior reserves, balance of share premium • Manpower (wages, qualifications, approval from MDTCC is usually only account and balance of profit and loss source of technical know-how) applicable to companies with more appropriation account, where: • Manufacturing process and than 50% foreign participation. pollution control • Paid-up capital shall be in respect • Main machinery and equipment In order to be eligible for the approval, of preference shares and ordinary • Main components and materials a company would be required to have shares and not including any amount • Production • Business plan

1 “NOL e-Form”. Invest Selangor’s Official Website. 2018. (http://investselangor.my/NOL/) 2 “NOL e-Form : Who Should Apply”. Invest Selangor’s Official Website. 2018. (http://investselangor.my/NOL/) A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 55

Duty exemptions on raw materials, components, machinery, and equipment can be applied concurrently 1 RECEIVED LETTER OF with the manufacturing license. MANUFACTURING LICENSE APPROVAL FROM MITI/ No-Objection-Letter MIDA (INTERIM LETTER). All manufacturing projects – except expansion projects at the same 2 location – need to obtain approval from SUBMIT APPLICATION the Selangor State Government for the ONLINE VIA E-NOL AT location of the project. http://investselangor. Upon successful application, approval NO FEES WILL BE CHARGED. 4 my/NOL/ will be granted by the Selangor State Duration to process will Government in the form of a no- take 1 week and longer if objection-letter. This letter is used to any problems occured, for verify the location of the project in the example: incomplete supporting designated zone. documents.

Subsequently, the letter needs to be submitted to MIDA for the issuance of the manufacturing license. 3 A more convenient method in applying COMPLETE THE NOL E-FORM AND SUBMIT for a no-objection-letter is through THE SUPPORTING DOCUMENTS. the online method of obtaining an electronic no-objection-letter (e-NOL) • Form 9, 24 and 49 via Invest Selangor’s official website1. • A list of products (end products) or attached the One condition before applying online is products catalogue if available to obtain the ‘Letter of Manufacturing • A copy of the Letter of Manufacturing License License Approval’ from MITI or MIDA, Approval from MITI / MIDA which is an interim letter2. • A copy of Land Title / Land Conversion Approval • A copy of Certificate of fitness Online applications for a no-objection- • A copy of Sale & Purchase / Tenancy Agreement letter generally take seven working days to process. * All documents must be certified by Company Secretary or Commissioner of Oath

AFTER THE PROCESS IS DONE, LOOKING TO APPLY THE APPLICANTS SHOULD BE 5 FOR AN E-NOL? NOTIFIED BY CALL OR EMAIL TO OBTAIN THE LETTER FROM STATE Visit Invest Selangor’s GOVERNMENT. official website at http://investselangor. Investors may contact Ms Siti my/NOL/ for more Balqis +603 5510 2005 ext 309 information on how to should they have further queries. obtain an e-NOL. 56 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

CHAPTER 5: WHAT REGULATORY REQUIREMENTS DO I HAVE TO CONSIDER?

GOOD MANUFACTURING PRACTICE ENVIRONMENTAL AND GOOD DISTRIBUTION PRACTICE REQUIREMENTS IN MALAYSIA Manufacturers are commonly required A company based in Malaysia will to comply with Good Manufacturing have the option of renting, selling, Practice and Good Distribution or developing land or office space, INVESTOR TIP! Practice. depending on its business needs. The PAT process may take up to 4 weeks to complete. Good Manufacturing Practice is a The Malaysian government, in standard established to ensure that support of environmentally sound any product manufactured is safe, and sustainable developments, The PAT technique mainly serves to efficacious, and of quality. has established certain legal and answer the following questions: institutional arrangements so that • Is the concept of the proposed Meanwhile, Good Distribution environmental factors are considered project in line with any development Practice is an important step that at the early stages of project planning. plan, policies, or any decisions of the should be considered in the storage, Government of Malaysia? transportation, and distribution Preliminary Site Assessment • Is the site located in or adjacent to of registered products – including (Environmental Assessment) Environmentally Sensitive Areas associated materials – in order to In order to ensure that the likely (ESAs)? preserve their characteristics and impacts on the environment are fully • What is the category of land use – was quality until they reach the consumer. understood and taken into account the land gazetted as an industrial This step is included in the scope of before any new developments take area, agriculture land, etc.? Good Manufacturing Practice. place, an environmental assessment – • Are there adequate buffer zones also referred to as the Preliminary Site from the project site to sensitive Inspection of the manufacturer shall Assessment (PAT) – will be required. receptors based on existing and take place based on the requirement future land use? of prescribed guidelines for the A PAT process applies for all industries In 2002, the National Policy on the respective industries. considering a new construction. The Environment was formulated and application for PAT is to be made to the approved. The policy integrates relevant Department of Environment three elements of sustainable (DOE) State Offices. development: economic, social and cultural development, along with Hence, given that its requirements shall environmental conservation. INVESTOR TIP! be subject to the company’s intended The process in setting up utilities such activities and industries, investors are As it aims for continued economic, as water and electricity, as well as advised to consult the respective state social and cultural progress, as well telephone and internet connectivity DOEs for further clarification. as enhancement in the quality of life varies on a case by case basis of Malaysians, the policy is based on eight (8) inter-related and mutually depending on the location, and may WHY IS PAT NECESSARY? take up to several months to complete. supporting principles, as follows: In any case, it is important to determine Clearance from DOE and compliance with regulations; accessibility before establishing a • Stewardship of the Environment; company in a certain area. • Conservation of the Nature’s Vitality Support from DOE in the event of and Diversity; any issue or complaints arising • Continuous Improvement in the pertaining to the environment; and Quality of the Environment; • Sustainable Use of Natural Full compliance may be important for future applications, claims, Resources; tenders, and so on. • Integrated Decision-making; A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 57

• Role of the Private Sector; • Commitment and Accountability; and LIST OF PRESCRIBED ACTIVITIES • Active Participation in the REQUIRING DETAILED EIA International Community. • Iron and steel industry; • Pulp and paper mills; Environmental Impact INVESTOR TIP! • Cement plants; Assessment (EIA) The period allocated for a review of • Construction of fired power For activities prescribed under the a Preliminary EIA report is 5 weeks plant; Environmental Quality (Prescribed while that for a Detailed EIA report is • Construction of dams for water Activities) (Environmental Impact 12 weeks 5. supply and hydroelectric power Assessment) Order 1987, an schemes; Environmental Impact Assessment • Land reclamation; Investors are also encouraged to give (EIA) is necessary. Industrial activities • Incineration plant (scheduled attention to some of the following wastes & solid waste); that are not subject to the mandatory aspects of pollution control during • Construction of municipal solid EIA requirements are still subject the early planning stages of their waste landfill facility (including to various regulations under the prospective projects 6: municipal solid waste transfer Environmental Quality Act, 1974. station); • Look into pollution control measures • Project involving land clearing EIA is used to identify, predict, evaluate as early as during the pre-feasibility where 50% of the area or more and communicate information study stage; having slopes exceeding 25 about the environmental impact of degrees (except quarry); • Find possible modifications in the a proposed project. It maps out the • Logging covering an area process line that can minimise waste mitigating measures prior to project exceeding 500 hectares or more; generation; approval and implementation 3. • Development of tourist or • Pollution prevention to be viewed as recreational facilities on islands important as production process; in surrounding waters which There are two EIA procedures that have • Engage in cleaner production; and are gazetted as national marine been adopted in Malaysia 4: • Consider recycling options as far as parks. possible. • Construction of recovery plant • Preliminary EIA – assessment of (off-site) for lead-acid battery environmental impact due to those wastes; and activities that are prescribed under • Scheduled wastes recovery or the aforementioned 1987 Order; and treatment facility generating • Detailed EIA – a procedure significant amount of wastewater undertaken for projects with which is located upstream of major or significant impact to the public water supply intake. environment. Source: “Environmental Impact Assessment (EIA): Procedure and Requirements in Investors are advised to consult the Malaysia”. Department of Environment. Department of Environment (DOE) for October 2007. pp. 34. (http://www.doe.gov.my/eia/wp-content/ further clarification on the procedures uploads/2013/06/EIA-Procedure-and- and requirements, by contacting the Requirements-in-Malaysia.pdf) DOE headquarters, DOE State Offices or the DOE representative at MIDA.

3 “Environmental Impact Assessment (EIA): Procedure and Requirements in Malaysia”. Department of Environment. October 2007. pp. 1. (http://www.doe.gov.my/eia/wp-content/uploads/2013/06/EIA-Procedure-and-Requirements-in-Malaysia.pdf) 4 “Environmental Impact Assessment (EIA): Procedure and Requirements in Malaysia”. Department of Environment. October 2007. pp. 11. (http://www.doe.gov.my/eia/wp-content/uploads/2013/06/EIA-Procedure-and-Requirements-in-Malaysia.pdf) 5 “Environmental Impact Assessment (EIA): Procedure and Requirements in Malaysia”. Department of Environment. October 2007. pp. 13. (http://www.doe.gov.my/eia/wp-content/uploads/2013/06/EIA-Procedure-and-Requirements-in-Malaysia.pdf) 6 “Environmental Requirements: A Guide For Investors.” Eleventh Edition. Department of Environment, Malaysia. October 2010. 58 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

CHAPTER 5: WHAT REGULATORY REQUIREMENTS DO I HAVE TO CONSIDER?

PROCEDURE FOR PRELIMINARY EIA

PROPOSED PROJECT CONCEPT AND SITTING ARE Project proponent is No advised not to proceed IN LINE WITH DEVELOPMENT with the proposed project PLANS, POLICIES OR ANY DECISION OF MALAYSIAN GOVERNMENT?

Yes

Submission of Preliminary EIA Report- 12 copies to the Preliminary EIA Technical Department of Environment (DOE) Committee Meeting/ State Office and 3 copies plus a Review at DOE State Office softcopy of the Executive Summary to the DOE Headquarters

Additional Information Required ADDITIONAL EIA REPORT MEETS INFORMATION THE REQUIREMENT OF REQUIRED AND TO SECTION 34A(2), EQA Yes BE SUBMITTED IN 2 1974 WEEKS TIME (FROM Yes MEETING DATE)

No No Preliminary EIA Report Approved Preliminary EIA Preliminary EIA with Report Rejected/ Report Rejected/ Conditions Not Approved Not Approved

Source: “Environmental Impact Assessment (EIA): Procedure and Requirements in Malaysia”. Department of Environment. October 2007. pp. 48. (http://www.doe.gov.my/eia/wp-content/uploads/2013/06/EIA-Procedure-and-Requirements-in-Malaysia.pdf)(http://www.doe.gov.my/eia/wp- content/uploads/2013/06/EIA-Procedure-and-Requirements-in-Malaysia.pdf) A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 59

PROCEDURE FOR DETAILED EIA

Submission of DETAILED EIA STUDY Detailed EIA CONDUCTED IN No Report-50 copies ACCORDANCE TO THE EIA Report plus a softcopy of the Rejected APPROVED TERMS OF Executive Summary to the DOE REFERENCE?

Yes

Detailed EIA Report Display and Comment

Additional Information DETAILED EIA Required AD-HOC PANEL MEETING/ REVIEW AT DOE HEADQUARTERS

ADDITIONAL EIA REPORT INFORMATION MEETS THE REQUIRED AND TO Yes REQUIREMENT OF BE SUBMITTED IN 2 SECTION 34A(2), WEEKS TIME (FROM No EQA 1974 MEETING DATE) Detailed EIA Report Rejected/ No Yes Not Approved

Detailed EIA Detailed EIA Report Rejected/ Report Approved Not Approved With Conditions

Source: “Environmental Impact Assessment (EIA): Procedure and Requirements in Malaysia”. Department of Environment. October 2007. pp. 49. (http://www.doe.gov.my/eia/wp-content/uploads/2013/06/EIA-Procedure-and-Requirements-in-Malaysia.pdf) 60 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

CHAPTER 5: WHAT REGULATORY REQUIREMENTS DO I HAVE TO CONSIDER?

APPLICATION PROCEDURES FOR ENVIRONMENTAL REQUIREMENTS IN MALAYSIA

2 1 ACTIVITIES SUBJECT TO AIR AND • SITE SUITABILITY WATER POLLUTION CONTROL: EVALUATION (FOR NON- • Written Permission (Air) PRESCRIBED ACTIVITIES) • Written Notification (Sewage, Industrial • EIA APPROVAL (FOR Effluent, Leachate) PRESCRIBED ACTIVITIES) • Written Approval (Prescribed Premises: Crude Palm Oil Mills, Raw Natural Rubber Mills, Scheduled Wastes Facilities) 3 LICENSE TO OCCUPY: • Crude Palm Oil Mills • Raw Natural Rubber Factories • Scheduled Waste Treatment and Disposal Activities • Prescribed Conveyance

Source: “Environmental Requirements: A Guide For Investors.” Eleventh Edition. Department of Environment, Malaysia. October 2010.

DEPARTMENT OF OCCUPATIONAL blasting, personal protective BUILDING AND PLANNING SAFETY AND HEALTH (DOSH) equipment, lifts, escalators, PERMISSIONS Under the purview of the Ministry of dumbwaiters, boiler and pressure Finally, investors considering building Human Resources, the Department vessels, and pipelines. their own site in Selangor should of Occupational Safety and Health know that additional permissions and (DOSH) is responsible for regulating DOSH also issues authorisation for procedures will be necessary. The and enforcing various occupational general machinery. following is an overview of the different safety and health rules to ensure agencies related to building planning, that the safety, health, and welfare An application to DOSH normally depending on the project’s aims. of the people at work are protected requires submission of design from occupational hazards in various drawing or catalogue of machines, For land development applications sectors. process flow chart, safe operating (section 124A and 204D NLC), technical procedures, data sheets, certificate of departments/agencies referred to are: Approval from DOSH is compulsory fitness, or any certification applicable prior to any commencement of to the respective machinery. 1. State Town and Country Planning manufacturing operations. Department; 2. Department of Valuation and If a company is setting up a factory Property (JPPH); or similar premises, certain 3. Planning Department of Local certifications must be obtained from Authority; DOSH. These certifications include 4. Department of Agriculture (if steam boilers, unfired pressure WANT TO KNOW MORE? necessary); and vessels, hoisting machinery, sand Find out more at 5. Other related technical departments/ http://www.dosh.gov.my/index.php/en/ agencies A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 61

Technical Departments/agencies 5. Other related technical departments/agencies. referred to for application of Planning Permissions are as below: For road and drainage plan, the technical department/agencies referred to are as 1. State Town and Country Planning below: Department; 1. Public Works Department 2. State Land and Mines Department/ 2. Department of Drainage and Irrigation; and District Land Office; 3. Planning Department of Local Authority; and 3. Public Works Department; 4. Other related technical departments/agencies. 4. Department of Drainage and Application for Street Lighting will be processed internally by the Engineering Irrigation; Department of the Local Authority. 5. Berhad; 6. Department of Environment; For further information and contact details, please refer to Local Authorities 7. Department of Sewerage Services; and District Offices in Chapter 7. 8. Department of Fire and Rescue Services; 9. Water Supply Corporation; Applicants 10. Internal technical departments (Landscape Department, Department of Engineering, Department of Health and Building One Stop Centre (REHDA Institute) Department; and 11. Other related technical departments/agencies. Jabatan Bomba Jabatan Jabatan dan Penyelamat For submission of building plans, the Pembangunan PBT Kejuruteraan PBT Malaysia technical departments/agencies that (JKT - KPKT) (JKT - KPKT) (JBPM) shall be referred to are as below: 1. Department of Fire and Rescue Services; One Stop Centre 2. Water Supply Corporation; (OSC of each local city 3. Department of Sewerage Services; council and municipal council) 4. Tenaga Nasional Berhad; 5. Internal technical departments (Department of Planning, Jabatan Bangunan PBT Landscape Department, (Local Authority) Department of Engineering, Department of Health); and 6. Other related technical Applicants departments/agencies

For earthwork plan, the technical department/agencies referred to are as below: 1. Public Works Department; 2. Land Office; 3. Department of Drainage and Irrigation; 4. Planning Department of Local Authority; and 62 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

CHAPTER 5: WHAT REGULATORY REQUIREMENTS DO I HAVE TO CONSIDER?

Another option would be the application via the Real Estate and Housing Developer’s Association of Malaysia (REHDA). The process is outlined below.

Applicants 1 Legend OSC Tasks (1 day) Processing days One Stop Centre 1 ** These plans can be submitted after layout plan and building plan have been approved Checking of Documents (1 day) 1 4 Processing steps

Note: Request Additional No Complete? Recommendation of Building Plan, Earthwork Documents/Information Plan, and Road and Drainage Plan shall be Yes subjected to the agreed layout plan

Technical 3E Land Office A 2 Local Authority B 2 Local Authority C 2 Local Authority D 2 Department Planning Department Building Engineering Department Department • JPBD • PTD/PTG Simultaneous Application Planning Permission Road & Drainage Plan • JKR for Conversion & Application Building Plan Application • JPS Subdivision (124A) (subsection 21(1), Act 172) Application (Section 9 Act 133) • TNB National Land Code (NLC) (section 70 Act 133) Earthwork Plan • JAS or Surrender & (Including Landscape Plan & (Section 70A Act 133) • JPP Re-alienation (204D) Proposal Plan for housing scheme (Including Sanitary Plan (Including street • PBA National Land Code (NLC) name & road name) & RC Plan)** lighting plan)** • JMG • JBPM 3A 3B 3C 3D • Jab. Pertanian • Jab. Penilaian & Land Administrator Written Register/ Open File Register/ Open File Register/ Open File Perkhidmatan Notice to Harta adjacent Refer to Development • Other relevant neighbors Plans & Planning technical (21 days) Guidelines department Check Building Plan Check Plans Land Administrator Objection checks and register Refer to SPC/MPFN (if necessary) & time frame application is subject to SPC/MPFN meeting Receive & coordinate Receive & coordinate comments & conditions comments & conditions SPC Yes Secretariat Charting, Memorial No MPFN Endorsement and Decision Advice Written direction to Written direction to Preparation of Report applicant shall amend applicant shall amend Objection Receive & coordinate Hearing comments & conditions plan accordingly plan accordingly

Written direction to Note: applicant & shall amend Application plan accordingly Forward comments considered Prepare Prepare to OSC Secretariat withdrawn if recommendation recommendation the plan is not Prepare recommendation paper to OSC paper to OSC resubmitted paper to OSC Secretariat Secretariat Secretariat within 7 days or extended (50 days) (25 days*) period granted (50 days) (25 days*) (50 days) (25 days*) (50 days) (25 days*) (40 days)(14 days*) *if local plan exists *if local plan exists *if local plan exists *if local plan exists *if local plan exists

OSC Secretariat will inform planning ONE STOP CENTRE (COMPILATION/COORDINATION permission decision to land office for 4 further processing land matters RECOMMENDATION PAPERS) (5 days)

Land Administrator prepare ONE STOP CENTRE COMMITTEE MEETING (DECISION)(1 day) 5 recommendation paper to Land & Mines Director 7 (10 days) ONE STOP CENTRE (PREPARE NOTIFICATION OF 6 PLANNING APPROVAL) (3 days) LOCAL AUTHORITY FULL State EXCO Meeting COUNCIL MEETING 7 ONE STOP CENTRE PREPARE DECISION PAPER (2 days) (Decision) (14 days) 9 (ACKNOWLEDGMENT) 9 (1 day) Land Office (5 days) 8 APPLICANT

Source: http://rehdainstitute.com/one-stop-centre-osc/ A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 63

The process for Land conversion and 4. Application for earthworks plan and with subparagraph 136 (1)(c)(i) NLC Building Permissions can be generally road drainage plan together to the or application for surrender and outlined as follows: Engineering Department/ Division re-alienation section 204D NLC in (example of the accompanying letter accordance with paragraph 204D(1) To begin with, applicants need to for the distribution of applications (d) NLC. submit the application and supporting to processing departments) documents to OSC Secretariat. 5. The OSC Secretariat shall also The approval letter with all the relevant Fees vary according to each city and distribute all three applications to signatures is usually ready within 3 municipal council. The estimated the relevant technical departments working days thereafter. duration for processing is 1 working for review and comment day. As a final step in the process, which This evaluation process will usually can take up to 24 days to complete, The application documents should take a maximum of 50 days or 25 days the official Land Administrator will include: if the plan is submitted at an early prepare a Recommendation Paper to stage. the State Executive Council for their 1. Simultaneous application for final decision on the application. conversion and subdivision under If the applicant does not re-submit Section 124A National Land Code the amended plan within the specified Once the decision has been made, (NLC) or application for Surrender period, the application shall be deemed the Land Administrator will inform and Re-alienation under Section to have been withdrawn. The Director the applicant of the following within 5 204D National Land Code (NLC); of Town Planning Department would working days: 2. Application for Planning then have to issue letter of cancellation 1. If the subdivision has been Permission; to the applicant (with empowerment of approved; 3. Application for Building Plan the Yang Dipertua). 2. For every such subdivision: the approval; category, conditions and expressed 4. Application for Earthworks Plan If all is in order, the Director of Town conditions (if applicable) as directed and application for Road and Planning Department shall table the by the State Authority; Drainage recommendation paper in the OSC 3. Additional premium rate and quit Committee Meeting. rent for every subdivision as well If the application is incomplete, the OSC as other payments that need to be Secretariat will request the applicant During the next stage which usually made; to submit the necessary documents takes 5 working days, the OSC 4. The period for the payment of and plans. Secretariat will inform the applicant additional premium, quit rent and to make the necessary amendments if others; and After this, The OSC secretariat will there is any difference noted between 5. Other conditions of approval as distribute the application with all the pre-computation plan and the imposed by the State Authority. accompanying documents to the layout plan. 6. The terms of the approval for each relevant departments for processing: unit that shall be re-alienated; Once the OSC Committee Meeting is 7. The additional premium and tax 1. Simultaneous application for held, approval can be given within 1 rates for each unit that shall be re- conversion and subdivision (section working day. alienated; 124A NLC) or surrender and re- 8. Period of payment of the additional alienation (section 204D NLC) to Before preparing the approval letters, premium, tax and other payments the Land Office; the OSC committee may make that is charged; and 2. Application for planning permission recommendations for: 9. The amount of premium in Form to the Town Planning Department/ 1. Improvements or amendments of 5A in relation with each unit. The Division of the Local Authority; the pre-computation plan; survey charges shall not be included 3. Application for building plan to the 2. application for simultaneous in Form 5A if the survey is to be Building Department/ Division of subdivision and conversion under undertaken by a licensed surveyor the Local Authority; section 124A NLC in accordance and the Land Administrator has 64 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

CHAPTER 5: WHAT REGULATORY REQUIREMENTS DO I HAVE TO CONSIDER?

been given the assurance by the REGULATION OF FOOD & BEVERAGE Food quality and integrity in Malaysia is Board of Surveyors. (F&B) INDUSTRY regulated by the Food Act 1983, Food Malaysia and food has a strong Regulations 1985, and its subsidiary As the same time, the Land relationship, resulting in a huge legislations. Administrator will request applicant to variety of dishes featured in this part of make the necessary payments within Southeast Asia. “Food” has been defined under the stipulated time as follows: the Food Act as “every article 1. Surveying fees if the survey is to be Deeply ingrained into the culture manufactured, sold, or represented done by the Department of Land of Malaysia’s ethnic and religious for use as food or drink for human Survey; and diversity, traditional dishes often take consumption or which enters into or is 2. Payment for the preparation and an important role when it comes to used in the composition, preparation, registration of the Qualified Title for celebrated festivals. preservation, of any food or drink and every lot in the subdivision. includes confectionery, or chewing Transcendently Malaysian-owned, substances.” The relevant acknowledgment letter the local F&B industry is dominated for applicants, the OSC and other by SMEs. Nevertheless, there are Various regulatory bodies are involved related parties will be prepared within notable foreign and multinational in the regulation of the F&B industry 5 working days. organisations producing processed depending on the type of food and food products in Malaysia. substances concerned. After such information has been circulated, the OSC Secretariat will Agriculture also plays a huge part in Authorities Commonly Involved in inform the applicant on the decision of Malaysia’s food industry, and is also the F&B Industry the application enclosing the approved one of the sectors identified in the Authority Role layout plan, building plan and other National Key Economic Areas (NKEAs). Department of Ensure that products Veterinary Services originate from related plans. In Selangor, F&B manufacturing is one (DVS), Ministry of a country which of the 5 core clusters that are seen to Agriculture and complies with the The total time frame for the processing have a huge potential in accelerating Agro-Based required standards. of simultaneous application is usually the state’s growth and sustainability. Malaysian Enforce compliance Quarantine and with the import estimated as 92 working days. Inspection Services requirements via Within the cluster, the main F&B (MAQIS), Ministry permit issuance and If the application falls within an area products manufactured in the state of Agriculture and customs clearance. with a gazetted local plan, the normal include dairy products, soft drinks, Agro-Based Industry time to process would usually be 67 confections, processed frozen food, Department Develop for of Agriculture planning purposes working days. and raw materials. (DOA), Ministry of and implement Agriculture and development Agro-Based Industry programmes for the sector. SELANGOR HAS 5 Food Safety and Protect consumers Quality Division against the CORE CLUSTERS! (FSQD), Malaysia’s consumption of Read about all the core Ministry of Health food contaminated INVESTOR TIP! with drugs and drug clusters in Chapter 2. If you still have queries on the residues; ensuring safety of food process, you can easily reach the products. REHDA institute via email: As the industry is constantly growing Food Safety Provide updates [email protected] or Information System on any legislation, in demand, there is little wonder many their telephone number of Malaysia (FOSIM) regulation, investors want to begin manufacturing guidelines, and +603 7803 6006/ +603 7803 2978. information related F&B products here. to F&B industry. A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 65

The comprehensive Food Regulations mentioned are prescriptive in LABELLING REQUIREMENTS the amount and type of additives, (NON-EXHAUSTIVE) processing aids, vitamins, minerals, novel food substances, and nutritive TRIVIA • Description of the F&B product substances which are permitted. A halal certified stamp on a product containing the common name of its principal ingredients; label is seen by Muslims as a sign of Additionally, the regulations prohibit • Statement on the net weight or trustworthy or genuine product, thus the word “organic”, “biological”, volume; such a stamp may be required for “ecological”, “biodynamic” and any • Declaration and details of the export of food to certain Muslim other words of the same significance, potentially hypersensitive countries. unless the food conforms to the ingredients, additives, vitamins, requirements specified in the and minerals; Once the certificate is issued, Malaysian Standards MS 1529: The • Details of supplier, importer, companies may utilise the registered Production, Processing, Labelling and foreign manufacturer or packer, trademark halal logo on the designated Marketing of Plant-Based Organically F&B origin; and products as well as for advertising and Produced Foods, which prescribes • Nutrient content and health marketing of the said products. the criteria and conditions for such claims of F&B. labelling. Genetically Modified Foods Certain certifications should also The regulations also provid that no be secured from the Ministry of person must import, prepare, sell, or Agriculture and Agro-Based Industry advertise for sale any food and food of Malaysia prior to the utilisation of ingredients obtained through modern some of the words mentioned above. biotechnology without the prior written To maintain halal status, the business approval from Malaysia’s Ministry of premises or production sites will be “Selangor provides a versatile, Health. subject to surprise inspections and skilled, industrious, and multi- continuous supervision. Moreover, lingual workforce. This is important Food Safety JAKIM conducts site inspections within as Cargill believes that people are Matters relating to illnesses or injury and outside of Malaysia, with the our greatest strength and employees resulting from food are under the purpose of accreditations on imported who are able to engage with our purview of FSQD of the State Health products carrying the halal logo. businesses and customers around Department and Ministry of Health the world will help us to feed the Malaysia. world in a responsible way.” HALAL CERTIFICATION Mr. Chandramohan Nair, If there is an intention to produce Director of Corporate Affairs, and distribute halal products, a halal Cargill Holdings (M) Sdn. Bhd. certificate from the Department of INVESTOR TIP! Islamic Development Malaysia (JAKIM) The Halal Verified Homepage contains Label and Packaging must be obtained. further information on which products Other than the above, certain labelling are halal or require licencing and is requirements for Food and Beverages updated every 2 days: (F&B) products manufactured for retail https://www.halalverified.com/ and wholesale purposes have been determined in the regulations. 66 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

CHAPTER 5: WHAT REGULATORY REQUIREMENTS DO I HAVE TO CONSIDER?

• Natural products which do not Applications for chain restaurants or CONDITIONS FOR HALAL involve any processing such as fresh franchise will be managed by JAKIM. CERTIFICATION fish, fresh vegetables, fresh egg and the like; It is vital to note that incomplete Prior to applying for halal • Fertiliser and animal feed; applications will automatically be certification, the applicant shall: • Crockery; rejected by MYeHALAL. Apart from • Paper; that, applications for renewal of halal • Register with SSM, Malaysia Co- operative Societies Commission, • Products which use the name or certification must be submitted at least or other government agencies; synonymous names with non-halal three months before the expiry date of • Hold a business license from the products or confusing terms such as the certificate. local councils (PBT) or obtain pork ham, bak kut teh, bacon, beer, a testimonial from the relevant rum, charsiew and the like; The certification fee, which is valid for government agency; • Local and imported finished two years except for slaughterhouse • Be in full operation; products which are relabelled (valid for the duration of one year only), • Produce and handle only halal without undergoing any processes in shall be paid in the form of postal order, products and in compliance with Malaysia; money order, bank draft, or online the specified halal standard; • Kitchen or food premise or food payment to JAKIM, MAIN, or JAIN. • Ensure sources for ingredients catering services which prepare are halal and choose suppliers haram cuisine as decreed in Shariah The said fee, fixed according to the who supply halal materials or have obtained recognised halal law; Malaysia Halal Certification scheme certificate; and • Products which are in the early and industrial categories, is subject to • Apply for all types of products or stages of research and development changes, and is not refundable. menus which are produced by (R&D); the factory or premise. • Products that can lead to deviation of aqidah, superstition and Applications for repackaging must be deception; and accompanied with halal certificates for • Hotel with kitchen that prepares said products. pork-based menu WANT TO KNOW MORE? Halal Certification For more information on the Halal Certification Certain applications will not be Application Procedures process and requirements, visit the eligible for halal certification7. These The following are simplified steps to JAKIM Homepage at applications include: apply for halal certification. http://www.islam.gov.my/en or contact the Director’s Secretariat at • Non-halal products; [email protected] • Any application with no standard STEP 1 reference or guideline; Submit application online via Alternatively, check out the Halal Certification • Companies that produce and Homepage, which includes detailed guidelines MYeHALAL at www.halal.gov.my. distribute halal and non-halal and online application services at products; STEP 2 http://www.halal.gov.my • Usage of similar branding for halal and non-halal products; Submit supporting documents to • Products or food premises which JAKIM or JAIN. gives negative implications towards Islam and the society, such as STEP 3 karaoke centres, entertainment centres, drugs, cigarettes, hair dyes, Receive letter requesting payment nail polish, and others; of certification fee.

7 “Manual Procedure for Malaysia Halal Certification (Third Revision) 2014”. Jabatan Kemajuan Islam Malaysia. 2015. pp.15-16 (http://www.halal.gov.my/v4/images/pdf/MPPHM2014BI.pdf) A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 67

Malaysian Halal Standards What’s more, Malaysia has been a pioneer in the development of halal standards. The following are some of the published Malaysian Standards (MS) on halal products.

Malaysian Standards (MS) Description

MS 2594:2015, Halal chemicals for use Specifies requirements forhalal chemicals used in the treatment of potable water. Processed in potable water treatment – General chemicals used in treating the raw water during the production of potable water must fulfil the guidelines necessary requirements that are in line with Shariah law and relevant regulations or law in force in Malaysia.

MS 2610:2015, Muslim friendly hospitality Specifies guidelines and requirements for managing tourism facilities, products, and services for services – Requirements Muslim travellers in accommodation premises, tour packages, and tourist guides. This standard is generic and is intended to be applicable to all organisations and individuals managing Muslim friendly tourism products and services – therefore is not applicable for health and beauty facilities such as spa and massages, or any balneo-therapy facilities, products, and services.

MS 2565:2014 - Halal Packaging – Describes the general guidelines in the manufacturing and handling of halal packaging. It General Guideline serves as a basic requirement for halal packaging for halal products in Malaysia.

MS 1500:2009, Halal Food - Production, Provides practical guidance for the food industry on the preparation and handling of halal food preparation, handling and storage – (including nutrient supplements) and to serve as a basic requirement for halal food product and General guidelines (Second revision) food trade or business in Malaysia. Note: This standard is also available in Bahasa Malaysia version.

MS 2200: Part 1: 2008, Islamic Consumer Prescribes practical guidelines for halal cosmetics and the personal care industry. It serves Goods - Part 1: Cosmetics and personal as a basic requirement for cosmetics and personal care industry as well as trade or business care – General guidelines in Malaysia. This standard should be applied with the Guidelines for Control of Cosmetic Products in Malaysia and Guidelines on Cosmetic Good Manufacturing Practice, by National Pharmaceutical Control Bureau, Ministry of Health (MOH). Note: This standard is also available in Bahasa Malaysia version.

MS 1900:2005, Quality management Specifies requirements for a quality management system where an organisation: systems - Requirements from Islamic • Needs to demonstrate its ability to consistently provide products that meet customer and perspectives applicable regulatory requirements; and • Aims to enhance customer satisfaction through the effective application of the system – including processes for continual improvement of the system and the assurance of conformity to customer and applicable regulatory requirements.

MS 2300: 2009, Value-based management Consists of a guideline and a certifiable requirements standard which prescribes the framework system – Requirements from an Islamic for an organisation to establish a management system based on Islamic values. perspective

MS 2424: 2012 Halal Pharmaceuticals – Prescribes practical guidelines for the pharmaceutical industry on the preparation and handling General Guidelines of halal pharmaceutical products including health supplements. It also serves as a basic requirement for pharmaceutical products and pharmaceutical trade or businesses in Malaysia.

MS 2400 series on Halalan-Toyyiban 1. MS 2400-1: 2010, Halalan-Toyyiban Assurance Pipeline Management system requirements for Assurance Pipeline transportation of goods and cargo chain services. This standard prescribes management system requirements for assurance of the halalan- toyyiban integrity of goods and cargo being handled through various mode of transportation. 2. MS 2400 - 2:2010, Halalan-Toyyiban Assurance Pipeline – Management System Requirements For Warehousing And Related Activities. This standard prescribes management system requirements for assurance of the halalan- toyyiban integrity of products, goods and cargo during the warehousing and related activities through the entire process from receiving to delivery. 3. MS 2400 - 3:2010, Halalan-Toyyiban Assurance Pipeline – Management System Requirements For Retailing. This standard prescribes management system requirements for assurance of the halalan- toyyiban integrity of products and goods at the retailing stage of the Halalan-Toyyiban Assurance Pipeline.

Source: “Halal Standards”. Official Website of Halal Industry Development Corporation, Malaysia. (http://www.hdcglobal.com/publisher/bi_halal_standards) 68 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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REGULATION OF Only public companies can be licensed • Diagnosis, monitoring, treatment of, INSURANCE INDUSTRY to carry on an insurance or takaful alleviation of, or compensation for Apart from that, there are specific business. Licensed insurers under a an injury; licenses and approvals that companies single entity are not allowed to carry • Investigation, replacement or intending to provide insurance services on both life business and general modification, or support of the should obtain. business; they will have to divest into anatomy or of a physiological separate entities. They must also process; The main regulatory authority for the appoint an actuary in respect of a life • Support or sustaining life; insurance industry in Malaysia is the or general business carried out. • Control of contraception; Central Bank of Malaysia (BNM). BNM • Disinfection of medical device; is tasked with regulating insurance BNM’s policy to date is that it does • Providing information for medical businesses, insurance broking not intend to issue any new licenses or diagnostic purpose by means of businesses, adjusting businesses, and to conventional insurers. Hence, in-vitro examination of specimens financial advisory businesses. interested institutions may opt to derived from the human body, partner with existing license holders. which does not achieve its primary Relevant legislations include the intended action in or on the Financial Services Act (FSA) which REGULATION OF MEDICAL human body by pharmacological, consolidated the repealed Banking DEVICES INDUSTRY immunological, or metabolic and Financial Institutions Act 1989, The Medical Device Act 2012 (MDA) and means, but that may be assisted in Payment Systems Act 2003, Insurance Medical Device Regulations 2012 (MDR) its intended function by such means; Act 1996, and Exchange Control Act came into operation on 1 July 2013 to and 1953. implement a regulatory framework for • Any instrument, apparatus, medical devices, an area previously not implement, machine, appliance, There is also the Islamic Financial regulated in Malaysia. implant, in-vitro reagent or Services Act (IFSA) governing the calibrator, software, material or Islamic equivalent of conventional The MDA states that no establishment other similar or related article, to insurance which consolidated the shall import, export, or place in the be used on the human body, which repealed Islamic Banking Act 1983 and market any registered medical device the Minister may, after taking into the Takaful Act 1984. unless it holds a license granted consideration issues of public pursuant to the MDA. safety, public health or public risk, Insurers are required to obtain a valid declare to be a medical device by license from the Ministry of Finance Furthermore, no medical device shall order published in the government (MOF) on the recommendation of BNM. be imported, exported, or placed in the Gazette. The carrying on of an insurance broking market unless the medical device is business or financial advisory business registered under the MDA. The type of licenses to be applied requires the approval of BNM, while an depends on the activities performed by adjusting business is required to be MDA defines “medical device” as “any the establishment. registered with BNM. instrument, apparatus, implement, machine, appliance, implant, in- vitro reagent or calibrator, software, material or other similar or related article intended by the manufacturer to be used, alone or in combination, for TRIVIA human beings, for the purpose of: Currently, foreign equity participation is limited in insurance companies, but • Diagnosis, prevention, monitoring, this shall be considered by BNM on a treatment of, or alleviation of case by case basis. disease; A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 69

LABELLING AND PACKAGING The National Pharmaceutical Type of License Activities Allowed REQUIREMENT Control Bureau (NPCB), which is Manufacturer (i) manufacturing of a The MDR sets out the general under the Malaysian Ministry of medical device; (ii) distributing the requirements of labelling. The Health’s Pharmaceutical Services medical device it classification, category, and group of Division, is the primary government manufactures; and a specific medical device would also agency responsible for regulating (iii) importing the medical device affect the specific content required and pharmaceutical products, being both from the contract exempted on the label. the secretariat and the operational arm manufacturer. of the Drug Control Authority (DCA). Authorised (i) representing Besides that, the labels and packages Representative foreign proposed to be used for any medical License applications for drug (AR) manufacturer; (ii) importing medical device will have to be submitted manufacturers, importers, and device; or and approved at the same time as wholesalers are applied through (iii) distributing medical devices. the application for medical device NPCB. registration is made. Importer Importation under Products which are not registered the authorisation of the AR. REGULATION OF with the DCA and are intended to be PHARMACEUTICAL INDUSTRY imported for the purpose of clinical Distributor Import and distribute registered medical Since January 2002, Malaysia trials shall have a Clinical Trial Import devices as authorised was admitted as a member of the License (CTIL). by the Manufacturer Pharmaceutical Inspection Co- or AR for the specific medical device. operation Scheme (PIC/S) thereby Meanwhile, products not registered facilitating exports of Malaysian with the DCA and are intended to Medical device manufacturers that do pharmaceutical products to the be manufactured locally for clinical not have any company registered with member countries which include EU, trials should apply for an exemption SSM, need to appoint an AR who must Australia, and Canada. with DCA from Regulation 7(1) of be a Malaysian citizen or permanent the Control of Drugs and Cosmetics resident to liaise with the Medical Pharmaceutical products can Regulations 1984. Device Authority and obtain the be broadly categorised into four necessary establishment license. categories: In January 2012, the Malaysian Department of Standards To apply for the licenses mentioned • Prescription medicine; implemented MS2424:2012 General above, the company will be required • Over-the-counter medicine; Guidelines on Halal Pharmaceuticals, to establish, maintain, and implement • Health or food supplements; and a voluntary certification scheme. This the appropriate quality management • Traditional medicine. guideline enables manufacturers of system (QMS) prescribed for the pharmaceutical products to apply category of license to be applied. for halal certification as well as MAIN LEGISLATIONS establish basic halal requirements for Next, the company must appoint the REGULATING MALAYSIA’S manufacturing and handling. Conformity Assessment Body (CAB). PHARMACEUTICAL INDUSTRY The QMS will be assessed by the • Poisons Act 1952; CAB, who will issue the certificate • Sale of Drugs Act 1952; of conformity upon satisfactory • Dangerous Drugs Act 1952; assessment. From then on, individual • Medicines (Advertisement and medical devices may be registered Sale) Act 1956; and accordingly. • Registration of Pharmacists Act 1951. 70 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

CHAPTER 5: WHAT REGULATORY REQUIREMENTS DO I HAVE TO CONSIDER?

REGULATION OF ELECTRICAL AND Once an electrical appliance or Communication ELECTRONICS (E&E) INDUSTRY equipment is approved, it is compulsory Apparatus or Equipment E&E related matters are administered for the electrical equipment or by the following governmental ministry appliances to be affixed with a safety and regulatory bodies: label before being offered to the general public. • Energy Commission of Malaysia (EC); To apply for a CoA, submission of test • Malaysian Communications and reports generated after approved Given the advancement in technology, Multimedia Commission (MCMC); laboratories have tested the applicable many electrical equipment and • Fire and Rescue Department of equipment or appliances, is required. appliances are integrated with Malaysia; communications modules for • Department of Personal Data connections to public communication Protection (PDP); networks, or for radio communications. • SIRIM; • Ministry of Domestic Trade, Co- Thus, along with the compliance operatives and Consumerism with the requirements prescribed by (MDTCC); and TRIVIA the EC, compliance and certification • Ministry of Communications and The most accredited lab in Malaysia is pursuant to the Communications Multimedia. SIRIM, an agency under the purview and Multimedia Act 1998 and the of the Ministry of Science, Technology Communication and Multimedia Main legislations governing this and Innovation (MOSTI) of Malaysia. (Technical Standards) Regulations industry are the Electrical Supply Act 2000 under the administration of 1990 and Electricity Regulations 1994 the Malaysian Communications and (ER). Investors should also take note that Multimedia Commission (MCMC) will the ER requires any electrical services be required for certain items. Such The ER provides that no person shall engineer, competent electrical items include electrical appliances, manufacture, import, display, sell, engineer, electrical supervisor, computer products, medical devices, or advertise electrical equipment charge men, wireman, or cable and toys. without a Certificate of Approval jointer to possess a valid Certificate (CoA) issued by the EC. The rationale of Competency appropriate to such Needless to say, pure communication behind it is to protect the public from category. components or apparatus, and dangers arising from the generation, multimedia products would require transmission, distribution, supply and “Invest Selangor has consistently approval from the MCMC. use of electricity, and supply and use of executed their commitment as an piped gas. effective and supportive one-stop centre in the state to serve the AIM OF MCMC CERTIFICATION interests of existing and potential • Protect consumer; investors. Keep it up!” • Serve as quality assurance; • Ensure compliance with Mr. K.H. Lim, standards approved by Managing Director, governing agencies and TRIVIA SGL Carbon Sdn. Bhd. ministries; Only businesses duly registered with • Avoid interference; SSM are eligible to apply for the • Ensure public safety; and certificate of approval. • Ensure network inter- operability. A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 71

MCMC prescribes the requirements Regardless, obtaining the Ministry of (Petroleum Regulations) and the Gas and exemptions from certification Finance (MOF) License is a prerequisite Supply Act 1993 (GSA). under the Technical Codes or for companies to participate in Declaration for communication and the government sector, and semi- Petroliam Nasional Berhad multimedia products amongst other government tenders and contracts (PETRONAS) is the responsible guidelines. to supply products and services – authority for licensing third party including consultancy services – to contractors wishing to participate in “Selangor has one of the best Malaysian government ministries, upstream and downstream petroleum infrastructure, connectivity, and departments, and agencies. activities, and the licensing of goods skilful workforce. Located in and service providers operating in this Cyberjaya, Selangor, T-Systems Depending on the individual sector. Malaysia is not only well connected to requirements for each tender, there the world renowned airports, but also may be requirement of local equity close to many administrative offices holdings in order to participate. in Putrajaya. These advantages are important to T-Systems’ operation “The success of PETZL operations in Malaysia. As a one stop centre for in Malaysia is closely connected to Selangor’s investment promotion, Invest Selangor. They have been there Invest Selangor has constantly on day one to guide us in the setup demonstrated professionalism and steps. They have been there along cooperation in serving the companies’ the way, when we were seeking for Any interested contractor or supplier interest, while companies are able to punctual support; and they are still must obtain the necessary license from focus on their core businesses.” following up as we speak, doing their Petronas to be eligible to participate. best to ensure we keep growing, here Ms. Sharmila Santharasagaran, in Selangor…Thank you!” It may be of interest to investors that Managing Director, there are different types of registrations T-Systems Malaysia Sdn. Bhd. Mr. Gilles Waeldin, and requirements depending on the Former Managing Director, project involved. More information, as GOVERNMENT TENDERS PETZL Manufacturing Malaysia well as the online application itself, AND PROCUREMENT Sdn. Bhd. is available on the PETRONAS web Since 2009, Malaysia has liberalised portal8 for the items listed below: many service sub-sectors, allowing REGULATION OF 100% foreign equity participation in OIL AND GAS INDUSTRY Application Purpose private hospital services, medical The oil and gas industry is basically Type specialist clinics, incineration services, divided into upstream, midstream, and New License To participate in a quotation accounting and taxation services, downstream activities. (& Renewal) / tender exercise for the upstream, downstream and courier services, private universities, maritime sector. vocational schools, vocational schools Upstream activities consist of New To participate in a for special needs, dental specialist exploration, development, and Registration quotation / tender exercise services, skills training centres, and production of oil and gas resources, (& Renewal) for the downstream and maritime sector only international schools, to name a few. while midstream and downstream activities range from the transportation Extension of To add new work Scopes categories into the existing Then, in November 2014, the of oil and gas, to refining and processing license / registration Parliament passed amendments to through, to marketing and trading of scope. laws governing architectural services, end products. Upgrade To upgrade its company quantity surveying services, and from status in order to Registration participate in a quotation engineering services, which eased The principal legislations governing oil to License / tender exercise for the restrictions on foreigners working in and gas activities are the Petroleum upstream sector.9 these professions in Malaysia. Development Act 1974 (PDA), the Petroleum Regulations 1974 72 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

CHAPTER 5: WHAT REGULATORY REQUIREMENTS DO I HAVE TO CONSIDER?

Foreign companies wishing to supply goods and services to the upstream oil and gas sector in Malaysia must either do so through an agency agreement with local companies licensed by Petronas or set up a local subsidiary to be licensed by Petronas pursuant to the PDA.

Foreign firms may participate in oil services in partnership with local firms; depending on the project, there may be a restriction to a 49% equity stake if the foreign party is the principal shareholder.

Furthermore, the company must also comply with the paid-up share capital requirements, in addition to the technical and registration requirements stipulated under Petronas’ General Guidelines – Application for Petronas License and Registration.

IMPORT, EXPORT, AND SHIPPING Import and Export Licenses Above and beyond all the aforementioned licenses, approvals, certification, and requirements, it is crucial to remember that certain goods will require a license for any import or export. This license is wholly separate from any customs duty.

An import license, for instance, could include a license for importation of certain steel products, where It is worth noting that the Harmonised the license would be granted via System Tariff Codes in Malaysia are Construction Industry Development longer than most other codes, such as Board (CIDB). the ones in Europe.

In other cases, an import license from For added insurance that goods are WANT TO KNOW MORE? the Malaysian Police Department, the imported using the correct Tariff Verify whether a product will require an Ministry of International Trade and Codes, one can reach out to the Royal import or export license via the Customs Industry (MITI), or the environmental Malaysian Customs Department Tariff Finder at or pharmaceutical regulating bodies (RMCD). http://tariff.customs.gov.my/ may be necessary.

8 http://www.petronas.com.my/partnering-us/licensing-registration/application-information/Pages/type-of-application.aspx 9 Ibid. A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 73

Goods Prohibited from Importation

Prohibited from Importation Prohibited from Importation EXCEPT under an Import License or Permit

• Reproduction of any currency note, bank note • Eggs in the shells. or coin which are currently being issued in any • Any meat, bones, hide, skin, hoofs, horns, offal, or any part of the animals and country. Poultry. • Indecent printings, paintings, photographs, books, • Live animals-primates including ape, monkey, lemur, galago, potto, and others. cards, lithographic, engravings, films, video tapes, • Explosives and fireworks. laser discs, colour slides, computer discs, and any • Imitation arms, toy guns and pistols. other media. • Imitation hand grenades. • Any device intended to be prejudicial to the interest • Arms and ammunition other than personal arms ammunition imported by any bona of Malaysia or unsuited with peace. fide traveller. • All genera of Piranha fish. • Bullet proof vests, steel helmets, and other article of clothing as protection against • Turtle eggs. attack. • Cocoa pods, rambutans, pulasan, longan, and nam • Soil and pests including live insects, rats, snails, and cultures of plant disease nam fruits from Philippines and Indonesia. causing organisms. • Intoxicating liquors containing more than 3.46 mg • Safety helmets – excluding those worn by motorcyclists or motorcycle pillion riders. per litre in any lead or in any compound of copper. • Motor vehicles. • Daggers and flick knives. • Batik sarong. • Broadcast receivers capable of receiving radio • Equipment to be connected to a public telecommunication network. communication within the ranges (68 – 87) MHz and • Video machines excluding game watches and video games for use with television (108 – 174) MHz. receiver. • Sodium arsenate. • Rice and padi including rice products. • Cloth bearing the imprint or duplicate of any verses • Radio communication being used for telecommunication in the frequency lower of the Quran. than 3000 GHz. • Pen, pencil, and other articles resembling syringes. • Saccharin and its salt. • Poisonous chemical. • Parabola antenna for outdoor use. • Lightning arresters containing radioactive material. • Pests and organisms which are capable of being injurious to plants. • Live fish. • Animal oils and fats. • Plants, including parts, and plant products. • Household and agricultural pesticides. • Electric domestic equipment that use 50 volt Dc, 120 volt Dc, or more. • Toxic and hazardous waste. • Corals, alive or dead. • Apparatus or equipment for the brewing of beer in the home. • Pharmaceutical products.

Goods Prohibited from Exportation

Exportation Prohibited from Exportation EXCEPT under an Export License or Permit

• Turtle eggs. • Any animal or bird, other than a domestic animal or domestic fowl, whether alive or • Rattan from Peninsular Malaysia. dead, or any part thereof. • Live animals from bovine species. • Poultry. • Meat of bovine animals. • Cockles. • Plants including orchids. • Vegetables, fresh, chilled, or frozen in excess 3kg per consignment. • Palm kernels and palm seeds. • Military clothing and equipment. • Arms and ammunition. • Antiquities as defined or stated in any written law in Malaysia. • Sugar and rice. • Coral, alive or dead. • Live prawns, shrimps, or fish. • Collections of zoological, botanical, mineralogical, anatomical, historical, archaeological, or ethnographical with numismatic interest. 74 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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On top of all of the above, the import In global trades, “delivery” refers to Incoterms 2010 and export of illicit drugs, for example the seller fulfilling the obligation of morphine, heroin, marijuana, etc., are the terms of sale or to completing a Category 1: Rules Category 2: for Any Mode of Rules for Sea and strictly prohibited. contractual obligation. It may occur Transport Inland Waterway while the merchandise is on a vessel on Transport Only Prescribed drugs can only be imported the high seas and the parties involved • CIP: Carriage • CFR: Cost and into or exported from the country are thousands of miles away from the and Insurance Freight by virtue of a license issued by the goods. Paid • CIF: Cost, • CPT: Carriage Insurance, and Ministry of Health, Malaysia. Paid To Freight In the end, the terms boil down to a few • DAP: Delivered • FAS: Free Incoterms basic specifics: At Place Alongside Ship • DAT: Delivered • FOB: Free On Incoterms are trade terms published At Terminal Board by the International Chamber of • Costs, or the party responsible • DDP: Delivered Commerce (ICC) that are commonly for the expenses involved in a Duty Paid • EXW: EX-Works used in both international and domestic shipment’s journey; • FCA: Free trade contracts; the terms are well • Control, or the party that owns the Carrier known and respected worldwide for goods at a given point in the journey; more than 70 years. and As shown, there are now only 11 trade • Liability or the party responsible for terms. Fundamentally, incoterms are a set paying damages to goods at a given of rules defining the responsibilities point in a shipment’s transits. Buyers and sellers must choose the of buyers and sellers for the delivery appropriate trade term according of goods under sales contracts, for Additionally, it is essential for shippers to the type of goods to be imported, domestic and international trade. to know the exact status of their exported, or delivered. shipments in terms of ownership and They are also authoritative rules for responsibility. It is recommended that any chosen determining how costs and risks are term be clearly specified in the allocated to such parties and can It is also vital for sellers and buyers to contract of sale or purchase order for significantly reduce misunderstandings arrange for insurance on their goods the benefit of the buyer and seller. among traders, thereby minimising while the goods are in their “legal” This will ensure protection of trading trade disputes and litigation. possession. Lack of insurance may parties to trade smoothly and avoid any result in wasted time, lawsuits, and dispute. broken relationships. The final thing to keep in mind is that Incoterms are applied and understood incoterms can have a direct financial by traders, contract drafters, as well as impact on a company’s business. by courts and arbitrators in a uniform TRIVIA way. Since the terms define the Export Control Incoterms were created primarily for obligations of the seller and the buyer On 28 April 2004, the United Nations people inside the world of global trade, regarding delivery, transfer of risk, Security Council (UNSC) adopted a as outsiders frequently find them loading of the goods, export or import resolution on a non-proliferation of difficult to understand. clearance, and conclusion of transport weapons of mass destruction (WMD), contracts; the rules are imperative namely the United Nations Security in the negotiation of international Council Resolution 1540 (UNSCR Seemingly common words such as contracts. 1540). “responsibility” and “delivery” refers to the seller fulfilling the obligation of Each term refers to a type of agreement The resolution states that all UN the terms of sale, or to completing a for the purchase and shipping of goods Member States shall take and enforce contractual obligation. internationally. effective measures to establish domestic controls in order to prevent A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 75

the proliferation of nuclear, chemical, • Preliminary matters; Visa Requirement by Country of Origin or biological weapons and their means • Appointment and powers of A. Sub. Continent Countries of delivery, including by establishing strategic trade controller; • Bangladesh appropriate controls over related • Control of strategic items, unlisted • India materials. items, and restricted activities; • Pakistan • Permit and registration; • Sri Lanka UNSCR 1540 defines “WMD” as any • Enforcement; and B. African Countries “weapon to kill, harm, or infect people, • General provisions. animals, or plants through the effect of • Angola nuclear explosion or dispersion or the In view of the seriousness of the • Burkina Faso toxic properties of a biological weapon, repercussions of misuse of the • Burundi and includes a delivery system strategic items and unlisted items for • Cameroon designed, adapted, or intended for the the purpose of restricted activities, • Central African Republic deployment of such weapons.” commensurate penalty is provided for • Congo Democratic Republic each of the offences under the STA. • Congo Republic Malaysia is one of the UN Member • Cote D’Ivoire States, therefore it is obliged to set For example, for the offence committed • Djibouti up national export controls relating to under the STA with the intent to • Equatorial Guinea the items stated in the said resolution unlawfully export, tranship, or bring • Eritrea while mitigating national security into transit of strategic items which • Ethiopia threats. are arms or related materials without • Ghana a permit; or with knowledge that such • Guinea-Bissau In light of this, the Cabinet agreed on transactions without a permit are • Liberia 5 October 2005 that a comprehensive unlawful, and where death is the result • Mali law, as well as regulations on export of the act, the most severe penalty • Mozambique of strategic goods be formulated since is death, or imprisonment for life. If • Niger Malaysia’s current export control such offence is committed by a body • Nigeria framework was not sufficient to govern corporate, a minimum fine of RM 30 • Rwanda the control on the strategic items which million will be imposed. • Western Sahara can contribute to the proliferation of C. Other Countries WMD. VISA AND WORK PERMITS • Afghanistan Depending on the nationality of a (Visa with reference) As a result, the Strategic Trade Act person, usually no prior application • Bhutan 2010 (STA) was gazetted in June 2010. for entry visa is needed for travels to • Colombia Its objective is to provide control over Malaysia for holidays or a standard • Myanmar the export, transhipment, transit, and business visit. • Nepal brokering of strategic items – including • PR China arms and related materials – and other The following table lists down the • Taiwan activities that will or may facilitate the nationalities which require prior visa D. All holders of Certificate of Identity design, development, and production applications before entering Malaysia. E. All holders of Laisser Passer of WMD and their delivery systems. The requirements are subject to F. All holders of Titre De Voyage change and should always be verified G. Countries That Do Not Require Visa The STA contains the essential with the relevant embassy, consulate • Commonwealth Countries elements relating to export control of or via the Malaysian Immigration strategic items and other activities as Department before initiating travel. Source: “Visa Requirement by Country”. follows: Official Portal of Immigration Department of Malaysia. (http://www.imi.gov.my/index.php/en/visa/ visa-requirement-by-country.html) 76 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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For foreigners who intend to work Equity Paid-Up Capital in Malaysia, possession of a valid Employment Pass (EP) is compulsory. 100% Local Owned RM 250,000 EP is a type of work permit that Joint Venture RM 350,000 enables employment in Malaysia; the 100% Foreign Owned RM 500,000 hiring party shall be responsible for application of an EP for the individual. Foreign-owned companies (foreign equity at 51% and above) operating in the Wholesale, Retail and Trade (WRT) sectors (mandatory requirement EP holders may only engage in the to submit valid WRT approval letter, if applicable). employment with the organisation RM 1,000,000 specified in the EP. Foreign-owned companies (foreign equity at 51% and above) involved in the sub-sectors on unregulated services (mandatory requirement to The application will be based on a set submit valid WRT approval letter, if applicable). of criteria such as: Different sectors are regulated by different authorised bodies or agencies. Thus, • Registration and recommendations an EP application will be processed by different authorised body depending on the from regulatory agencies (if relevant, sector of the organisation. depending on the core business of the hiring party); Authorised Body / Agencies Sector • Minimum paid-up capital (amount Multimedia Development Information Technology companies with depends on equity ownership of Multimedia hiring company); Corporation (MDec) Super Corridor (MSC) status. • Hiring company’s activities; • Monthly income; and Malaysian Investment Development • Representative Office; Authority (MIDA) • Regional Office; • Age and working experience. • Principal Hub; • Manufacturing; The organisation registered with the • Training Institutes; • Hotel or Tourism; following may be eligible to apply for • Energy Services; EP: • Healthcare Facility; • International or Private School; • Research and Development; • SSM, pursuant to the Companies • Integrated Facilities; Act; • Waste Recycling Activities; and • Registry of Societies Malaysia, • Other activities promoted under the Promotion of Investment Act. pursuant to the Organisation Act; • Incorporated professional firms; Central Bank of Malaysia (BNM) • Banking sector; • Finance sector; and • Organisations supported by the • Insurance sector. Ministries or Government Agencies; Securities Commission (SC) Securities and share markets. or • International organisations certified Public Services Department (PSD) Post in Public Services or Government- related agencies. by the Ministry of Foreign Affairs. Immigration Department of Malaysia (IMI) All sectors not regulated by any of the above Where applicable, interested agencies. organisations are generally required to meet the following minimum paid-up Given the above, the minimum requirements and processes for the EP application share capital requirement prior to an may differ depending on the core business of the organisation and the governing EP application. bodies. A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 77

Employment Pass (EP) There are different types of EP currently available with the Expatriate Services Division (ESD) of Immigration Department of Malaysia (IMI), subject to changes. TRIVIA Employment Pass Employment Pass Employment Pass Preference will be given to EP holders employed in any of the (Category I) (Category II) (Category III) Expatriate Expatriate Knowledge/Skilled 11 industries which form part of the National Key Economic Worker Areas (NKEA); including biotech, aeronautics, and information

Basic monthly Basic monthly Basic monthly technology sectors. salary of minimum salary of between salary between RM RM 10,000. RM 5,000 to RM 3,000 to RM 4,999. 9,999. An RP-T holder’s spouse and children below 18 years old shall be eligible for RP-T Dependant Pass. The spouse will Employment Employment Employment Contract Contract Contract be able to work in Malaysia without the application of a up to 5 years. up to 2 years. must not exceed 12 separate EP. months.

Dependants Dependants Dependants NOT Meanwhile, dependants over 18 years old, parents, and allowed. allowed. allowed. parents-in-law would be eligible for a 5 year Social Visit Pass. - - • Maximum 2 renewals. Professional Visit Pass (PVP) • Approval from the Ministry of Home A PVP is a temporary pass issued to a foreigner to engage Affairs (MOHA) to in a non-salaried temporary business or contracted activity seek exemption with an organisation in Malaysia for a short term period; not from the minimum salary exceeding twelve (12) months for one contract or project at requirement of a time. RM 5,000. The pass may be issued for up to a total maximum period of Where applicable, organisations regulated by designated 12 months only. agencies or regulatory bodies must present the approval letter for supporting the specified expatriate post applied for, Categories of PVP Applicants for each application. • Expertise Transfer • Exhibitors regulated by the • Research Malaysia Convention and Among the supporting documents to be submitted are the • Trainee Exhibition Bureau contract of employment containing the employees’ job • Volunteers • Student Internship position, duration of employment, and minimum salary in • Hotel Trainee . A PVP applicant may only work for the company as stated in Residence Pass – Talent (RP-T) the PVP. RP-T is a renewable 10-year multiple entry visa which is employer-independent for any foreign talent who holds a Dependant Pass (DP) PhD, Master’s Degree, Bachelor’s Degree, or Diploma in any An eligible EP holder may apply for DPs for their dependants, discipline from a recognised university; or a professional which generally includes the holder’s legal spouse, children, or competency certificate from a recognised professional adopted children, and stepchildren. institute; possessing at least five years of work experience. A DP holder is not allowed to work in Malaysia, therefore any The applicant should be an EP holder who has been living and prospective employer of the DP holder will be required to working in Malaysia for at least three years on a continuous apply and convert the DP to EP. basis, earning a minimum monthly basic salary of RM 15,000, and has paid income tax in Malaysia for at least two years in order to be eligible for RP-T. 78 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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Social Visit Pass (Long Term) • The applicant has fulfilled all Temporary Employment Visit Pass As stated before, eligible EP holders requirements as specified for the for Foreign Maid(s) may apply for Social Visit Passes (Long Social Visit Pass to be granted and in An EP holder may apply under this Term) for their: the case of employment, the relevant category to employ female foreign • Children above 18 years old and requirements for permission to maid(s) aged between 21 to 45 years, unmarried; engage in paid employment. who have been certified healthy by the • Parents; Foreign Workers Medical Examination • Parents-in-law. Of benefit is the fact that holders of Monitoring Agency (FOMEMA). Long term Social Visit Pass holders this visa may engage in any form of will generally not be able to take paid employment or in any business Foreign Worker’s Visa (Temporary up employment in Malaysia. The or professional occupation without Employment) maximum tenure of this pass is 12 converting the Social Visit Pass to the Notwithstanding the above, foreign months. Employment Pass or Visitor’s Pass workers are allowed to be brought in (Temporary employment), which as for certain non-expatriate positions. The case is different when the holder outlined before, have more stringent These workers would be considered as of a Long Term Social Visit Pass is requirements and longer application manual labourers, mainly, and are only married to a Malaysian citizen. procedures. permitted to work in manufacturing, construction, plantation, agriculture, Foreign husbands and wives to and services sectors respectively. Malaysians can be given the Social Visit Pass for a period of 5 years on condition that they comply with all the requirements. INVESTOR TIP! The application for long-term social Some of the requirements are as visit pass can be made at Visa, Pass follows: and Permit Division, Immigration TRIVIA Department of Malaysia (Headquarters) The Ministry of Home Affairs will set a • The marriage is legal under the quota of foreign workers for a company. respective Malaysia Laws. In the or at any State Immigration Office case of doubt, the foreign couple can This quota needs to be obtained from them in advance. check with the Malaysian Embassy More information at or Consulate in their respective https://esd.imi.gov.my/portal/ country. expatriates/myxpats/key-services/ Said labourers must be between • The applicant is eligible to be given employment-pass/long-term-social- a long term Social Visit Pass or has 18 to 45 years of age at the time of visit-pass/ already been issued such a pass application. There are steps to be taken as a foreign husband and wife in at the source country to produce a Malaysia. Social Visit Pass – Internship (SVP-I) certified pass for immigration security • The respective employment or This is a facility introduced by IMI to clearance (ISC) and certificate of business or professional occupation enable organisations to undertake health, before the labourers can enter does not contravene any law or international student mobility Malaysia. regulation in Malaysia. programs, like student exchange, • The permission to engage in industrial training, internship, paid employment or business or mentorship, etc., for a maximum professional occupation must be period of up to three months. endorsed on the applicant’s passport by an authorized Immigration officer. For this so-called working permission to be granted, similar conditions as for the normal Employment Pass may apply. A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 79

Only the following countries are eligible to send foreign Once the application has been approved and the foreign labourers under this visa. worker has arrived in Malaysia, employers must ensure that the clearance process of foreign workers at the entry points is done within 24 hours from the arrival time. Country Gender Sector

F M The issuance of Visit Pass (Temporary Employment) to the foreign workers will only be done after they have passed Thailand / / the FOMEMA medical examination within 30 days. The Cambodia / / examination can be done at any medical centres registered with FOMEMA. Nepal / /

Myanmar / / The pass will be issued once the foreign worker is certified fit by the clinic or medical centre. Failing which, the foreign Laos / / worker will not be allowed to stay and work in Malaysia. Vietnam / / All Sectors Valid for a period of 12 months, employers can apply for an (Construction, extension of 3 months before the expiry date. Philippines X / Plantation, Agriculture, Services, Manufacturing). Foreign workers are allowed to work in this country on a yearly basis up to 10 years. Yet, those registered under the Pakistan / / 6P Program will be allowed to work up to 3 years only. Sri Lanka / / Upon completion or termination of employment, the Turkmenistan / / employers must ensure that foreign workers are deported Uzbekistan / / to their origin countries by using the Check Out Memo. When the repatriation process is done accordingly, the security Kazakhstan / / bond can be claimed. India / / • Construction (high tension cable only); There are notable fees involved in the visa extension process • Services (goldsmith, wholesale/ retail, for foreign labourers. restaurant-cooks only, metal/ scrap materials and Rate of Levy, Visit Pass (Temporary Employment) and Process recycling, textiles and Fees Based on Different Sectors barbers); Sector Levy VP(TE) Process • Agriculture; and • Plantation (Selangor)

Indonesia / / Male workers from Manufacturing RM 1,850 RM 60 RM 125 Indonesia are allowed Construction RM 1,850 RM 60 RM 125 to work in all sectors except Manufacturing, Plantation RM 640 RM 60 RM 125 while female workers from Indonesia are Agriculture RM 640 RM 60 RM 125 allowed to work in all sectors stipulated. Services RM 1,850 RM 60 RM 125

Bangladesh / / Plantation via G to G Services RM 1,850 RM 60 RM 125 agreement. (Island resort)

Other than the pre-arrival requirements mentioned above, employers must first apply to IMI for a Visa with Reference (VDR) approval before employing foreign workers, which can be done manually or online. 80 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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Rates of Visa and Security Bond a maximum of 30 days, whereby the Based on Nationality duration of the pass will be determined Nationality Visa (RM) Security by the officer issuing it at his / her Bond (RM) discretion. Indonesia 15.00 250.00 Bangladesh 20.00 500.00 TRIVIA REAL ESTATE As indicated in its name, the Pakistan 20.00 750.00 Malaysian Property Market programme is mainly tailored to Myanmar 19.50 750.00 The Malaysian property market, foreigners wishing to retire in India 50.00 750.00 especially in Selangor, is a fertile Malaysia’s sunny climates. one. Various benefits, such as its Philippines 36.00 1,000.00 developmental status and excellent Thailand Gratis 250.00 infrastructure, play a role in promising The best thing about this programme is Cambodia 20.00 250.00 high returns on property investments. Nepal 20.00 750.00 that it is open to citizens of all countries Vietnam 13.00 1,500.00 recognised by Malaysia regardless of race, religion, gender, or age. Sri Lanka 15.00 750.00 Not only that, applicants are allowed to bring their spouses and unmarried children below the age of 21 as TRIVIA dependants. Real estate in Malaysia’s city centres are usually more affordable than a host MM2H can also provide a host of WANT TO KNOW MORE? of other Asian countries, for example benefits, such as easing the process China, Vietnam, Indonesia, Philippines, For further details and the most up-to-date of importing vehicles from abroad, India, and Japan. information, visit purchasing property in Malaysia, and http://www.imi.gov.my/index.php/en/ transporting pets into Malaysia. At the time of writing, stock amounts Besides the above, it must be noted Despite that, working under the MM2H to 8.7 million sf, with a 13.5% vacancy that foreign labourers who hold the programme is prohibited, save for rate. Rentals can be estimated at Visit Pass (Temporary Employment) certain conditions. Part-time work of 5.50 to 6.60 per sf for properties in must adhere to these conditions: not more than 20 hours a week, subject Selangor. • Family members are not allowed to conditions, or work as a lecturer at to accompany them or live in this tertiary level may be allowed; however The median price in 2017 is estimated country; applicants are required to prove that at 859, based on 484,943 units sold • They must not work as front liners; their skills or knowledge are not in the preceding 12 months, while • Change of employers or employment readily available in Malaysia. the compound annual growth rate in sectors is not allowed; and median price is estimated at 11.7%. • Marriage is prohibited with local or Special Pass foreign citizens. Although the special pass is not a Amongst the vast area that is Selangor, traditional visa or work permit in its Petaling Jaya plays a major role in Malaysia My 2nd Home (MM2H) own right, it may appear during the the real estate market. Being another A particular visa that is significantly course of another visa or work permit major development zone in Selangor, different than the others is called application process. it was awarded city status in 2006 – Malaysia My Second Home (MM2H). making Selangor the only other state The pass is a special permission in Malaysia with more than one city The MM2H programme is promoted by granted by IMI to an individual (the other is Sarawak). the Government of Malaysia to allow for the purpose of remaining in foreigners who fulfil certain criteria Malaysia whilst a visa or work permit In the 2017 budget by the federal to stay in Malaysia for as long as application is in process. government, stamp duty exemption possible on a multiple-entry social visit for properties was increased from 50% pass. The pass will initially be granted Obtaining such a pass can only be done to 100%. However, this only applies to for a period of ten (10) years, and is on a case-by-case basis with sufficient properties worth between RM300,000 renewable. pressing circumstances. It is valid for A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 81

and RM500,000 for first time buyers Furthermore, stricter lending fall into the matrix of laws in this whereby 100% exemption will apply guidelines have been enforced by country: quit rent and assessment on stamp duty for the first RM300,000; the Malaysian Central Bank a.k.a tax. The government levies these with the excess being subjected to the Bank Negara Malaysia (BNM), such taxes against landowners who meet prevailing rate of stamp duty. as basing mortgage eligibility for certain legal qualifications. private persons on net income and For other properties, the stamp considering all other debt obligations. Based on the nature of land use or the duty on instruments of transfer of organisation in possession of land, properties for the first RM100,000.000 BNM had earlier this year increased some exemptions to these taxes may is 1% whereas with the excess the overnight policy rate (OPR) by apply. amount between RM100,001.00 up 25 basis points to 3.25 percent as it to RM500,000.00, it is 2%. As for the expects the Malaysian economy to Quit Rent transfer amount worth a balance further expand in 2018. The floor and Definition of Alienated Land value above RM500,000.00, it is 3%. ceiling rates of the corridor for the For properties with a value above OPR are correspondingly raised to • Any leased land owned by the 1 million (USD 225,759), the stamp 3.00 percent and 3.50%. government; • Any land formerly owned by the duty will remain at the current rate government; and of 3% as announced in the Malaysian Still, it is comparatively easy to obtain • All land not owned by indigenous Budget 2018. financing loans in Malaysia even for peoples. foreigners as compared to other It was then proposed in the Malaysian countries. Also known as Cukai Tanah, quit rent 2018 budget that the existing constitutes a form of tax levied against stamp duty exemptions given on As previously mentioned in Chapter all alienated land in Malaysia. While the instruments specified below be 4 on the costs of business, the Real the tax is mandated by federal law, extended for another three years, Property Gains Tax (RPGT) was raised state governments hold the authority to further ease financial burden of in 2014 for properties sold within to assess and collect all quit rent. the original house purchasers and three to five years. No RPGT will be encourage the involvement of rescuing imposed on Malaysian citizens who Quit rent rates depend on land usage, contractors to revive abandoned sell their properties after five or more for example rubber farming, coffee housing projects:- years, whilst companies are taxed at a growth, fruit orchards, and other steady 5% rate. properties, and the total hectares Instruments Rescuing Original owned. Contractors House For non-citizens, it should be noted Purchasers that the RPGT on properties sold in Assessment Tax in the less than or equal to five years from Assessment tax or Cukai Taksiran is Abandoned Projects purchase date will amount to 30%. A levied by local councils against every year makes a great difference to non- Loan To finance For household to finance the functions agreements the revival of additional citizens as the RPGT will be reduced and roles of the local councils for the abandoned financing to 5% if the property is sold after welfare and amenity of the residents housing five years or more from the date of in the area and also levied against projects purchase. owners of empty residential and Instrument To transfer To transfer of transfer the title for the houses commercial lands. The assessment land and in the Interestingly, in 2014 the Malaysian tax is utilized amongst others to pay for houses in abandoned government has also set limits on establishing, maintaining and carrying abandoned housing bulk sales of more than four units in out services for the streets, the drains, housing projects a single project, whereby property projects the sanitation and open public spaces developers would need to register the and buildings. name of the buyer and the transaction Upon receipt of approval, the exemption with the Urban Wellbeing, Housing will apply to loan agreements and and Local Government Ministry before memorandums of transfer executed proceeding with such sales. from 1 January to 31 December 2020 for abandoned housing projects certified Before we delve further into the topic, by the Ministry of Urban Wellbeing, there are two forms of land tax that Housing and Local Government. 82 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

CHAPTER 5: WHAT REGULATORY REQUIREMENTS DO I HAVE TO CONSIDER?

The amount of annual assessment Exemptions Overview of Malaysian Property Law tax is determined by the annual The Selangor government has the In West Malaysia, the land law is rental value of the property, which is capacity to choose to exempt any governed by the National Land Code ascertained – in most cases – by the organisation from assessment tax. 1965 (“National Land Code”) which is state government and local authority Below are types of property whose modelled on the Torren System. based on where the property is located. owners may be exempted from It is payable in two instalments. assessment tax: The states of Sarawak and Sabah are • Property not used exclusively for governed by their respective land Any repairs or improvements made to commercial; laws. Under the National Land Code, the property or properties in the area • Places of worship; every creation and/or transfer of title that increase its value may impact the • Licensed burial grounds and (ownership) or interest (including assessment tax rate. crematoriums; lease and charge) in the land must be • Public schools; and registered at the relevant land office • Public places dedicated to charity of or registry. The land office or registry science, literature, or the arts. will keep a record of the ownership or interest in the land which record is open to public. There are two categories TRIVIA of land and properties in Malaysia The law governing assessment tax is available for property owners, i.e.:- unique to Malaysia. TRIVIA i. Permanent ownership vide freehold Selangor exempts all registered places land and properties and/or Under the Local Government Tax Act of public worship from assessment tax. ii. Long term possession of the property 1976, assessment tax rates may not for a limited time vide leasehold land exceed 35% of the value of a property and properties. in a given year. Payment In the event that the property is Without demand from the government, purchased from the Developer and there is no document of title issued Calculation of Assessment Tax quit rent and assessment tax are usually due every 6 months. by the relevant land office or registry The annual value of the Assessment Tax yet, the creation and/or transfer of is computed based on the estimated title (ownership) will be governed by gross annual rent of the property. The Therefore, land and property owners estimation is based on the tenancy or should know the relevant state due Malaysian Contract law pending the comparable rent at the area where the dates, as well as assessment rates, issuance of the document of title. property is located at. Kindly refer to the and act of their own accord in paying following formula: the taxes. Property Titles Annual Value = Estimated gross rent per For new investors, especially foreign month x 12 months investors, there are many different types of property in the booming Assessment Tax = Annual Value x Rate (The annual value and rates are set by the economy into choose from in Malaysia. State) Since there are at least 14 property types, investors should be aware of For example: TRIVIA the different jargons that are used to Malaysian states allow for the Annual value = RM6,000 (RM500 x 12 describe specific properties. months) payment of quit rent online.

Percentage rate = 8% (for example purpose only) Late payments will result in a fine. In the event of unpaid taxes, Assessment = RM480.00 per year or RM240.00 for every 6 months Malaysian authorities have the right to begin foreclosure and reclamation TRIVIA proceedings on alienated land. Malaysia operates under the Torrens title system of land registration; similar to countries like Singapore and Australia. A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 83

While the National Land Code governs more of its voting shares held by a i. Under the EPU guidelines, Foreign land matters in Peninsular Malaysia, non-citizen or by a foreign company Purchasers are not allowed to East Malaysia has their own versions referred to paragraphs i and ii purchase :- Properties valued less of the land code which may differ from above; than RM 1,000,000.00; the National Land Code. iv. Company incorporated under the ii. Residential Units under the Companies Act 2016 and/or the category of low and medium cost as Property titles refer to ownership previous act with fifty percent or determined by the State Authority; rights, and different countries have more of its voting shares being iii. Properties built on Malay Reserved different systems as to how this is held by a company referred to Land (to be exclusively sold to documented. in paragraph iii or by a company Bumiputera, it is not the same as referred to in paragraph (iii) or by a Bumi lots); and Main Property Titles in Malaysia company referred to in paragraphs i iv. Properties allocated to Bumiputera and ii above. interest in any property development Title Function project as determined by the Master Generally held by the In the alternative, foreigners may State Authority. (Each property property developer before become holders of the MM2H visa development has a specific quota the issuance of strata or or permanent residents in Malaysia for Bumiputras called “Bumi-lots” individual title. wherein which case a different set of which can only be purchased by Individual A title referring to rules will apply. bumiputeras i.e Malay individuals landed property such as or aborigines in accordance to semi-detached homes, the special rights accorded by bungalows, and houses. Property Restrictions for Foreign Buyers the Constitution of Malaysia in Strata Governed under the For foreigners to obtain a property in particular Article 153). Strata Titles Act 1985; a title issued in houses Malaysia, there are certain conditions that are shared (usually specified by the Malaysian Government The other conditions are usually based non-land property), such in respect of purchasing a property. on: as condominiums and • The state where the property is apartments. The general rule is that foreign located; purchasers are not allowed to acquire • The title of the property; and Serviced residences on a general basis any land (other than industrial land) • Whether the buyer is a holder of hold commercial titles – as they are in West Malaysia unless approval of MM2H visa. frequently attached to or situated on the relevant state authority has been top of commercial property. obtained. Section 433A to 433H of the Previously, foreigners were allowed National Land Code deals with these to purchase properties valued RM Foreign Buyers restrictions, but reference to the 500,000.00 or more. To curb speculation Foreigners may purchase property Guidelines of Acquisition of Property from foreign investors, the minimum in Malaysia using their individual by the Economic Planning Unit (EPU) purchase price of the property for names or foreign companies. must also be made which is a general foreigners has now been increased to Foreign companies include any of the guidance. 1,000,000.00 from the initial 500,000.00 following:- by the federal government. i. Company or corporation or Under the National Land Code, the association or other body state authority consent is required On the other hand, some states may incorporated outside Malaysia; by a Foreigner or Foreign Company set a different minimum purchase ii. An unincorporated society or prior to any acquisition of any land or prices for the property, especially association which may hold property properties in Malaysia. The solicitor is states that have stricter restrictions in the name of the secretary or other required to submit an application to the such as Penang and Malacca. officer of the body or association state authority and this process may duly appointed for the purpose and take up to two months for its approval. The states also have the ability to which does not have its head office In the event that state authority consent place other restrictions in addition to or principal place of business in is denied, the bank providing the loan the minimum property price, as land Malaysia; (if any) will not disburse the loan sum matters are under the purview of the iii. Company incorporated under the to the Developer or the Vendor. respective state governments. Companies Act 2016 and/or the previous act with fifty percent or 84 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

CHAPTER 5: WHAT REGULATORY REQUIREMENTS DO I HAVE TO CONSIDER?

In 2014, Selangor State Government companies can only purchase of the SPA, residential properties that issued a Circular on the Guidelines of properties priced RM 3,000,000.00 comes under the Act need to be handed Acquisition of Property by Foreigners and above located in all three zones over to the purchaser within: in the State of Selangor, which states whereas they are barred from • 24 months for landed properties; or that a foreigner shall not obtain more purchasing agricultural land, Malay • 36 months for strata properties. than 10% of the non-Bumiputera Reserve Land (exclusively sold to units that have been allocated by the Bumiputera, it is not the same as Bumi However, the terms in the SPA may state authorities. The Selangor State lots), property sold through auction, be amended subject to approval from only permits foreigners and foreign low to medium cost properties and the Controller in rare circumstances. companies to purchase strata and freehold landed residential property. Besides that, the government has landed strata properties (i.e. leasehold warned that purchasers should only properties and landed leasehold Purchasing Land and/or Property pay the full price of the property once properties only). Under the aforesaid To purchase land and/or property in the property has been completed. guidelines, residential, commercial Malaysia, the buyer should determine and industrial properties are divided the identity of the owner of the property The delay in delivery of vacant into three zones:- (usually referred to as the ‘vendor’). possession of the property would result in the developer being liable for • Zone 1 comprising of the district It is crucial to know the vendor’s identity liquidated ascertained damages, and of Petaling, Gombak, Hulu Langat, as the process of sale and purchase reimbursements must be made to the Sepang and Klang; could somewhat differ if the property buyer as prescribed in the SPA. • Zone 2 comprising of the district of is purchased from a developer or from Kuala Selangor and Kuala Langat; vendors other than a developer. and • Zone 3 comprising of the district of Let’s look at the different types of sale Hulu Selangor and Sabak Bernam and purchase. TRIVIA The minimum purchase price is based Purchase of Off Plan Residential A purchaser can occupy the house so on the zones. Property from Property Developers The main instrument that governs long as the certificate of completion The below chart gives a simple the sale and purchase of residential and compliance is issued by the overview of the investment volume property by the developer is the developers’ architect or engineers. needed for foreigners to purchase Housing Development (Control and property in Selangor. Licensing) Act 1966 and the Housing Purchase of Completed Residential Development (Control and Licensing) Property from Developer Only strata properties are Regulations 1989. The same rules that apply for off available for purchase plan completed residential property The Act has since been amended, with are also applicable to completed Zone 1: MYR 2 mil all changes reflected in the Housing residential property. Developers are Petaling, Gombak, Hulu Development (Control and Licensing) bound by the Housing Development Langat, Sepang & Klang (Amendment) Act 2007. (Control and Licensing) Act 1966 and the Housing Development (Control and Zone 2: MYR 2 mil The aforesaid regulations prescribe Licensing) Regulations 1989. The only Kuala Selangor & mandatory sale and purchase terms difference is that the Developer has to Kuala Langat that a developer has to adopt in its use the SPA format under Schedule I Sales and Purchase Agreement (SPA). for landed property and Schedule J for Zone 3: MYR 1 mil Schedule G of the said Regulation completed lots or parcels of residential Hulu Selangor & contains the SPA format for off-plan premises. Sabak Bernam residential buildings and lands, whilst Schedule H provides the SPA format for Purchase of Completed Properties On top of that, Bumi lots are not off-plan lots or parcels of residential Directly from Owner of the Property allowed to be purchased by foreigners. premises. (Sub-Sale) A sub-sale purchase is between the Other property acquisition restrictions Generally, the terms for the SPA buyer and the owner of the property include that foreigners and foreign specifies that from the signing date from the secondary market of A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 85

completed property by way of a private off-plan properties whereby the contract. Thus, the parties are free Developer has obtained approval to dictate their respective terms and for the subdivision of the land with conditions without the involvement of master title and the building plan the Developer. WHAT IS MM2H? from the relevant authorities and is Flip to Chapter 8 to read more in the midst of obtaining a separate Purchase of Commercial and about the programme. document of title). Industrial Land and/or Property from Developer or Owner of the Property Furthermore, if a lawyer is hired, he (Sub-sale) / she would normally disclose the The Developer of commercial and estimated legal fees that need to be Initial Stage: Entering into a Sale and industrial properties are not bound paid before advising on the matter. by the Housing Development (Control Purchase Agreement For the sale and purchase of land and Licensing) Act 1966 and the Loan Application and/or property, it is a fundamental Housing Development (Control and CIMB, Maybank and Public Bank offer rule to enter into an agreement made Licensing) Regulations 1989. As such, home loans to expats up to 80% of the in writing, incorporating all terms to it is advisable to seek legal advice from purchase price for property under the which the parties have agreed. lawyers to scrutinize the terms of the MM2H program. In the event that the sale and purchase agreement. There is foreigner is married to a Malaysian At this point, it would be best to appoint no set format for the terms of the sale citizen, the Banks may also provide a lawyer to assist in the transaction and purchase agreement which may refinancing options up to 90% provided of purchasing the property as there vary for different projects or schemes that there is a joint application by both are certain technicalities involved or developments developed and built parties. especially if loans are required by by different development. The same is the Purchaser and/or the Vendor had applicable to sub-sale of commercial The maximum loan allowed for previously obtained financing from and industrial land and/or property. commercial properties is 80% of the the financier (Financier or a bridging purchase price and the balance is loan by Developer if the land and/or However, the rules for creation and required to be paid by the purchaser. transfer of the commercial and property is purchased directly from Developer or end-financing by Vendor industrial land and/or property are Commercial property loans are if the land and/or property is from the governed by the National Land Code only restricted to certain types of secondary market). and the engagement of a lawyer to commercial properties which include handle the transaction is advisable. retail shop lot / shop house, office, The SPA would set out certain things factory, SOVO / SOFO units, commercial such as the details of the buyer(s), Malaysia My 2nd Home (MM2H) land, and agricultural land. details of the property, purchase price, The purchase of a residential property completion date, and remedy for under the MM2H programme is The interest rate differs on a case to breach, amongst others. subjected to a few conditions laid down case basis. The maximum tenure is up by the state government. Terms and to 30 years depending on the age of the Once the SPA has been agreed upon, conditions may vary from state to state. borrower with the loan amount being the general rule is that an earnest different according to banks and the deposit of 10% is paid to the vendor. A foreigner can only purchase one relevant federal state. Then, the buyer and seller will sign and residential property and it must be execute: purchased directly from the Developer Loan applications will differ based on • The SPA together with the Instrument under the Selangor guidelines. the type of property purchased and the of Transfer specified under the banks involved. National Land Code known as Form The major benefit of holding a MM2H 14A for properties with individual visa lies within its better margin of If the property is purchased directly titles; or financing for the property of purchase, from the developer, the purchaser • The SPA with the Deed of Assignment whereby in some cases it would reach will normally be requested to sign a (DOA) – for properties without 90% compared to the typical 70%. property booking form and/or receipt any document of title (ownership) and pay a minimum deposit before issued by the relevant land office the execution of a sale and purchase or registry (which is common for 86 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

CHAPTER 5: WHAT REGULATORY REQUIREMENTS DO I HAVE TO CONSIDER?

agreement. In the alternative, if Self- Employed or Company The lawyer will normally prepare a the property is purchased from the facility agreement with the borrower(s), Passport secondary purchase market, the real together a deed of assignment and estate agent will request that the Working Permit (if any) power of attorney (if the document purchaser sign a letter of offer and Property booking form and/or receipt of title for the Property has not been acceptance and pay an earnest deposit and/or letter of offer and acceptance issued). Otherwise, the Bank will with subsequent execution of a sale and Sale and Purchase Agreement / Title sign a facility agreement together purchase agreement to be done within copy with instrument of charge under the a shorter fixed time frame (normally National Land Code to protect their Deposit statement two weeks from date of execution of interest. offer and acceptance). Latest income tax declaration form with payment Second Stage: Adjudication and At this juncture after the signing of Business registration as proof of Stamping the booking form or the letter of offer ownership of the company In this stage, the SPA and the DOA will and acceptance, the Purchaser may Latest profit and loss statement be submitted to the stamp office to pay proceed to apply to the bank for a the stamp duty after the parties have Latest Audited Report loan. They will usually be required to signed the agreement. Once a separate provide the following documents for Memorandum of Article and Company individual title is issued, the instrument loan approval to the respective banks Profile and/or Constitution of the of transfer known as Form 14A will and the banks may require further Company be submitted to the stamp office for documents:- Guarantee letter by local individual or adjudication in order to calculate the company (If applicable) ad valorem stamp duty payable for the Under Employment Other documents as deemed instrument of transfer. Passport necessary by the Bank Working Permit (if any) At this juncture, the Banks will approve The stamp office or revenue service Property booking form and/or receipt the amount based on the following centre is a unit under the Inland and/or letter of offer and acceptance factors:- Revenue Board of Malaysia (IRBM). Sale and Purchase Agreement / Title i. Type and location of the land and/or Copy property; Submissions can be done online via http://stamps.hasil.gov.my or Deposit statement ii. The valuation of the Property; iii. The age and income of the loan manually at an IRBM branch. Latest 3 months pay slip borrower(s); Latest 3 months personal bank iv. The visa held by the Loan Loan documents also need to be statement (as proof of salary) borrower(s); adjudicated and duly stamped before Employment letter/ Latest KWSP v. Background and profile check on being registered at the Land office or statement / CPF statement (if borrower(s) (if applicable) registry with Form 14A. applicable) Latest income tax declaration form Once approved, the Bank will provide Submissions for Adjudication with payment an offer letter specifying the terms (Applicable for Land and/or and conditions of the loan such as Properties With Separate Other documents as deemed margin of financing, tenor, monthly Document of Title) necessary by the Bank repayment amount and penalty of early For online submissions, once the termination (if any). Upon acceptance application is accepted, an adjudication of the letter of offer, the bank will number would be given by the system. assign its lawyer to prepare and The adjudication number for manual register the loan documents whereby submissions is given on Form 14A and the borrower(s) will be responsible for returned to the solicitors. the legal fees and the disbursements (stamping fees for loan documents, valuation report fees, fire insurance; registration is free of charge at Land Office). A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 87

Payment must be made to the collector Online Submission Manual DOCUMENTS REQUIRED FOR Submission of stamp duty at the stamp office or revenue service centre within 30 days SUBMISSION (NON-EXHAUSTIVE) Relevant pages of SPA A copy of SPA from the date of the notice. A penalty that has been stamped that has been • Completed Form 14A and other containing: stamped. will be imposed for late payments. • Date of agreement of relevant documents; SPA; Where there is no separate issue • Original Issued Document of • Selling price of the Title; property; of title, the DOA will not be sent for • Schedule of Payment; adjudication. The SPA and the DOA will • Certified copies of Buyer’s and • Map or Plan of the only be charged a nominal stamping Vendor’s identification cards or Property; passports; • Signing page of fee of RM10.00. vendor and purchaser; • A copy of current Quit Rent and and Assessment Receipts; • Name of Seller and Online Submission Manual • Fees as prescribed by the Land Buyer. Submission Office or Registry; Form PDS 15 – 1 copy Form PDS 15 Relevant pages of SPA A copy of SPA • Completed Charge Form and (through Data Entry). – 5 copies. that has been stamped that has been other relevant documents (if containing: stamped. A copy of Issued A copy of • Date of agreement of applicable) Document of Title. Issued SPA; Document of • Selling price of the The Land Administrator will then Title. property; • Schedule of Payment; endorse the name of the buyer in the Form 14A. Form 14A. • Signing page of Register Document of Title (RDT), vendor and purchaser; Any other document Any other and which is kept at the Land Office or supporting related to document • Name of Vendor and Registry. The name of the financier transfer. supporting Purchaser. will also be endorsed in the RDT related to transfer. Deed of Assignment, Deed of (if applicable). Once the property is including: Assignment. charged to the Financier, the charge • Date of the - 2 copies of will need to be removed before any Cover Letters Agreement; from Lawyer. • Signing Page; subsequent transfer can be made. • Address of Property; and As part of the stamping process, a • Name of Vendor and Seeing as the developer would hold valuation will be made by the Valuation Purchaser. the property under a master title, the and Property Services Department, Form PDS 15 – 1 Copy Form PDS 15 developer could assign the vendor’s and a report will be issued. The process (through Data Entry). – 5 copies. title and legal rights of the property takes approximately eight working to the buyer by way of DOA, once it is A copy of Issued A copy of days, depending on the relevant Document of Title. Issued officially signed. district. Document of Title.

For the stamping of Form 14A, the Any other document Any other stamp office will issue a Notice of supporting related to document transfer. supporting Assessment online or manually, related to transfer. indicating the stamp duty payable for TRIVIA the transfer of property. - 2 copies of For properties without separate Cover Letter document of titles issued, no from Lawyer. The rate chargeable is based on the registration would be required. Stamp Act 1949: Third Stage: Registration of Title This is because the Land Office or • First 100,000 – 1% (where separate document of title is Registry does not have a record of the • More than 100,000 but less than issued) individual or strata properties until 500,000 – 2% To finally register the property, an the individual or strata document of • More than 500,000 – 3% application must be submitted to the titles corresponding to the individual or Land Office or Registry. strata properties are issued. 88 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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The DOA has to be adjudicated in a comparison to freehold land and/or Extension of Leasehold under NLC 1965 similar manner as property with title, properties in the same location. but instead of Form 14A, the original Provision Function copy of the DOA must be submitted The disadvantage of leasehold land Section 76(a) Deals with alienation of together with Form PDS 15. and/or property is that financing may state land. be more difficult to be obtained as Section 197 Details the procedures for The buyer acquires legal rights and beyond 30 years, the value of leasehold a proprietor to surrender his / her title to the state title to the property only when the title land and/or property will stagnate authority. is officially stamped and executed. and depreciate until the expiry and/ Section Provides for certain The only difference for properties or renewal of the lease. Financing 204B powers to the state without titles is that the properties are institutions normally do not lend to authority to approve not registered at the Land Office or purchasers with less than fifty years surrender and alienation. Registry and the rights of parties are remaining on the lease. governed by Contract Law. In Selangor, the Selangor Land Rules Based on Section 40 of the National 2003 and Selangor Quarry Rules Deposit of Real Property Gain Tax Land Code, property in state land, 2003 shows the formula to calculate with the Lawyer minerals, and rock materials are the premium of the extension of the The Finance (No. 2) Act 2017 which vested in the state authorities. leasehold land. Under Section 7, the came into effect on 1.1.2018 amended formula is as follows: Section 21B of the Real Property Gains This means that in any transaction Tax Act 1976. Lawyers are now required involving the creation and/or transfer Premium: (1/4) x (1/100) x (Market to retain 7% of the sale and purchase of ownership and interest over the land Value of Land) x (Lease Period – price from foreigners and foreign and the property built therein related Years Remaining on the Lease) x companies for the purpose of payment to leasehold land, the land belongs to (Land Area) of the RPGT. The RPGT is required to be the state. Any person purchasing the paid on or before 60 days from the date land and the property built therein is Two options for private ownership of the sale and purchase agreement. only buying their rights to live in the scheme were provided under the property on the land; not the ownership Guidelines issued by the Selangor Options for Leasehold Land of the land itself. Department of Land and Mines (PTG The advantage of purchasing leasehold Selangor). land and/or property is that when it A person who acquired a leasehold title comes to value, experts have observed may occupy it for any time for a period The first option would be to pay the full that in Malaysia, leasehold land and/ not exceeding 99 years as provided premium rate with a 30% rebate. Under or property value with a 99 years lease under Section 76(a) of the National this option, the premium has to be paid go up at a similar rate with freehold Land Code. within six months from the time Form land and/or property in the same area Notice 5A is issued. A further RM 500 during the first 20 to 30 years. Some When the lease has lapsed over a is to be paid to the state cemetery trust leasehold land and/or property may specified time, the person holding it fund for the State Government to buy gain even higher value in comparison can either renew the lease or return land for cemeteries. to the freehold land and/or property in the land to the state authority upon the same area due to the location. expiry. The state has the right to refuse Meanwhile, the second option is to pay the grant of renewal of the lease. It is a premium of RM 1,000 as an extension Another advantage to take into advisable for the owner to apply for of the lease. Taking this option will only consideration is that freehold land extension of lease before the expiry. If allow the property to be transferred to and/or properties are limited and that the owner does not renew the lease, immediate family members; the owner most leasehold land and/or properties the land shall revert to the state is not allowed to resell the property. are located in very convenient government. Once land is returned, a locations with amenities and public fresh application for alienation to the The state authorities will lodge a transportation within walking distance, state authorities must be made. ‘Register Caveat’ to prevent the owner possibly being cheaper to purchase in from selling off the property. A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 89

As for renewal of properties with strata access to main roads and highways Land Conversion Premium Rates in title, Section 90A(8) of the NLC provides and/or close to developing townships Selangor for land with subdivided buildings such or schools or industrial areas have Type of Land Premium (from as condominiums and apartments. good potential in the long term. Certain approved land land types, such as agricultural land, value) The section states that the renewal may be converted for residential, Agricultural to 15% shall be done by the management commercial or industrial uses under Residential corporation as they hold the master Section 124 of the National Land Agricultural to 30% title and strata titles of the individual Code. After conversion to residential, Commercial blocks, which are to be renewed at the commercial or industrial land, the Agricultural to same time. value of the land will increase as Industrial 20% the land can now be developed for • Light Industry 25% • Medium Industry 30% Process of Lease Extension commercial or industrial purpose and/ • Heavy Industry The process of lease extension can or divided into smaller plots and sold vary, depending on the district. A Residential to 15% separately. Commercial simple overview of requirements during an application is as follows. In an application for land conversion, Industrial to 10% Commercial the following will be required: Complete relevant forms available • Approval by local council allowing Source: Selangor Government Official Website at District Office and submit a the conversion; and The application fees are based on the processing fee. • Land layout plans and development size of the land that is to be converted: proposal report (LCP). • Not more than 1 hectare – RM 70.00 Prepare original title or grant of • 1 hectare to 10 hectares – RM 140.00 the property. The following are the simplified steps • More than 10 hectares – RM 140.00 of an application for land conversion: for the first 10 hectares, and RM Prepare copies of latest Quit Rent 15.00 for every additional 1 hectare and Assessment Tax. Step 1 or part of it.

Prepare a copy of the individual’s Submit application at relevant land office. National Registration Identity Alternative to Purchasing Property Card (NRIC), Passport or company In the event that foreigners and/or registration documents, depending Step 2 a foreign company intend to use the on intended ownership. Application is forwarded to EXCO in land and/or property long term but do Selangor or JKKT in KL for approval. not have the capital or funds available Prepare a copy of Official for purchasing the land and/or Leasehold Search – search is Step 3 property, the alternative is to rent the done based on where the title is property long term with less stringent registered. A conversion premium rate will be determined and charged. requirements.

Prepare the prescribed The National Land Code provides that application fees. The premium rate differs on a case to case basis, and the amount charged is where the rental of the property is for calculated depending on the valuation three years or less, it is referred as a Land Conversion of the land that is to be converted. tenancy. A tenancy for three years is Land is a limited resource in Malaysia exempt from registration. However, a and investing in land requires high Confusion regarding the conversion rental period of more than three years capital. Having said that, there is huge premium has arisen many times. is a lease and the National Land Code potential for long-term investments provides for it to be registered. Upon or obtaining land for future business Because of this, the Selangor registration of the lease, the existence expansion. Land prices in Malaysia are government has taken initiative to is endorsed on the title of the land and/ less volatile in comparison to shares clearly state the premium rates, as can or property. As such, even if the owner and commodities. Land with direct be seen below. 90 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

CHAPTER 5: WHAT REGULATORY REQUIREMENTS DO I HAVE TO CONSIDER?

of the property was to sell the property need to appoint lawyers and/or real to a third party buyer, the third party estate agents so that their rights and buyer is bound by the lease because it interest are protected at all stages of is registered and endorsed on the title the transaction. of the property. The stamp duty tax rate, the real The buyer of the Property cannot deny property gain tax rate, the minimum the rights of the party to whom the purchase price mentioned above and property is leased and will not be able the other conditions imposed by the to evict the party leasing the Property state authorities may change from time until the expiry of the lease period to time. The procedures involved for subject to the compliance with the the creation and transfer of ownership terms and agreement of the lease. As as well as interest over the lands and such, the buyer purchase the property properties may also change with time, subject to the lease. along with the extension of leasehold rate and land conversion premium Parties signing the tenancy or lease rate. agreement may negotiate on terms for option to purchase the Property. As such, it is advisable to consult Malaysian lawyers to seek legal advice Provided that the property falls within in handling the creation and transfer of all requirements mentioned above, ownership and interest over land and parties may insert a clause on the right properties. of first refusal – this gives a contractual right to purchase the property from the owner before an offer can be made to sell the property to a third party. Therefore this could be a first step especially for smaller investments, as an option to purchase the property may be beneficial for long-term investment, expansion or additional control purposes.

The advantage of a long term lease is that there is no need to come up with funds or invest heavily initially.

Parties are free to agree on the tenure of the lease and the amount of rental payable together with other terms and conditions. Furthermore, parties can choose to rent freehold and/or leasehold properties for commercial or residential purpose.

The lawyer will normally prepare a leasing agreement and register the lease subsequently to safeguard the rights of all parties. Interested parties A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 91 CHAPTER 6: WHAT LAWS SHOULD I KNOW ABOUT? 92 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

CHAPTER 6: WHAT LAWS SHOULD I KNOW ABOUT?

Apart from regulatory requirements, Employment Act (EA) 1955 it is important to understand LAWS INFLUENCING The EA prescribes the minimum terms certain statutory obligations before EMPLOYMENT PRACTICES and conditions of employment for establishing a business in Malaysia. certain categories of employees and • Employment Act 1955; provides a process that employees • Industrial Relations Act 1967 Statutory obligations are required may use to make claims for breach of and the Industrial Relations by law and refer to current laws that contract or non-compliance with the Regulations 1980; were passed by a state or federal • Sabah Labour Ordinance 1949; provisions of the EA. government. These laws, usually in • Sarawak Labour Ordinance the form of statutes, rarely change 1952; The entire EA is equally applicable to unless a new law is passed that • Trade Unions Act 1959; foreign workers and local employees. updates them. • Employees Provident Fund Act Still, there are certain provisions that 1991; may be applicable only to certain Meanwhile, regulatory requirements, • Employees Social Security Act categories of employees. as seen in the previous chapter, are 1969; required by law, but refer to rules • Children and Young Persons The EA specifically covers any person or issued by a regulating body that Employment Act 1966; class of persons who has entered into • Minimum Wages Order 2016; is appointed by a state or federal a contract of service with an employer, • Persons with Disabilities Act requirement. These requirements whose monthly wages do not exceed 2008; tend to change more often than • Workmen’s Compensation Act RM 2,000, and certain categories of statutory requirements. 1952; employees irrespective of their wages • Human Resources Development such as manual labourers, supervisors Now that we know the difference, let’s Fund Act 2001; of manual labourers, drivers, domestic examine the statutory obligations that • Occupational Safety and Health servants, and others. may affect investors in Malaysia. Act 1994; • Employment (Part-Time Any terms or conditions of employment LABOUR LAW Employees) Regulations 2010; which are less favourable than those Before we examine the basic • Factories and Machinery Act provided for by the EA are void and of requirements of Malaysian 1967; and no effect. • Code of Practice on the employment law, it is useful to Prevention and Eradication note that on such issues, investors Employees who earn monthly wages of Sexual Harassment in the should always seek advice from legal Workplace. between RM 2,000 and RM 5,000 may counsel. This is because the Malaysian seek redress at the Labour Court legal system is based on case law, on the terms and conditions of their meaning that a recent court decision individual contracts of service. The basis of the employment can change many things. relationship in Malaysia is the contract The rights of employees which do of employment between the employer not fall within the abovementioned and the employee. categories would have to bring their claims either for breach of contract The following subchapters address the pursuant to the Contracts Act 1950 or main legislations under employment bring action via the tort of negligence law. at common law or pursuant to the Industrial Relations Act 1967. A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 93

Hence, the contract of employment is important in itself as Subject Terms this may give rise to a common law action for its enforcement 6. Sick Leave An employee covered by the EA is entitled to paid or for damages for its breach. sick leave (where no hospitalisation is necessary) of –

Subject Terms (i) Fourteen (14) days in each calendar year if 1. Working An employee shall not be required under his employed for less than two (2) years; Hours contract of service to work— (ii) Eighteen (18) days in each calendar year if (i) more than five (5) consecutive hours without employed for more than two (2) years but less a period of leisure of not less than thirty (30) than five (5) years; minutes duration; (iii) Twenty-two (22) days in each calendar year if (ii) more than eight (8) hours in one (1) day; employed for more than five (5) years. (iii) in excess of a spread over period of ten (10) hours in one (1) day; or However, if the illness requires hospitalisation, (iv) more than forty-eight (48) hours in one week. the employee is entitled to a total of sixty (60) days paid sick leave in a calendar year, inclusive 2. Overtime Employees are permitted to work up to a limit of of non-hospitalisation paid sick leave entitled as 104 hours of overtime in a month. stated above. The employee must be paid – (i) no less than 1.5 times the hourly basic rate of The sick leave must be certified by registered pay for overtime on normal working days; medical practitioners, medical officers or dental (ii) no less than 2 times the hourly basic rate of surgeon. pay for overtime of the normal working hours on a rest day; or 7. Maternity A female employee covered by the EA is entitled to (iii) no less than 3 times the hourly basic rate of Leave a minimum of 60 days of maternity leave. pay for overtime on public holidays; 3. Rest Days Employees are entitled to one (1) rest day per A female employee shall be entitled to receive week unless the employee is engaged in work maternity allowance for the eligible period from which by reason of its nature requires to be carried her employer if she has been employed by the on continuously or continually by two (2) or more employer for a period of, or periods amounting shifts. in the aggregate to, not less than ninety (90) days during the nine (9) months immediately before 4. Annual The number of days of paid annual leave an her confinement; and she has been employed by Leave employee is entitled to depends on his service the employer at any time in the four (4) months period – immediately before her confinement. (i) 8 days if employed for a period of less than 2 years; A female employee shall not be entitled to (ii) 12 days if employed for a period of 2 years or any maternity allowance if at the time of her more but less than 5 years; confinement she has five (5) or more surviving (iii) 16 days if employed for a period of 5 years or children. more. If the employee has not completed twelve (12) 8. Payment of Every employer shall pay to each of his employees months of continuous service, the employee’s Wages not later than the seventh (7th) day after the last entitlement to paid annual leave shall be in direct day of any wage period the wages, less lawful proportion to the number of completed months of deductions. service. 9. Registers Every employer shall prepare and keep registers of containing information regarding each employee The paid annual leave to which an employee is Employees employed as prescribed by the employment entitled shall be in addition to rest days and paid related regulations and shall preserve the same holidays. for such period that every particular recorded 5. Public Employees covered by the EA are entitled to a therein shall be available for inspection for at least Holidays minimum of eleven (11) paid gazetted public six (6) years. holidays in a year, five (5) of which are fixed and 10. Notification An employer who employs a foreign employee compulsory: of Foreign shall, within fourteen (14) days of the employment, • National Day Employees furnish the Director General of Labour with • The birthday of the Yang di-Pertuan Agong the particulars of the foreign employee in such • The Birthday of the Ruler or the Yang manner as may be determined. di-Pertua Negeri (based on the state the employee works in) • Labour Day Although the law for maternity leave is under EA, it applies • Malaysia Day to all female employees regardless of their monthly wages Employees required to work on any public holiday and category. shall be paid two (2) days’ wages at the ordinary rate of pay. 94 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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It was proposed in the Malaysian 2018 Budget that the Category of Contributor Employer Employee number of maternity leave days be increased to 90 days a year. Monthly salary less than or equal to 13% 11% RM 5,000

Minimum Wages Order (MWO) 2016 Monthly salary more than RM 5,000 12% 11% The MWO prescribes the mandatory minimum rate of pay Source: “Overview Of The EPF : Mandatory Contributions”. to workers in Malaysia. Any employer failing to adhere Official EPF Website. to this may be subjected to punishment by the Malaysian (http://www.kwsp.gov.my/portal/en/about-epf) government. Mandatory contributions only apply to employees who are citizens and permanent residents of Malaysia. All foreign workers, expatriates, and their employers are exempted from compulsory contributions. TRIVIA Nonetheless, the employer may choose to contribute at the applicable rates of RM 5 per employee per month for foreign New minimum wages rates were introduced in MWO 2016, workers and expatriates. repealing the previous MWO 2012.

However, the MWO does not apply to domestic servants whereby it is defined as persons employed in connection with the work of a private dwelling-house which is not in connection with any trade, business, or profession carried on TRIVIA by the employer in such dwelling-house. EPF guarantees a 2.5% dividend annually. This includes a cook, house-servant, butler, child’s nurse, valet, footman, gardener, washer-man or washer-woman, Failure to make contributions in accordance with the watchman, driver, or cleaner of any vehicle licensed for provisions of the EPFA is an offence. private use. Employees or contributors can make full withdrawal

Minimum Wages Rates in Selangor when the respective employees attain the retirement age prescribed in the EPFA, but withdrawal may be made prior Monthly Hourly Daily (RM) to retirement up to a prescribed limit; subject to prescribed RM RM Number of days worked in a week pre-conditions for education, housing, and health.

6 5 4 Employees Social Security (SOCSO) Act 1969 1,000 4.81 38.46 46.15 57.69 To provide social security protection to Malaysian employees Source: Minimum Wages Order 2016, National Human Resource Centre under the SOCSO Act, the Social Organisation (SOCSO) was established. Employees Provident Fund Act (EPFA) 1991 The EPFA provides for mandatory monthly contributions on As a Malaysian government agency, SOCSO has two the amount of wages to be made by both the employer and insurance schemes under the SOCSO Act, namely the the employee to a government-managed retirement fund. “Invalidity Scheme” and the “Employment Injury Scheme”. The statutory rates of contributions are as follows. The former provides coverage to employees who suffer from invalidity or death due to any cause unrelated to their employment, whilst the latter provides coverage for accidents at the workplace. A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 95

As stated in the SOCSO mission The maximum contribution is capped In cases where registration is voluntary statement on their official website, based on wages of RM 4,000 per and the employer chooses to register, the intention behind SOCSO is to month. Therefore, those earning more the employer must pay at the rate of enable the provision of “free medical than RM 4,000 will be required to 0.5% of the employee’s monthly wages. treatment, facility for physical or contribute the same amount as those vocational rehabilitation and financial earning RM 4,000. assistance to employees if they have lost their abilities due to accidents As of 2018, a new financial scheme or diseases that have reduced their aimed at helping employees who abilities to work or rendered them have lost their job or been retrenched TRIVIA incapacitated. If an employee has died, was introduced as the Employment Different sectors, such as the services, their dependants are provided for Insurance System (EIS). Managed manufacturing, or mining and quarrying financially through pensions.” by SOCSO, this scheme enables sectors, carry different HRD levies. retrenched employees to gain For more information, visit the Official Any employee who has ever earned less monetary funds that would allow them Website of the National Human than RM 4,000 per month is required to get back on their feet, for up to 6 Resource Centre of Malaysia at to make mandatory contributions. months. The employee and the employer must http://www.nhrc.com.my/hrdf1#. both contribute to the aforementioned Employees who have resigned from Wo0676huaM9. schemes. work due to threats to them or even http://www.nhrc.com.my/hrdf1#. to their family are also covered under Wo0676huaM9. All eligible Malaysian citizens as well EIS. This includes sexual harassment as permanent residents, who have at work. been employed by an employer under Employers who have registered and a contract of service or apprenticeship The EIS functions similarly to EPF, paid the levy shall qualify for training must be registered under SOCSO. Once where the contribution will go into a grants from the HRDF to defray or covered, employees remain covered pooled fund which will then be invested. subsidise training costs for their regardless of their wages. The contribution rate is fixed at 0.2% of Malaysian employees. the employee’s monthly salary for both employee and employer, at a total of PROTECTION OF INTELLECTUAL EMPLOYEES EXEMPTED FROM 0.4% per month. PROPERTY (IP) SOCSO ACT COVERAGE Now that basic employment laws are Human Resources understood, let’s find out on how to • Federal and state government Development Fund (HRDF) Act 2001 protect the intellectual property (IP) of permanent employees; HRDF operates on the basis of a levy a company in Malaysia. • Domestic Servants; or grant system for the purpose of • Self-employed; IP laws and regulations in Malaysia • Sole proprietors or owners of promoting, developing, and upgrading conform to international standards. partnership; the skill of employees. • Spouse(s) of a sole proprietor or Its protection comprises of copyrights, partner; and Subject to some qualifying criteria, trademarks, patents, industrial • Foreign workers. employers that fall under the sub- designs, geographical indications, and sectors under the industries such layout designs of integrated circuits. The Employment Injury Scheme is as manufacturing, services, mining, Currently, Malaysia is a member funded solely by the employer with and quarrying listed by HRDF are of the World Intellectual Property the contribution of 1.25%; while the required to register with HRDF. The Organisation (WIPO); a signatory Invalidity Scheme is funded with the employer shall be liable to pay a HRD to the Trade Related Aspects of contribution of 1%, shared equally by levy in respect of each of his Malaysian Intellectual Property Rights (TRIPS) employers and employees. employees at the rate of 1% of the monthly wages of the employee. signed under the auspices of the World 96 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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Trade Organisation (WTO); a signatory Meanwhile, sound recordings, Trademarks to the Paris Convention and Berne broadcasts, films and liveA trademark is a mark or sign capable Convention which govern these IP performances are protected for fifty of being represented graphically which rights. (50) years from the calendar year distinguishes the goods and services of following the year after the works are one trader from those of another. Malaysia has also acceded to the first made or published. Patents Cooperation Treaty (PCT) in Trademark protection in Malaysia is 2006 and World Intellectual Property governed by the Trade Marks Act 1976, Organisation Performances and WORKS ELIGIBLE FOR Trade Marks Regulations 1997, and the Phonograms Treaty (WPPT) in 2012. COPYRIGHT PROTECTION Trade Description Act 2011.

• Sound recordings; Trademark applications are to be filed • Films; with MyIPO. Although local applicants • Artistic works; • Literary works; may file applications on their own, • Musical works; foreign applicants may only do so via TRIVIA • Broadcasts; registered trademark agents. In 2017, Malaysia ranked second in the • Published editions; and Association of Southeast Asian Nations • Derivative works. A registered trademark will be (ASEAN) and 19th in the world in terms protected for an initial period of 10 of IP protection for countries assessed There is no requirement of any formal years and may be renewed every 10 in the latest US Chamber International registration in order to get copyright years in perpetuity. IP Index. protection, as it arises automatically on creation of the work for copyright owners and authors. The administration of IP rights in Malaysia is undertaken by the Although the ‘original’ work need not Intellectual Property Corporation of be unique or necessarily creative, it TRIVIA Malaysia (MyIPO). must be in tangible form and derived Trademark protection in Malaysia from some intellectual effort in skill is valid only when the trademark is and judgment. registered in Malaysia. Protection in foreign countries must be applied for Nevertheless, in 2012, Malaysia separately. introduced the Voluntary Notification Registration System. The system Interested applicants and trademark allows copyright holders to notify users are advised to consult trademark Copyrights and deposit a copy of their works lawyers or registered trademark Copyright law in Malaysia is governed with MyIPO. The notification would agents to seek advice and to conduct by the Copyright Act 1987 and the be useful in proceedings of copyright searches to determine: Copyright Regulations. infringement. • The availability of the trademark; • The strength of the trademark; and The duration of protection varies In an action for such infringements, • The maintenance and protection of according to the type of copyright work the types of relief that may be granted the trademark in the marketplace. concerned. by the court include: • An injunction; Unregistered trademarks may be For instance, copyright in a literary, • Damages; protected under the common law dramatic, musical, or artistic work • An account of profits; action of “passing off”. subsists during the life of the author • Statutory damages; and plus fifty (50) years after his death. • Other applicable remedies. A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 97

In an action for infringement of a Relief that may be granted by the • An injunction; registered trademark, the types of court in an action for infringement of a • Damages; relief that the court may grant include: registered patent include: • An account for profits; and • An injunction; • An injunction; • Other applicable remedies. • Damages; • Damages; • An account for profits; and • An account for profits; and Layout Designs of Integrated Circuits • Other applicable remedies. • Other applicable remedies. (LDIC) The protection of layout designs of Patents INDUSTRIAL DESIGNS (ID) integrated circuits (LDIC) is governed The Patents Act 1983 and the Patents The main legislations affecting by the Layout Designs of Integrated Regulations 1986 provides patent industrial design (ID) in Malaysia are Circuits Act 2000, which ensures the protection in Malaysia. A patentable the Industrial Designs Act 1996, and growth of technology in the country invention must be novel, non-obvious, Industrial Designs Regulations 1999. and serves to provide a guarantee to involve an inventive step, and have investors in the electronics industry in utility. An ID means features of shape, Malaysia. configuration, pattern, or ornament As with trademark registration, local applied to an article by any industrial Just like the protection for copyright, applicants may file applications for process, which in the finished article there is no requirement of formal patent registration on their own, but appeals to the eye and is judged by the registration in order to get protection foreign applicants must go through eyes. for LDIC. registered patent agents to do so. To be eligible for registration, the ID The protection period of layout- must be new, fulfil the interpretation design from the date of commercial of ID and does not include a method of exploitation in Malaysia or elsewhere construction or design that is dictated is ten (10) years. Layout-design which solely by function. is not commercially exploited shall be TRIVIA protected for fifteen (15) years from the A successful patent registration under Furthermore, the design of the date of creation. the abovementioned legislation will article must not be dependent on the only be granted patent protection appearance of another article of which In an action for infringement of layout- within Malaysia. Patent protection it forms an integral part. design, the types of relief that the court in foreign countries will have to be may grant include: obtained separately. A registered industrial design is given • An injunction; an initial protection period of five (5) • Damages; years from the date of filing and is • An account for profits; and Given Malaysia’s accession to the PCT extendable for four consecutive terms • Other applicable remedies. in 2006, PCT international applications of five (5) years each. The maximum can be made at MyIPO for simultaneous protection period is twenty-five (25) GEOGRAPHICAL INDICATIONS (GI) protection in a number of countries. years. A geographical indication (GI) means an indication which identifies any A patent will be granted a protection Similar to trademark and patent goods as originating in a country period of twenty (20) years. While registration, foreign applicants will or territory, where a given quality, the utility innovation certificate only need to seek the services of registered reputation or other characteristic of provides protection for an initial ID agents whilst local applicants may the goods is essentially attributable to duration of ten (10) years from the file registrations by themselves. their geographical origin. date of filing of the application, it is renewable for two consecutive terms An action for infringement of a The Geographical Indications Act of five (5) years each, subject to use. registered ID may be granted the 2000 and the Geographical Indications following types of relief by the court: Regulations 2001 were enacted to provide protection for GIs. 98 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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Basically, the protection is given to Prohibitions Exemptions prevent the use of GIs which mislead Anti-competitive agreements and As with any law, there are exemptions the public as to the true place of origin abuse of dominant position are to competition law. of goods and to curb acts of unfair prohibited by the CA. competition. Exemptions to Competition Act 2010 Anti-Competitive Agreements Condition Description A ten (10) year protection period is Horizontal or vertical agreements that given for the production and may be significantly prevents, restricts, or Certain Activities regulated by the: distorts competition in any market for commercial • Communications and renewable for every ten (10) years activities Multimedia Act 1998; thereafter. goods or services are prohibited by the • Energy Commission Act CA. 2001; • Aviation Commission The types of relief that the court may Act 2015; and grant in an action for infringement of Agreements which may be prohibited • Petroleum Development Act 1974 GI include: include agreements that: and the Petroleum • An injunction; • Constitute bid-rigging; Regulations 1974 (upstream operations • Damages; and • Directly or indirectly fix purchase or comprising the • Other applicable remedies. selling prices or any other trading activities of exploring, conditions; exploiting, winning, and obtaining petroleum COMPETITION LAW • Share markets or sources of supply; whether onshore or In the business world, healthy or offshore of Malaysia). competition is encouraged. • Limit or control productions, Certain • Conducts or markets, technical developments, or conducts or agreements that agreements comply with any Competition laws promote economic investments. legislation; development by promoting and • Collective bargaining or collective agreements protecting the process of competition Abuse of a Dominant Position on behalf of employees, by prohibiting anti-competitive Any enterprise, independently or between employers and trade unions; and business conducts. collectively with other enterprises, is • Services of general prohibited by the CA from engaging in economic interest any conduct that amounts to an abuse which cover public With the enactment of the Competition utilities or having the Act (CA) 2010, competition policy of dominance. character of a revenue in Malaysia took a significant step producing monopoly. forward. A conduct may constitute such an Other • Activities that involve abuse if it consists of: activities an exercise of governmental authority; • Price discrimination not due to any • Activities carried economic reason and that is unfair; out pursuant to the principle of solidarity; • Predatory behaviours towards and competitors; • Purchase of goods or • Taking advantage of its position in services not intended TRIVIA for resale or resupply. refusing to supply to a particular The CA 2010 was prepared by modelling enterprise or group or category of relevant articles of the European An enterprise may apply for an enterprises; Union’s Treaty on the Functioning of the individual exemption with respect • Tied selling where the conclusion European Union. to a particular agreement from the of contracts are subject to the prohibition where the enterprise acceptance by the other parties of can show evidence of the following The CA applies to most commercial supplementary obligations which benefits: activities in and out of Malaysia, so have no connection with the subject long as the commercial activity has a of the contracts; or negative or anti-competitive effect in • Buying up scarce goods or resources any market in the country. required by a competitor but not needed for own use. A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 99

• There are significant identifiable PERSONAL DATA However, the PDPA does not apply technological, efficiency, or social PROTECTION ACT 2010 (PDPA) to individuals and organisations that benefits directly arising from the The Malaysian Personal Data process personal data on behalf of agreement; Protection Act 2010 (PDPA) first came the data user, and does not process • The benefits could not reasonably into force on 15 November 2013. the personal data for any of their own have been provided by the parties purposes. to the agreement without the With its enactment, businesses in agreement having the effect of Malaysia are now faced with additional Seven Principles of Information Handling preventing, restricting, or distorting responsibilities and requirements Practices under PDPA competition; when dealing with the personal data Principle Description • The detrimental effect of the of their employees, suppliers, and agreement on competition is customers. General Personal data can only be Principle processed with the data proportionate to the benefits subject’s consent. provided; and PDPA’s main objective is to protect • The agreement does not allow the the personal data of individuals with Notice and Data subjects must be respect to commercial transactions, by Choice informed by written enterprise concerned to eliminate Principle notice of, among other competition completely in respect regulating the processing of said data. things, the type of data of a substantial part of the goods or being collected and the In general, the data covered by PDPA purpose, its sources, the services. right to request access and is any information that allows a living correction, and the choices and means by which the Administration and individual to be identified. Examples of personal data are names, contact data subject can limit the Enforcement of Competition Law processing of their personal The Malaysia Competition Commission details, national registration identity data. card numbers, and passport numbers. (MyCC) is an independent body Personal data also includes any Disclosure Personal data may not established under the Competition Principle be disclosed without the sensitive data, such as physical or Commission Act (CCA) to enforce the data subject’s consent for mental health, political opinions, any purpose other than CA. that which the data was religious beliefs, and other beliefs of a disclosed at the time of similar nature. collection, or to any person The CCA empowers MyCC to carry out other than that notified to the following functions: the data user. Additionally, the commission or • Implement and enforce the alleged commission by the individual of Security Data users must take provisions of the CA; any offence is considered as sensitive Principle practical steps to protect the personal data from any • Issue guidelines in relation to the personal data. implementation and enforcement of loss, misuse, modification, or unauthorised access or the competition laws; All individuals and organisations – also disclosure, alteration, or destruction. • Act as an advocate for competition known as “data users” – that process matters; personal data in their dealings must Retention Personal data shall not • Issue a direction as an interim comply with the rules set out in the Principle be kept longer than is measure, while an investigation is necessary for the fulfilment PDPA. The act of processing personal of its purpose. still on-going; data includes collecting, recording, • Carry out general studies in relation holding, storing, organising, modifying, Data Data users must take Integrity reasonable steps to ensure to issues connected with competition disclosing, and destroying said data. Principle that personal data is in the Malaysian economy or accurate, complete, not particular sectors of the Malaysian misleading, and kept up- to-date. economy; and • Inform and educate the public Access Data subjects must be given regarding the ways in which Principle access to their personal data and be able to correct competition may benefit consumers any personal data that is in the . TRIVIA inaccurate, incomplete, The Federal Government and misleading, or not up-to- date. The amount of penalty imposed may be state governments are exempted up to 10% of the worldwide turnover of from the PDPA. the business. 100 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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Non-compliance of the PDPA may The Anti-Money Laundering, Anti- result in a fine between RM 100,000 Terrorism Financing, and Proceeds of to RM 500,000 per offence. Upon Unlawful Activities Act 2001 (AMLA) conviction, offenders may also be liable is the primary statute governing the to imprisonment. Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) Individuals who feel that their WANT TO KNOW MORE? regime in Malaysia. It was gazetted as personal data has been processed in For further information regarding the PDPA, visit law on 5 July 2001 and came into force breach of any provision of the PDPA http://www.pdp.gov.my/index.php/en/soalan-lazim on 15 January 2002. may make a complaint to the Personal Data Protection Commissioner. Even Since then, the AMLA has been through so, the PDPA does not provide for a ANTI-MONEY LAUNDERING, several amendments, but one thing is specific right to claim for damages. ANTI-TERRORISM FINANCING, for sure – it provides for the offences AND PROCEEDS OF UNLAWFUL of money laundering and terrorism For organisations which are data ACTIVITIES financing, along with the measures to users under the PDPA, the following For a country’s economy to develop be undertaken for the prevention of actions must be considered: healthily, it is fundamental for the both offences. - Conduct and audit to identify: country to have laws against proceeds • The types of personal data being derived from unlawful activities. Not Under the AMLA, wide-ranging collected and processed; only that, the country must have investigation powers – including • The purposes personal data is measures to uncover and avoid powers for law enforcement agencies being collected; transactions that may legalise said and the Public Prosecutor to freeze • Third parties to whom personal proceeds. These transactions are often and seize properties that are involved data is being disclosed; and referred to as ‘money laundering’. or suspected to be involved in money • How data subjects are being laundering or terrorism financing notified of the data processing. Money laundering is a process of offences – and the power of the court - Have a framework in place to ensure converting cash or property derived to forfeit properties derived from the compliance with the PDPA. from unlawful activities to give it a proceeds of serious crimes. - Be mindful that even if an existing legitimate appearance. In other words, global privacy policy is in place, it may it is a process to clean ‘dirty’ money in need to be reviewed and customised order to disguise its criminal origins. to match Malaysian requirements. - Key personnel must be trained on Criminals commonly use three the workings of the Act. methods in money laundering to hide - Given the severe consequences for their illegal proceeds – placement, TRIVIA non-compliance, it is imperative that layering, and integration. The general element of “money senior management set the tone and laundering” is that the person “buy in” the importance of complying The above should be clearly should have participated in with the PDPA. differentiated from terrorism financing “unlawful activities”. - Have a system in place to - which is the act of providing financial continuously monitor compliance support, funded from either legitimate with the organisation’s personal data or illegitimate sources, to terrorists or According to Section 4 of the AMLA, policies and procedures, so that any terrorist organisations to enable them any person who commits crimes of gaps can be identified and addressed to carry out terrorist acts, or to benefit money laundering shall be liable to quickly. any terrorist or terrorist organisation. imprisonment for a term not exceeding 15 years. Though the additional obligations and While most of the funds in terrorism responsibilities under the PDPA may financing originate from criminal The person will also be liable to a fine appear troublesome to some, it is the activities, they may also be derived of not less than five times the amount right step towards bringing Malaysia’s from legitimate sources, for example, or value of the proceeds of an unlawful personal data protection laws in line through salaries, revenues generated activity at the time the offence was with the rest of the world as well as from legitimate businesses, or the use committed, or RM 5 million, whichever boosting investor confidence. of non-profit organisations to raise is higher. funds through donations. A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 101

As at November 2014, there were 356 “other miscellaneous business” has contract or agreement to sell its offences in 42 pieces of legislations replaced clothing and accessories franchise in Malaysia to the Franchisee listed under the Second Schedule of as the second biggest industry, and whereby this franchised business the AMLA. learning centres and nurseries are now becomes operational in Malaysia. The the third biggest (ahead of services and transaction, offer and acceptance to Besides that, the schedule also lists maintenance). Locally, the numbers of buy a franchise in Malaysia can either the various ministries and agencies approved local franchisors and master or all be conducted internationally. enforcing it, based on the nature of the franchisees of foreign franchisors have crime under their respective purviews. remained about the same (16 in 2016 However, the franchise must operate and 17 in 2017). While the numbers in Malaysia and must be registered in The Central Bank of Malaysia (BNM) is of applications for franchisees of order to be recognised officially. only empowered to investigate money local franchisors and local master laundering cases relating to laws franchisees have been encouraging, administered by BNM, which include: the numbers of approved applications • Financial Services Act 2013; were between 1.2% and 8.3% only in • Islamic Financial Services Act 2013; 2016 and 2017, according to Thomson • Money Services Business Act 2011; Reuters. TRIVIA and The Act mandates a minimum franchise • Development Financial Institutions Over the decades, franchising period term of 5 years to all legitimate Act 2002 (Act 618). has become a platform of many franchises in Malaysia. purposes: to expand one’s brand and All in all, it is a compulsory practice to foster business opportunities for that all reporting organisations are other companies (the “Franchisee”) By virtue of the Act, the following obligated by law to adapt preventive under the guidance and assistance elements (amongst others) must be approaches to prevent from being used of the original brand holder (the met: - as a channel for money laundering and “Franchisor”); who initially created • the Franchise exists with a franchise terrorism financing activities. the brand and holds the sought-after contract or agreement between the experience, knowledge and success of Franchisor and the Franchisee; The preventive approaches include, the market practice and industry. • the Franchisor has provided the but are not limited to, conducting risk Franchisee with use of the brand’s assessments, application of customer For the Franchisee, gaining a new trademarks, intellectual property, due diligence, submission of suspicious or faster source of profits, business assistance to the franchisee in terms transaction reports and cash threshold reputation and success is the main of training, marketing, business or reports, and maintenance and objective. Moreover, franchising technical assistance and provision retention of records of transaction. provides a good investment option to of materials or ingredients of the the new, raw, inexperienced company franchise product; FRANCHISING LAWS IN MALAYSIA or businessman to benefit from the • a franchise fee and/or consideration According to Thomson Reuters on Franchisor’s international and/or must be exchanged with the franchising in Malaysia at the time of regional reputation and goodwill. Franchisor in return for the writing, the number of approved foreign franchise; franchisors has dropped only slightly Examples of well-known franchises • the franchisee’s business is since 2015. The foreign franchisors in Malaysia are Old Town White conducted separately from the still outnumber the local franchisors. Coffee, Cambridge English for Life, Franchisor; and McDonald’s, and Avon Cosmestic1. • the franchise is to or must be As a whole, foreign franchises make up registered with the Registrar of 34% of the total number of franchises Elements of a Franchise Franchises, Ministry of Domestic in Malaysia. Notably, while F&B is still Under the Franchise Act (“Act”), the Trade, Co-Operatives and the biggest industry for franchises, Franchisor generally enters into a Consumerism (“Registrar”).

1 More brands can be explored in the official directory of the Malaysian Franchise Association: http://www.mfa.org.my/newmfa/business-directory/ 102 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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However, once there is an appointing of tainted with illegality, the Act requires TERMS AND CONDITIONS the Franchisee, the Franchisee must the Franchisor to declare the financials MANDATED UNDER A register itself as such under the Act. of the promotion fund (endorsed by a FRANCHISE AGREEMENT If the Franchisee is appointed as the registered practising accountant) and ACCORDING TO THE ACT master franchisee of the Franchisor submit it as an annual report to the in Malaysia, it must register itself as Registrar. • Identities of the Franchisor and one before the Registrar to empower Franchisee/Master Franchisee itself with the legitimacy to grant Post-Termination/Expiration/ • Obligations of both the sub franchises in Malaysia or to any Cessation Franchisor and Franchisee/ Malaysian. If the master franchisee One of the biggest concerns for the Master Franchisee fails to do, it will mean that they have considerations of a Franchisor is the • Name and description of goods, committed an offence under the Act. leakage of confidential information, product, services and business trade secrets, know-hows and private under the franchise (b) Malaysian Franchisor recipes that led to the success of the • Scope of territorial rights Similar to the foreign Franchisor, franchise business. granted to the Franchisee the Malaysian Franchisor must be • Franchise period, renewal, termination, pull out and post- a registered franchisor with the How does the Act protect confidential termination/cessation Registrar before it can sell its franchise information and trade secrets that are • Fees for franchise, promotion, in Malaysia or to a Malaysian. Here, part of a franchise exchange? Firstly, royalty, use of intellectual the Franchisor is eligible to apply for the Act allows the Franchisor to insert property, training or any related registration if they have been operating a term and condition in its franchise type of payment payable by the the franchised business in Malaysia for agreement with the Franchisee fix the Franchisee more than 3 years. All records, bank scope and boundaries of protection • Scope of support, training, statements and supporting documents when it comes to the preservation of assistance and resources to be must be substantial and made available confidential information upon the event provided by the Franchisor for inspection. of the termination/expiration/cessation • Trademark, logo and intellectual of the franchise. If drafted well by the property Franchisor’s legal experts, the record • Registration obligation with the Financial Consideration Registrar All fees relating to the franchise, of the franchise agreement would • Written Record of any royalty or promotion thereof must be protect all confidential information of arrangement that is considered consistent with the amounts declared the Franchisor and franchise against part of the Agreement by the Franchisor in its disclosure unauthorised or unwanted disclosure documents to the Registrar. Where including protecting all information, Types of Franchisor: Foreign or in doubt, rates, sums and amounts of data, secrets, manual and any other Malaysian? any fees must be fixed for reference in sensitive, private or confidential (a) Foreign Franchisor the franchise agreement between the information obtained by the Franchisee The Act requires a foreign franchisor Franchisor and the Franchisee. or its employees during the franchise to be an approved franchisor by the term from the Franchisor to operate Registrar before it can sell its franchise If there are further financial sums the franchise in Malaysia. in Malaysia or to a Malaysian. This or fees required by the Franchisor means that negotiations and sales of towards the Franchisee for the When a franchise or a franchise franchises with a non-approved foreign promotion of the franchise, the Act agreement terminates or expires, the franchisor will not be legitimate in requires the Franchisor to establish Act allows the Franchisor to protect its Malaysia. a promotion fund, managed under interest by requiring the Franchisee and a separate account and solely used its employees to continue observing Like any franchisor under the Act, the for the purpose of payment by their obligation of confidentiality for a foreign franchisor must submit its all Franchisees, in relation to the specified time, for example, 6 years. application for approval to the Registrar promotion of the product under the if it intends to sell its franchise in franchise. Then, to ensure that the The Act however does not ban extra Malaysia as soon as possible. monies involving the franchise are not undertakings, covenants and promises, A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 103

guarantees and legal documents from If there is cause, an authorised office quality accounting and financial being drawn up to refrain and/or under the law can: reporting standards that are consistent ensure that unauthorised or unwanted • investigate the activities of any with international best practice – all disclosures do not occur. With good Franchisor, Franchisee and any for the benefit of users, accountants, counsel, such documents can provide relevant person; auditors, and the public in Malaysia. more assurance to the Franchisor • with a warrant, enter the franchise against the leakage of confidential premises at any reasonable time trade secrets and know-hows. by day or by night, with or without assistance and if need be by force; In the event that there is a leakage • with a warrant, seize, detain or after such protection has been put in take possession of any articles for The governance of the MASB rests with place, the franchisor or offended party the purpose of carrying out the the Financial Reporting Foundation is perfectly empowered under the investigation of a criminal or other (FRF), while the members of FRF and Act to bring a legal action against the offence MASB are appointed by the Minister of offending party for breaching the terms • under the Act, criminal laws and any Finance. of the franchise. However, before doing other relevant laws in Malaysia. so, one must always seek legal counsel to gage one’s options before seeking to In the consideration of gaining bring another party to court. business expansion through franchise, it is prudent for all involved to know OFFENCES AND ENFORCEMENTS the law and legal framework behind TRIVIA By virtue of the Act, various offences franchises. The Act purports to give FRF is made up of twelve members, and penalties are defined in the event a clear light and direction of how whereas MASB comprises of eight the Act is breached. franchises should operate smoothly in members and three advisors; one each Malaysia. Collaboration arrangements from the Securities Commission (SC), If convicted, the sentencing judge like licensing, partnership, BNM, and SSM. can levy a fine and/or a term of distributorship and joint ventures are imprisonment, whereby the amount not franchises and cannot enjoy the of the fine or duration of the term will protective framework of the Act. Initially, MASB adopted 24 of the existing International Accounting Standards depend on: (IAS) and Malaysian Accounting • the severity of the breach; ACCOUNTING STANDARDS Standards (MAS) issued prior to the • whether the breach has been IN MALAYSIA creation of the MASB by the Councils of Malaysia’s accounting standards repeated by the offending party; the Malaysian Institute of Accountants have achieved great milestones of • whether a specific penalty has been and the Malaysian Institute of Certified accomplishments over the years. provided for under the Act. Public Accountants.

Prior to 1997, in ascertaining Under the Act, first offences can see However, since July 1999, the new accounting standards in Malaysia, two the offending party being served standards issued by MASB have professional bodies were tasked to with a fine up to the maximum sum replaced these existing standards. carry out the standardisation, namely of RM 50,000.00 (approximately USD the Malaysian Institute of Accountants In August 2008, MASB made 15,000.00) by the sentencing. For body (MIA) and the Malaysian Institute of an announcement of its plan to corporates, the Act mandates fines to Certified Public Accountants (MICPA). converge Malaysian Financial be a value not less than RM10,000.00 Reporting Standards (MFRS) with (approximately USD 2,500.00). In 1997, the Financing Reporting Act the International Financial Reporting 1997 was introduced. It served to Standards (IFRS) in 2012. Additionally, the franchise may be establish the Malaysia Accounting Standards Board (MASB) as an barred from operating in future and The implication is that the basis for the independent authority to develop the Franchisor may be barred from financial reporting system in Malaysia and issue accounting standards for taking on new franchises or being a would be fully compliant with the Malaysia, as well as promote high Franchisor. IFRS. Thus, a Convergence Task Force 104 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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(CTF) was set up to monitor and also The MASB has consistently used the The case is very different for foreign meet the deadline of aligning the new effective date for MFRS 15 (which is, in companies. The extension of the IFRS framework. substance, word-for-word IFRS 15) as application is permitted for foreign the basis for setting the effective date companies, therefore allowing them MASB then unveiled a roadmap in the for TEs to apply the MFRS Framework. the option to adopt MFRS Framework facilitation of a changeover to the IFRS, or any acceptable international which shows the timeline and also the Financial Reporting accounting standards issuing bodies steps taken to achieve the changeover. Framework in Malaysia recognised by MASB, including IASB. As of January 2015, the Approved During that period, under the Financial Accounting Standards (AAS) are issued Regulatory Framework of Reporting Standard (FRS) Framework, by the MASB. Accounting in Malaysia 22 technical pronouncements of the Over the years, legislations and International Accounting Standards Standards Applicable Under AAS regulations have been drawn to curtail Board (IASB) are yet to be adopted. accounting and auditing requirements. Standards Description One of the main legislations is the The issuance of the Malaysian Malaysian Mandatory for entities other Financial Reporting Act 1997, as Financial than private entities. Financial Reporting Standards (MFRS) Reporting mentioned previously. Framework on November 2011, sets Standards the MASB standards applicable to (MFRS) Another piece of legislation would be entities other than private entities Financial Optional temporary the Companies Act 2016 (previously to be identical to IFRS in all respects Reporting framework for eligible Companies Act 1965), which governs Standards entities. The eligible entities other than the nomenclature. The (FRS) 3 will no longer be able to the incorporation of companies and framework was adopted on 1 January apply FRS for financial sets out the requirements with in statements with annual 2012. periods beginning on or regards to the lodgement of audited after 1 January 2017. financial statements. Another announcement was made Malaysian A framework developed for on 2 September 2014, which fixed Private private entities. A private The Companies Act requires Entities entity that has not opted the mandatory effective date for Reporting to apply MFRS shall apply incorporated companies to prepare Transitioning Entities (TEs) to migrate Standard the MPERS for financial financial statements in accordance with (MPERS) statements with annual the approved accounting standards by to the MFRS Framework on 1 January periods beginning on or 2017. after 1 January 2016. MASB.

Private An optional temporary In light of this, two additional IFRS Entity framework for private Other legislations include: standards were adopted as part of the Reporting entities. Private entities • Central Bank of Malaysia Act 2009; Standards will no longer be able to MFRS Framework which includes the: (PERS) apply PERS for financial • Financial Services Act 2013; and • MFRS 15 Revenue from Contracts statements with annual • Islamic Financial Services Act 2013. periods beginning on or with Customers – effective for after 1 January 2016. annual periods beginning on or after The above statutes give BNM regulatory authority over banks and 1 January 2017. It is mandatory for non-private entities insurance companies. Financial • Agriculture: Bearer Plants to adopt the MFRS Framework for institutions are also required to (Amendments to MFRS 116 and annual periods beginning on or after 1 follow policy documents on Financial MFRS 141) – effective for annual January 2012. periods beginning on or after 1 Reporting, Financial Reporting for Islamic Banking Institutions, and January 2016. For TEs, it is only mandatory on or Financial Reporting for Takaful • Then again, on 8 September 2015, after 1 January 2018. TEs that have not Operators. the deferral of IFRS 15 Revenue from chosen to apply the MFRS Framework Contracts with Customers has led will continue using the existing the mandatory effective date to be Malaysian national GAAP (known as moved to the following year, which the FRS Framework) in its entirety. would be 1 January 2018. A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 105

Furthermore, the Securities Commission Malaysia Act 1993 formed a statutory body known as the Securities Commission (SC) that promotes and maintains a fair, efficient, and transparent stock market, as well as to facilitate the overall development of an innovative and competitive capital market.

The statute has also established the Audit Oversight Board to promote and develop an effective audit oversight framework, at the same time promote confidence in the quality and reliability of audited financial statements in Malaysia.

Audit Exemption for Private Companies According to Section 266(1) of the Companies Act 2016, all private companies are required to appoint an auditor for each financial year of the company for purposes of auditing its account.

However, the Registrar may now exempt any private company from having to appoint an auditor, subject to certain criteria.

WHAT ARE THE QUALIFYING CRITERIA FOR AUDIT EXEMPTION? Learn all about it in Chapter 3’s subchapter “Private Limited Company”. 106 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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POLITICAL SYSTEM IN MALAYSIA Under the Federal Constitution, a the state governments, with separate Located in Southeast Asia, Malaysia is vast array of powers is conferred to jurisdictions, stated in the constitution. separated into two parts –Peninsular the YDPA. This includes being the Malaysia and East Malaysia. The country Commander in Chief of the Armed Based in Putrajaya, the federal practices parliamentary democracy Forces, the task of appointing the government is the ultimate authority with a constitutional monarch, headed Prime Minister, the ministers, deputy in Malaysia. It is headed by Malaysia’s by the Yang di-Pertuan Agong (YDPA), ministers, and the Attorney-General. prime minister who is also known as who is customarily referred to as the the head of government. King. On the other hand, the powers of the YDPA are not under his discretion. Additionally, the constitution provides The YDPA is elected for a period of Instead, they are exercised with the for the establishment of the main five years, based on a rotational basis advice of the Prime Minister. branches of the government, which among 9 hereditary state rulers, also include the executive, legislature, and known as the . Besides being judiciary – based on the principle of known as a leader of the Islamic faith separation of powers. in Malaysia, the YDPA also holds the position of Islamic Religious Head for LEGISLATURE the states of Sabah, Sarawak, Penang, The Malaysian Parliament is the Malacca, and the Federal Territories. principal law-making body, legislating national laws which are based on the The aforementioned Federal English Westminster parliamentary Constitution, which was enforced system. in 1957, is the supreme law of the land. Any laws that contravene the In general, the parliament consists of constitution are considered to be a bicameral federal legislature, which TRIVIA unconstitutional or void to the extent of comprises the upper house, the Senate Sabah, Sarawak, Penang, Malacca its inconsistency. (Dewan Negara) and the lower house, and the Federal Territories do not have the House of Representatives (Dewan Sultans. There are two levels of government in Rakyat). Malaysia; the federal government and A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 107

House of Representatives JUDICIARY Currently, the House of Representatives The Malaysian legal system is based heavily on the English common law, whilst the is made up of 222 members who are laws of Malaysia are modelled on the laws of other jurisdictions, namely Australia elected through a General Election that and India. is held every four or five years. Each of the members represents a Parliament Essentially, the Malaysian judicial system has two tiers – superior courts and Constituency, while the majority party subordinate courts. In addition, there is a Special Court and a parallel system of is considered as the ruling government. state Shariah courts.

The prime minister would be appointed The judicial system can be outlined as follows: from among the members of the House of Representatives by the YDPA. On the advice of said prime minister, the YDPA will then appoint the other ministers FEDERAL COURT SPECIAL COURT who make up the cabinet.

Senate The Senate consists of 70 members; Court of Appeal Shariah Court 26 members are elected by the state governments while the other 44 members are appointed by the YDPA on the advice of the prime minister, High Court of High Court of Malaya including two members from Kuala Sabah & Sarawak Lumpur and one member from Labuan and Putrajaya respectively.

Senators are drawn from people who have contributed significantly in Sessions Court various fields and are also capable of representing the minorities, such as the (aborigines). The term Magistrates Court Children’s Court of each office is a period of three years, for a maximum of two terms. Source: The Official Website of the Office of the Chief Registrar Federal Court of Malaysia. (http://www.kehakiman.gov.my/en) EXECUTIVE Malaysia’s executive power is vested in the cabinet led by the prime minister. There are also specialised quasi-judicial statutory tribunals that provide alternative, faster, and inexpensive means to resolve disputes in the respective jurisdiction, The cabinet is a council of ministers such as the Labour Court, Industrial Court and Tribunal for Consumer Claims. who are collectively accountable to the Parliament.

Therefore, the executive branch of the government consists of the Prime Minister as the head of the government, followed by the various ministers of the cabinet. TRIVIA TRIVIA The Senate is not affected by Each state in Malaysia is given the According to the constitution, members dissolution of the Parliament. power to pass laws on Islam and Malay of the cabinet can only be chosen from customs as long as this does not among members of both houses of conflict with the Federal legislations. Parliament. 108 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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Federal Court At the apex of Malaysia’s judiciary system is the Federal Court.

Jurisdiction of Federal Court Receive appeals from the Court of Appeal of Malaysia where there are questions of law of public importance. Determine whether a law made by Parliament or by a state legislature is invalid. Resolve disputes on any other question between states or between the Federation and any state. Answer questions from the Yang di- Pertuan Agong as to the effect of any These courts have general supervisory Children’s Court provision of the Constitution and revisionary jurisdiction over the The Children’s Court specialises in Source: The Official Website of the Office of subordinate courts, and also hear trials and sentencing of offenders who the Chief Registrar Federal Court of Malaysia. appeals. are below eighteen (18) years of age, (http://www.kehakiman.gov.my/en) who are minors. In addition, the High Court has Court of Appeal unlimited jurisdiction to hear criminal Special Court The Court of Appeal has jurisdiction and civil cases. All offences committed in the to hear and determine any appeals federation by or against the YDPA or against any civil matters from the High Sessions Court the Sultan will be exclusively tried in Court. This court has the jurisdiction to try the Special Court. civil matters for claims not exceeding With regards to criminal matters, the RM 1,000,000 and criminal matters not Shariah Court Court of Appeal may hear appeals to involving the death penalty. The state Shariah Courts only have decisions made by the High Court in jurisdiction over matters involving the exercise of its original jurisdiction, Matters involving motor vehicle Muslims, pursuant to Shariah laws or in the exercise of its appellate or accidents, landlord and tenant enacted by each state. revisionary jurisdiction in respect of disputes, and distress cases may also any criminal matter decided by the be decided in the Sessions Court, The High Courts and subordinate Sessions Court. irrespective of claim amount. courts have no jurisdiction in matters which fall within the jurisdiction of the Nevertheless, any criminal matter Magistrates Court Shariah Courts. originated at the Magistrates’ Court The Magistrates Court tries civil may only be appealed at the Court of actions where the claims do not Arbitration Appeal with the leave of the Court of exceed RM 100,000. Besides the court system, there are Appeal. Moreover, the appeal shall only other means of resolving disputes. be confined to questions of law. Criminal offences with a maximum Arbitration is a form of alternative penalty not exceeding ten (10) years or dispute resolution submit to one or High Court which are punishable with fines only more neutral arbitrator(s) for a final There are two high courts in Malaysia – will also be tried by the Magistrates and binding decision. High Court of Malaya and High Court of Courts. Sabah and Sarawak. A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 109

As a result of international trade and Once the Bill has been approved by It may be of interest to investors to commerce, more and more disputes the State Assembly, it shall be signed know that the Selangor state have arisen from cross-border by the Sultan of government charter has high transactions. International arbitration Selangor. The Bill will then be gazetted aspirations towards efficiency and is increasingly becoming the preferred in the Selangor Government Gazette, serving the public well. mode of resolving commercial disputes and subsequently enforced. outside the court system. Some of the goals listed in the charter DISTRICT OFFICES IN SELANGOR include: In Malaysia, arbitration is governed There are nine district offices in by the Arbitration Act, which is based Selangor, which includes Petaling, • Processing payment of contractors substantially on the United Nations Klang, Gombak, Hulu Langat, Sepang, within 14 working days; Commission on International Trade Kuala Langat, Kuala Selangor, Hulu • Providing feedback to inquiries Law (UNCITRAL) Model Law on Selangor, and Sabak Bernam. received through the online portal International Commercial Arbitration. within 3 working days; Also known as land offices, the district • Completing the tender process SELANGOR STATE offices act as a centre for payment of within 90 days of the issuance of the POLITICAL SYSTEM quit rent; providing services in land official advertisement; and Under the Selangor state government, affairs, such as transfer, mortgage, • Providing feedback to public a body that functions similarly like caveat, and more, as well as its complaints within 7 working days, the Parliament is called the State enforcement; providing development amongst other things. Legislative Assembly. projects and improving the economy with SMEs; home assistance to the The respective district offices’ client Two components that make up the State needy; and so on. charters, where available, are just as Legislative Assembly are Duli Yang ambitious and business-friendly. Maha Mulia Sultan of Selangor and the Investors should know that most of State Assembly (Dewan Negeri). The the time, this is where vital processes latter is the legislative body that enacts in setting up a business may take and executes the state laws. place. For example, applications for a business license, or payment of the land assessment tax will take place in a district office. WANT TO KNOW MORE? Head over to http://www.selangor.gov.my/index.php/pages/ TRIVIA view/219?mid=682 Laws that are enacted under the to know more about the Selangor state Selangor state government are known government’s client charter. as enactments. INVESTOR TIP! Payment of required levies such as quit rent may be done at the respective The matters in which the State district offices,or online via Legislative Assembly are able to enact https://hasil.selangor.gov.my laws for are enumerated under List II of the Ninth Schedule of the Federal Constitution, namely land matters and The different district offices in Selangor local administration. are listed below, with their respective client charters and contact details. 110 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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Petaling District CLIENTS’ CHARTER OF (NON-EXHAUSTIVE LIST) An interesting fact about this district is Processing and evaluating applications for small projects in 4 weeks that its name was derived from a type of tree that is now extinct. Management and execution of approved small projects in 10 weeks Immediate counter-service The Petaling district is home to major Immediate information service on changes in policy and district regulations cities like Petaling Jaya, Shah Alam, pertaining to administration, finance, and licensing and . Payment of contractors within 14 working days Popular tourist spots in this district Complaint management within 14 working days include the Sultan Salahuddin Abdul For technical matters such as drawing plans, charting and measurement Aziz Mosque, , and 1 applications (PU), to be processed within 30 minutes to 1 day per file Utama. For the land reports and valuation of payment rate for land to be ready within 4 to 14 working days CONTACT DETAILS Land placement within 2 to 7 working days Land measurement or valuation applications to be handled within 1 to 7 District Officer: working days per file, whereas application of re-measurement to be done in 5 The Honourable Dato’ Haji Misri bin to 14 working days per file Haji Idris Acceptance and process of land transfer applications, up to the decision of District and Technical Land Committee (MJKTTDP), within 5 months E-mail(s): Completing process of preparing summary papers until the decision of the State • [email protected] Government Committee (MMKN), within 3 months • [email protected] Completing process of preparing approval letters, Notice 5A (up to 6 months payment), within 7 months Address: Process of relinquishing ownership of land to be completed within 3 months Petaling District / Land Office Completing process of land lease duration application within 12 months No. 1, Persiaran Atmosfera, Seksyen U5, 40150 Shah Alam. Preparing papers for MMKN’s consideration on land conversion, adjustment of borders, transfers of propriety rights to possessor for the purpose of land development within 6 months General opening times: Monday to Thursday To issue approvals for border adjustments and land unification within 3 months 8.30AM to 3.30PM Process payment of royalties for brick or building materials within 1 hour Friday Publication of decision of MMKN on Enforcement Unit matters within 14 working 8.30AM to 12.00PM days 2.45PM to 3.30PM Resolving various complaints regarding land by preparing land reports from the date which the complaint was received on, within 14 working days Tel: +603 7841 9400 Registration of business within 1 working day for Transfer of Land Dealings Fax: +603 7842 2900 (PMT), and 7 working days for other business types Application for search of name certificate or self-search to be done immediately Website: Registration of temporary ownership to be done within 1 week www.selangor.gov.my/petaling Applications to obtain joint ownership to be done within 60 to 90 days Applications for certified true certificates to be processed within 3 days Applications for permanent ownership to be done within 90 days Source: The Official Portal of the Petaling District and Land Office. (http://www2.selangor.gov.my/petaling.php) A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 111

1. Bukit Raja Industrial Park 16. AMJ Industrial Area PETALING 2. Industrial Park in Sect. 15, 16, 17 & 24 17. Hicom-Glenmarie Industrial Park DISTRICT 3. Ampuan Lion Industrial Park (Sect. U1) 4. MIEL Industrial Park (Sect. 21 & 23) 18. Temasya Industrial Park 5. AXIS Industrial Park (Sect. 22) 19. Mah Sing Industrial Park Industrial Parks 6. Hicom Industrial Estate 20. Mah Sing Integrated Industrial Park in Petaling 7. Ampuan Lion Industrial Park (Sect. 26) 21. Saujana Indah Industrial Park 8. Sime UEP Industrial Park 22. Industrial Park 9. Megah Indah Industrial Park 23. Kg. Baru Subang Industrial Park 59. Subang Hi-Tech 10. Industrial Park 24. Subang Perdana Light Industrial Park Industrial Park 11. Berjaya Park Industrial Lot 25. Industrial Park 60. UEP Industrial Park, Subang 12. Bukit Kemuning (Sect. 32) 26. i-City, Sect. 7 Jaya 13. Shah Alam Technology Park 27. Seksyen U10 61. Sunway City 14. Elite Industry Park 28. Elmina Industrial Area Industrial Park 15. Bukit Kemuning Industrial Park (Sect. 34) 62. Subang/Sungai Penaga Industrial Park 63. SS 13 & PJS 11 Industrial Park 64. Bukit Tandang Industrial Park 65. Subang Square Industrial Park 29. Kg. Baru Sg. Buloh 30. Dadimur Industrial Park 51. Petaling Industrial Park Sect. 1 & 2) Jaya 52. Bukit Industrial Park Subang 53. Puchong Seksyen 15 Jaya Industrial Park (Sect. 1) Puchong 54. Puchong Utama Seri Industrial Park Kembangan 55. Puchong City Centre Industrial Park 56. Industrial Park 57. Maju Jaya Industrial Park 58. Kinrara Industrial Park 46. Bukit Serdang Industrial 31. Seksyen 13 Industrial Park (Jalan Bersatu) Park (Sect. 7, 8 & 9) 32. Seksyen 19 Industrial Park, PJ 47. Bukit Serdang 33. Seksyen 51 Industrial Park, PJ Industrial Park (Sect. 14) 34. Seksyen 51A Industrial Park 48. Serdang Jaya Industrial Park 35. SS10 Industrial Park, PJ 49. Seri Kembangan 36. Sungai Way FTZ Industrial Area 37. Taman Mayang Industrial Park 50. PKNS Seri Kembangan 38. Medan Maju Jaya Batu 7 Industrial Park (PJ 1 & 2) Industrial Park 39. Taman Medan Industrial Park (PJS 3 & 4) 40. Industrial Park (PJS 5) 41. Jaya Industrial Park (PJU 2) 42. Sunway Damansara Techonology Park 43. Selangor Science Park 1, (PJU 5) 44. Sungai Buloh Industrial Park (PJU 5) 45. Sri Damansara Light Industrial Area (PJU 9) 112 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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Klang District CLIENTS’ CHARTER OF (NON-EXHAUSTIVE LIST) Klang is considered as the royal city of Receive payments for state and federal revenue collection within 2 minutes for Selangor. This is because Selangor’s one title royal castle, royal mosque, royal museum, and even royal mausoleum Process, review, and update information on Land Tax Bill (Counter Question) are located in Klang. within 5 minutes per title Manage refunds or withdrawal refunds (for delivery to the State Treasury) Apart from this, Port Klang plays a within 5 working days central role in Malaysia’s economy. Preparation of documents until the summary paper is sent to the Selangor Land and Mines Office within 7 months Popular tourists spots in Klang, among Extension of lease period processing of documents within 7 months others, are and Pulau Process the application for a lease of land under the Section 63 of the National Ketam. Land Code (NLC) until the summary paper is sent to the State Land and Mines Office within 12 months CONTACT DETAILS Processing of Permits of Materials (for land titles and government land) and sourcing, processing, and production of rock or building materials within 6 District Officer: months Tuan Mohd Zainal bin Mohd Nor Processing application for Land Acquisition under Sections 3(1)(a) and 3(1)(b) Land Acquisition Act 1960 until the issuance of Form K within 12 months E-mail(s): Accept and process applications for consolidation of land under Section 146 to • [email protected] 150 of the NLC within 15 weeks • [email protected] To process ground breaking applications under Sections 140 to 144 of the NLC within 9 weeks • [email protected] • [email protected] Accept and process the application for change of land conditions under Section 124(1)(A)(C) of the NLC for Malay Reserved Land within 5 weeks Address: Accept and process the application for change of land conditions under Section 124(1)(A)(C) of the NLC for non-Malay Reserved Land within 2 weeks Klang District / Land Office Jalan Kota, 41902, Klang Accept and process applications for submission of land under Section 197 of the NLC and rescind the land under Section 76 of Malay Reserved Land within 5 weeks, or within 2 weeks for non-Malay Reserved Land Tel: +603 3371 8030 Receive and process applications for part of land under Section 200 of NLC: +603 3371 1963 (general) • Approval of District Officer – from the date the application is received until the Fax: +603 3372 3079 approval letter is submitted to the applicant within 5 weeks; or • Approval of Director for Land and Mines – from the date the application is Website: received until the file is sent for approval within 2 weeks www.selangor.gov.my/klang The decision on new applications or renewal of Public Houses License Class I, II, III, Wholesale and Retail is issued upon approval by the Klang District Licensing Board within 7 days Process and consider applications for rural small projects within 2 weeks Managing the implementation of small projects that have been approved within 10 weeks Source: The Official Portal of the Klang District and Land Office. (http://www2.selangor.gov.my/klang.php) A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 113

KLANG DISTRICT 5. Meru Industrial Park 6. Jalan Haji Sirat Industrial Park Industrial Parks 7. Pekan Meru Industrial Park in Klang 8. Jalan Haji Abdul Manan Industrial Park 1. Marin Industrial Park, Kapar 9. Persiaran Hamzah Alang 2. Batu 2 Industrial Park, Jalan Kapar 10. Pekan Meru Industrial Zone 3. Sungai Kapar Indah Industrial Park 11. Able Link Industrial Park 4. Worldwide Industrial Park, Kapar 12. Meru Indah Industrial Park

Kapar

13. Sg. Puloh Industrial Park 14. Klang Utama Industrial Park 15. Bukit Raja Industrial Park 16. Sungai Rasau Industrial Park Klang 17. Sementa Industrial Park 18. Bukit Raja Industrial Park (Phase I), Northern Gateway

32. Pulau Indah Industrial Park 33. Selangor Halal Hub (Phase I, II and III) 34. Port Klang Free Zone 35. MISC Logistic Free Commercial Zone

23. Kg. Baru Industrial Park 19. Bandar Sultan Sulaiman 24. Industrial Park 20. Selat Klang Utara Industrial Area 25. Sobena Jaya Industrial Park 21. Taiwanese Industrial Park 26. LandPac Industrial Park 22. Perdana Industrial Park 27. MIEL Industrial Park, Pandamaran 28. Industrial Area 29. Kampung Idaman Industrial Park 30. Taman Klang Jaya Industrial Area 31. Sentosa Industrial Park 114 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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Gombak District CLIENTS’ CHARTER OF (NON-EXHAUSTIVE LIST) The name ‘Gombak’ was originally Review of quit rent and low cost public houses within 1 hour taken from a village in called Gombak Setia. Payments via counter within 1 hour, including quit rent and assessment tax Applications for tax advice or quit rent account statement within 1 hour Unlike others, this district began in Payment of quit rent through post using bank draft, cheque, or postal order 1973, when Kuala Lumpur was given to within 7 days the Federal government. Feedback to inquiries or complaints from the public within 3 days The National Zoo and are For Strata units, the Official Land Search and Private Land Search is to be done located in this district, among other in 15 minutes, Certified True Copy of title and documents within 1 day, and famous tourist areas. permission for transfer and lease within 14 days For landed properties, the Official Land Search and Private Land Search is to CONTACT DETAILS be completed within 2 hours, the application of Transfer of Land (Form 14A) within 1 day, and Certified True Copy of title within 1 day District Officer: Certified True Copy of documents to be processed in 3 days The Honourable Dato’ Azmirul Azizan Registration of lost title to be processed in 6 months bin Abd Rahim Application for Variation of Conditions under Section 124(1)(A) and (C) of the NLC within 6 months E-mail(s): Simultaneous applications for Variation of Conditions and Sub-division of • [email protected] Lands under Section 124A NLC within 6 months

Address: Applications for Sub-division of Lands under Sections 135 to 139 and 200 NLC (PM) 05 within 5 months for District Land Administrator (PTD) and 7 months for Gombak District / Land Office Selangor Mine Director (PTG) Bangunan Sultan Sulaiman, Persiaran Pegawai, Surrender and Re-Alienation of Land under Section 204A NLC to be completed within 6 months Bandar Baru , 68100 Batu Caves. Prepare a Technical Review for planning permission within 14 days Application for rights of way under Section 387 NLC within 3 months General opening times: Disposal of land by alienation of state land, under Section 76 of NLC, within 5 Monday to Thursday: months 8.30AM to 3.30PM Surrender of whole land and disposal of alienation under Sections 76 and 197 Friday: NLC, for the purpose of extending the lease: 8.30AM to 11.45AM • State jurisdiction – approval within 4 months, 14 days 2.45PM to 3.30PM • Land administrator jurisdiction (for residential purpose only) – within 2 months, 7 days Tel: +603 6126 1500 (general) Land acquisition under Section 3(1)(b) Land Acquisition Act 1960 by any person or corporation for any purpose which, in the opinion of the state authority, is Fax: +603 6136 1073 beneficial to the economic development of Malaysia or any part thereof or to +603 6138 7470 the public generally or any class of the public, to be completed within 9 months Source: The Official Portal of the Gombak District and Land Office. Website: (http://www2.selangor.gov.my/gombak.php) www.selangor.gov.my/gombak A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 115

GOMBAK DISTRICT 22. Selayang Utama Industrial Park 23. Taman Bidara Industrial Park Industrial Parks 24. Prima Selayang Light Industrial Park in Gombak 25. Taman Selayang Baru Industrial Park 26. Selanyang Indah Industrial Park 27. Bolton Industrial Park 28. Dolomite Industrial Park 1. Rawang Perdana 29. Sri Batu Caves Industrial Park Industrial Park 30. Batu Caves Industrial Park 2. KRI Industrial Park 3. Greatyear Industrial Park 4. Greenpark Industrial Centre, Bt 20 31. Hulu Kelang FTZ 5. PKNS Industrial Park, 32. Keramat AU3 Industrial Park Rawang Bt 20 33. Pandan Cahaya Light 6. PKNS Industrial Park, Industrial Park Rawang Bt 16 34. Kg. Pandan Small Medium 7. Sri Hijau Industrial Park Industrial Park 8. Rawang Jaya Industrial Park 35. Kg. Baru Ampang Tambahan 9. Rawang Hi-tech Light Industrial Park Industrial Park Rawang Setapak 36. Taman Kencana Light 10. Chok San Industrial Park Industrial Park 11. Belmas Johan 37. Light Industrial Park Industrial Park 12. Great Wall Plastic 38. Pandan Mewah Light Industrial Park Hulu Klang Industrial Park 13. Superbox Industrial Park 39. Taman Tasek Tambahan 14. Rawang Indah Industrial Park Industrial Park 40. Belum Bina 15. Rawang Food Industrial Park (GMH) Industrial Park 16. Permai Puteri Industrial Park 17. Taman Velox, Rawang 18. Hi-Tech Industrial Park, 47. Industrial Park 41. Taman Ehsan Industrial Park 19. Industrial Park 48. Magilds Industrial Park 42. Sri Ehsan Industrial Park 20. Rawang Integrated (Karambunai) 43. Usaha Ehsan Industrial Park Industrial Park 49. Sg. Buloh Jaya Industrial Park 44. Bukit Desa Industrial Park 21. Puteri Permai 50. Kg. Jaya Industrial Park 45. Tago Industrial Park 51. Desa Aman Industrial Park 46. KIP Industrial Park 116 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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Hulu Langat District CLIENTS’ CHARTER OF (NON-EXHAUSTIVE LIST) This district was named after the start Implementing projects under the state allocation for projects under RM of the . Major cities like 200,000 within 3 months, or based on the cost of the project Cheras and are located in the northern part of it. Submit a list of suitable projects requested by the People’s Representative or Individual Head of the State Economic Planning Unit (UPEN) within 2 weeks CONTACT DETAILS To arrange a complete payment invoice document for the state project to be submitted to the Hulu Langat District Office, Management Services Division District Officer: within 1 business day The Honourable Dato’ Zul-kefli @ To comment on the application of electricity and water to landowners within 2 Zulkefli bin Khalid working days Provide feedback to public letters within 2 weeks E-mail(s): Manage Parliamentary documents to be submitted to the Hulu Langat District • [email protected] Office, Management Services Division within 3 days Source: The Official Portal of the Hulu Langat District and Land Office. Address: (http://www2.selangor.gov.my/hululangat.php) Hulu Langat District / Land Office Kompleks Pentadbiran Daerah Hulu Langat, Bangunan Sultan Hishamuddin, Seksyen 9, Shah Alam, 43650 .

Tel: +603 8925 1988 +603 8925 1992 (general) Fax: +603 8925 2137

Website: www.selangor.gov.my/hululangat A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 117

HULU LANGAT DISTRICT

Industrial Parks in Hulu Langat

7. Kg. Sg. Tekali Industrial Park 8. Sungai Tangkas Industrial Park 3. Selesa Jaya Industrial Park 9. Kg. Kwang Tong Industrial Park, Sg. Chua 4. Cheras Jaya Industrial Estate 10. Bukit Angkat Industrial Park, Sg. Chua 5. Mas Jaya Industrial Park 11. Sri Jenaris Industrial Park 6. Budiman Industrial Park, Sg. Long 12. Kajang Utama Industrial Park

Hulu Langat 13. Jaya Bandar Industrial Park Mahkota 14. Balakong Cheras Industrial Park 1. Seri Kembangan Balakong 15. Sg. Ramal /Balakong Shoe Industrial Park Seri Kajang Industrial Park 2. Taman Bukit Serdang Kembangan 16. Balakong Primary Industrial Park, Sect. 7 Bandar Industrial Park Baru Bangi 17. Taming Jaya Industrial Park

Semenyih

Beranang

30. Bandar Rinching Industrial Park 31. Bandar Tasik Kesuma Industrial Park 32. Mahkota Industrial Park 18. Villaraya Industrial Park 33. Beranang Industrial Park 26. Bandar Baru Bangi 19. Seri Haneco Industrial Park Industrial Park, Sect. 10 20. Ria Industrial Park 27. Selaman Industrial Park 21. Kajang Jaya Industrial Park 28. MIEL Bandar Baru Bangi 22. Kajang Techonology Park Industrial Park, Sect. 13 23. Mega Industrial Park 29. Small & Medium 24. Sg. Lalang Industrial Park Industrial Park, Sect. 9 25. Technology Park 118 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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Sepang District CLIENTS’ CHARTER OF (NON-EXHAUSTIVE LIST) Just like Petaling, this district’s name Manage complaints received within 3 working days was also derived from a tree called Sepang. Manage customer satisfaction feedback within 14 working days Deliver assistance to eligible disaster victims once complete reports are Home to the Kuala Lumpur received from relevant agencies within 14 working days International Airport, Sepang Manage new applications or renewals of excise license within 6 months International Circuit, and Cyberjaya, Implementing projects under the state allocation for projects under RM200,000 this district is forty minutes away from in 3 months working, or based on cost of project Shah Alam and usually less than an hour away from Kuala Lumpur. Applicationsfor land development for Malay Reserved Land to be processed within 30 days until the preparation of the summary paper for the consideration of PTG CONTACT DETAILS Applications for land development for non-Malay Reserved Land to be processed within 14 days District Officer: Puan Roslinah binti Md Jani Applications for land development for non-agricultural categories to be processed within 30 days E-mail(s): Boundary applications and Submissions of Land under Sections 135 and 139 to • [email protected] 200, NLC, PTD and PTG, to be processed within 30 days Commenting on planning permission applications within 14 days of receipt Address: To process individual land ownership or company applications under Section Sepang District / Land Office 76, NLC within 3 months Bangunan Tun Aziz, Applications for extension of land lease under Sections 76 and 197, NLC – while Bandar Baru , maintaining existing conditions – within 3 months 43900 Sepang. Processing Temporary Occupational License applications for individuals or companies within 3 months General opening times: Renewal of Temporary Occupational License in 1 working day Monday to Thursday: 8.30AM to 5.00PM Processing of permits for rock or building materials within 30 days Friday: Applications for renewals of rock or building materials permits within 1 week 8.30AM to 12.15PM Copy of Certified True Copies to be done immediately 2.45PM to 5.00PM New title registration and extension due to lease expiration within 1 day Tel: +603 8706 1211 New title registration such as border breaking, divisions, land consolidation, +603 8706 1212 land acquisition and resettlement, within 1 day +603 8706 1213 (general) Registered order of distribution of small estate within 1 day Fax: +603 8706 1731 Any queries related to land revenue and assessment tax, to be done immediately Website: Return of deposits for rock or building material permits, land acquisition and www.selangor.gov.my/sepang other transactions involving deposit payments within 2 weeks Preparation of Land Technical Report within 10 working days Processing public complaints within 3 days Action against squatting to be taken within 30 days, once all conditions have been met Source: The Official Portal of the Sepang District and Land Office. (http://www2.selangor.gov.my/sepang.php) A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 119

SEPANG DISTRICT

Industrial Parks in Sepang

1. Taman Mas Industrial Park 2. Taman Meranti Industrial Park 3. Tasik Perdana Industrial Park 1 4. Meranti Utama Industrial Park 2 4 5 5. Meranti Perdana Industrial Park 3 6. BBST Industrial Park 8 7. Tanjung Industrial Park 9 8. Autoville Industrial Park 9. Selangor Valley Industrial Park 10. Sepang Industrial Park 7 6

Labu

10 Sepang 120 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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Kuala Langat District CLIENTS’ CHARTER OF (NON-EXHAUSTIVE LIST) Similar to Hulu Langat, this district’s To guarantee hospitality in managing quality administration and is always name is derived from the Langat river. concerned about the issues of clients

The word Kuala is taken to mean the To provide trained and the best human resources based on an excellent meeting point between two or more working culture to meet the needs of individuals, the community, and the rivers. Here, the name describes the nation meeting point between the Langat To valuate assessment taxes fairly and handle the Kuala Langat District river and the Straits of Malacca. Council (MDKL) facilities effectively To manage finances effectively and transparently based on the stipulated and are some of the Treasury Directives and regulations places in this district that are good To plan sustainable development by integrating the development of land usage tourist spots. through a balanced economic and social development as well as environmental conservation CONTACT DETAILS To provide licensing for all types of business in a controlled and efficient manner District Officer: To exercise an efficient and quality municipal service in order to create a Tuan Haji Rosli bin Othman comfortable, harmonious, and prosperous surrounding To provide and maintain the infrastructural facilities in the best way for the E-mail(s): comfort of the residents • [email protected] To ensure speedy and efficient processing of the Certificate of Fitness for Occupation and the Certificate of Completion and Compliance Address: To provide the best landscape development in establishing a beautiful Kuala Langat District / Land Office surrounding in line with the concept of ‘Garden City’ Persiaran Sultan Abdul Aziz Shah, To conduct Committee Meetings for the One Stop Centre (OSC) twice a month Kota Seri Langat, Sungai Sedu, To conduct professional auditing based on a commonly accepted standard 42700 Banting. To ensure a fair and integrity-based exercise of legal services and legal General opening times: enforcement Monday to Thursday: Source: The Official Portal of the Kuala Langat District and Land Office. (http://www2.selangor.gov.my/kualalangat.php) 8.30AM to 5.00PM Friday: 8.30AM to 12.15PM 2.45PM to 5.00PM

Tel: +603 3182 2536 +603 3182 2555 (general) Fax: +603 3187 2011

Website: www.selangor.gov.my/kualalangat A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 121

KUALA LANGAT DISTRICT

Industrial Parks in Kuala Langat

1. Telok Panglima Garang Free Trade Zone 2. Kebun Baru Industrial Park 3. Telok Mengkuang Industrial Park 4. Light Industrial Park 1 Tanjung (Taman Yayasan) 2 Dua 5. Jenjarom Light Industrial Park 3 Belas 16 5 6. Bandar Mahkota Banting 15 4 Industrial Park Jurga 8 Bandar 17 6 7 7. Olak Lempit Industrial Park 13 11 8. Olak Lempit Furniture Complex 12 10 9. Genting Sanyen Bukit Kelanang Changgang Industrial Park 9 10. Megasetel Industrial Park 11. Bandar Sungai Emas Morib Batu Industrial Park 12. Banting Industrial Park 13. Taman Muhibbah Banting Light 14 Industrial Park 14. Tanjung Sepat Industrial Park 15. Segenting Industrial Park 16. Batu 12 Sungai Rambai Industrial Park 17. Batu 15 Jenjarom Industrial Park 122 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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Kuala Selangor District CLIENTS’ CHARTER OF (NON-EXHAUSTIVE As with Kuala Langat, Kuala Selangor LIST) describes the meeting point between To ensure that the certified premises are inspected once a year for Grade A two rivers, specifically the with the Straits of Malacca. To issue the planning permission approval letter within 30 days from the receipt of 20 completed plan copies which comply with the technical conditions and OSC Meeting decision from the applicant Popular places to visit in this district are , Kuala Selangor For planning permission applications for change of building materials – to issue the planning permission approval letter within 30 days from the receipt of National Park, Kuala Selangor the completed plan and document which comply with the technical review and Park and Kuala Selangor Eagle OSC Meeting decision from the applicant Feeding Park. To issue the landscape plan approval letter which is complete and complies with the conditions within 30 working days from the application date CONTACT DETAILS For applications for residential area name, building name and address plan – to issue the approval letter for residential area name within 30 days from the District Officer: receipt of the completed plan and document which comply with the technical Tuan Shamsul Shahril Badliza bin review and OSC meeting from the applicant Mohd Noor In accordance with Section 141 on valuation lists – to print and deliver the valuation list amendment notice not more than 42 days prior to the valuation E-mail(s): list amendment date • [email protected] For assessment tax objection management process – to issue the objection • [email protected] results notice within 7 working days after the full meeting approval For the proposed amendment to the existing valuation list in accordance with Address: Section 144 – to print and deliver the valuation list amendment notice within 7 Kuala Selangor District / Land Office working days after the Finance Committee Meeting or Full Meeting approval Kompleks Kerajaan Daerah To deliver the title transfer approval letter to applicants within 7 working days Kuala Selangor, from the receipt of completed application 45000 Kuala Selangor. To issue tax confirmation letter within 7 working days from the receipt of completed application General opening times: Monday to Thursday: To deliver the decision letters to owners within 30 working days after the 8.30AM to 5.00PM Council Meeting endorsement Friday: To issue decision and offer letters to applicants within 14 working days after 8.30AM to 12.15PM the Rental Interview Committee Meeting 2.45PM to 5.00 PM For tenders – to issue the offer letter and Work Indent or Letter of Acceptance within 7 working days after the verification and approval from related Tel: +603 3289 1355 departments +603 3289 1010 (general) To issue revenue receipts on the same day Fax: +603 3289 2145 For assessment tax bill issuance – to issue the assessment tax bill within the first 14 days of each term Website: For Certificate of Fitness for Occupation (CFO) Approval, Site Visit – to prepare kualaselangor.selangor.gov.my the approval letter and CFO within 14 working days after the OSC Committee http://www.mdks.gov.my/en Meeting decision For building plan approvals – to send the review letter to applicants within 14 working days after the file is opened To prepare the approval letter and plan within 24 working hours after the approval For approval compliance visit – to provide the letter, notice, approval, restoration, and legal action within 30 working days after the commencement of construction A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 123

For court actions on property owners with assessment tax arrears – to send file to the panel of lawyers within 7 working days after being reviewed and found to be complete The prosecution and summon papers will be registered within 10 working days after obtaining permission to prosecute To ensure premise monitoring is performed 2 months after the license approval date To ensure license monitoring is performed within 14 working days after the license approval date for Monitor Immediate License with Specific Conditions (List B) For immediate license issuance – to inform applicants regarding approvals within 24 hours Source: The Official Portal of the Kuala Selangor District and Land Office. (http://www2.selangor.gov.my/kualaselangor.php)

KUALA SELANGOR DISTRICT

Industrial Parks in Kuala Selangor

1. Kuala Selangor SMI Industrial Area 2. Suria Industrial Park 3. Asahi Industrial Park, 4. Alam Jaya Industrial Park

Tanjung 2 Karang Hulu Tinggi

Hujung 3 Permatang Batang Pasangan Berjuntai 1 Kuala Selangor Api-Api 4 Ijuk

Jeram 124 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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Hulu Selangor District CLIENTS’ CHARTER OF (NON-EXHAUSTIVE LIST) Not unlike Hulu Langat, this district is Process application of development plan within 3 months named after the start of the Selangor river. Process application of remission within 6 months Ensure complaints are given feedback within 1 working day A lot of areas in this district are still not Manage solid waste 3 times a week in residential area and every day in developed, therefore there are many commercial areas places here that are well-known for its Mowing once a month in areas of open space or sidewalks and twice a month camping sites. around playground or football field areas

For instance, , Ulu Cleaning of the trenches and drains twice a year Yam, and Serendah are amazing places Repair small damages of infrastructure in public reserves within one month to visit to reconnect with nature. Process the applications for business license, advertisement license, entertainment license, and hawker license within 2 months CONTACT DETAILS Process applications of license for business activity that are not at risk within 1 working day District Officer: Source: The Official Portal of the Hulu Selangor District and Land Office. Tuan Mohd Fauzi bin Mohd Yatim (http://www2.selangor.gov.my/huluselangor.php)

E-mail(s): • [email protected] • [email protected]

Address: Hulu Selangor District / Land Office Jalan Bukit Kerajaan, 44000 Kuala Kubu Bharu.

Tel: +603 6064 1258 +603 6064 1026 (general) Fax: +603 6064 4253

Website: www.selangor.gov.my/huluselangor http://www.mdhs.gov.my/en A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 125

HULU SELANGOR DISTRICT

Industrial Parks in Hulu Selangor

1. Industrial Park 2. Zurah Industrial Park, Rasa 3. MIEL Industrial Park, 4. Batu 30 Industrial Park, Hulu Yam Bharu 5. Batu 30 Industrial Park, Serendah Hulu 6. Laman Gapimas Industrial Area Bernam Kalumpang 7. Selisek Industrial Park, Batang Peretak Kali Sungai 8. Tengas Industrial Park, Hulu Gumut 1 Yam Bharu Sungai 2 9. Furniture Village Industrial Tinggi 3 16 Park, Hulu Yam Bharu 4 7 5 10. Serendah Automotive Industrial 6 8 Park Serendah 15 9 11. Industrial Park 14 12 13 11 12. Anugerah Suria Industrial Park, 10 Sg. Choh 13. UMW-PNSB Industrial Area 14. Industrial Park 15. Industrial Park 16. Berjaya City Industrial Area 126 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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Sabak Bernam District CLIENTS’ CHARTER OF (NON-EXHAUSTIVE LIST) Translated into Malay, ‘six friends’ is Application for disposal through land alienation to be completed within 8 ‘sahabat berenam’. It is believed that months this district was originally established by six friends, hence its name1. The Application for Temporary Occupation License to be processed in 4 months main tourist area here is . Application for development of land to be processed within 3 months Surrender of land, whether wholly or partially, for public purposes to be CONTACT DETAILS processed within 4 months Land acquisition to be done within 4 months District Officer: Tuan Mohd Khairuddin bin Md Som Payment processing to be done speedily, by cash, cheque, bank draft, postal order, debit card, or credit card within 2 minutes E-mail(s): Registration of written instruments for PMT within 24 hours, caveat within 14 • [email protected] days • [email protected] Applications for permission of dealings: • Permission for transfer to be processed within 14 days Address: • Permission for charge to be processed within 14 days Sabak Bernam District / • Permission for transfer and charge to simultaneously be processed within 14 days Land Office Complex, • Permission of approvals from state authorities (MB) and appeals to be 45300 , processed within 30 days Sabak Bernam. Applications for variation of conditions, sub-division of land, land acquisition, violation of terms, and assessment tax to be done within 14 days Tel: +603 3224 1970 +603 3224 1963 (general) Certified True Copy documents or titles to be done within 3 days Fax: +603 3224 2178 Preparation of ownership for sub-division, partition, and alienation of land within 30 days Website: Preparation of lost, damaged, or destroyed titles to be done in 1 year www.selangor.gov.my/sabakbernam Process and evaluate received applications for small development projects within 4 weeks Prepare property valuation in transfer dealings within 3 days Signing of written instruments, statutory declaration, and stamping to be done immediately Applications of various licenses to be processed within 30 days Providing legal advice to the public immediately and completed no later than 3 workingdays Preparation of legal documentation within 4 working days WANT TO KNOW MORE? Case management in court to be handled within 7 to 14 working days Read more about district offices at http://www.selangor.gov.my/ Source: The Official Portal of the Sabak Bernam District and Land Office. (http://www2.selangor.gov.my/sabakbernam.php) A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 127

SABAK BERNAM DISTRICT

Industrial Parks in Sabak Bernam

1. Sabak Bernam SMI Zone 2. Sg Besar Industrial Park 3. Sekinchan Industrial Park

Bagan Sabak Nakhoda Omar

1

2

Pasir Panjang 3 128 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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LOCAL AUTHORITIES IN SELANGOR LOCAL AUTHORITIES IN GET TO KNOW ASSESSMENT TAX! There are 12 local authorities in SELANGOR Read more about assessment tax in Selangor, but the most notable ones Majlis Bandaraya Petaling Jaya Chapter 5’s subchapter Real Estate. are Majlis Bandaraya Petaling Jaya (MBPJ) (MBPJ), Majlis Bandaraya Shah Alam Majlis Bandaraya Shah Alam Besides assessment tax, local (MBSA), Majlis Perbandaran Subang (MBSA) Jaya (MPSJ), Majlis Perbandaran authorities are also mainly responsible Majlis Perbandaran Subang Jaya Klang (MPK), and Majlis Perbandaran for: (MPSJ) Selayang (MPS). • Public health and sanitation; Majlis Perbandaran Klang (MPK) • Town planning; There are three types of local Majlis Perbandaran Selayang (MPS) • Waste removal and management; authorities in Malaysia: Majlis Daerah Hulu Selangor • Environmental protection and • District Council; (MDHS) building control; • Municipal Council; and Majlis Daerah Kuala Langat (MDKL) • Social and economic development; • City Council. and Majlis Daerah Kuala Selangor • General maintenance functions of (MDKS) District Councils focuses on rural urban infrastructure. areas, where the population count Majlis Daerah Sabak Bernam is less than 100,000 and the annual (MDSB) revenue of the area is less than RM 5 Majlis Perbandaran million. (MPAJ) Majlis Perbandaran Kajang (MPKJ) As the population of an area increases Majlis Perbandaran Sepang to more than 100,000 people, and the (MPSepang) area’s annual revenue exceeds RM 5 million, the District Council will be least 150 metres away from rivers and upgraded to a Municipal Council. residential areas. Certain factories, such as those that handle or emit toxic The area will then be developed into an wastes must be located more than 500 urban area. metres away from the aforementioned areas. City Councils are basically Municipal Councils that have been upgraded Besides this, a factory must also be as an area that has been granted city built and operated away from a flood- status after meeting certain criteria, prone area. which includes having a population of KEEN ON INVESTING IN SELANGOR? over 100,000 and annual revenue that Assessment tax is imposed on holdings Find out more information regarding local exceeds RM 20 million. located within the council area, such authorities in Selangor and the up-to-date as: costs of obtaining certain licenses by Investors planning to invest in • Residential buildings – apartments, contacting Invest Selangor or visit Selangor must go through a due flat houses, terrace houses, single http://www.investselangor.my. diligence process by the respective houses, bungalows, and others; local authority. • Commercial buildings – shop lots, shop houses, office lots, business For companies planning to set up premises, hotels, and others; and manufacturing factories, each local • Industrial buildings – factories, authority has specific requirements. warehouses, plants, depo, substations, and others. As an example, a factory must be built in an industrial zone, located at A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 129

MAJLIS BANDARAYA PETALING JAYA (MBPJ) Majlis Bandaraya Petaling Jaya (MBPJ), also known as the Petaling Jaya City Council, administers the city of Petaling Jaya.

Previously known as the Petaling Jaya Municipal Council, MBPJ was established after Petaling Jaya was officially granted city status on 20 June 2006. Its jurisdiction covers an area of 97 square kilometres.

Petaling Jaya is geographically the heart of the Klang Valley, a buffer zone between Kuala Lumpur in the east, Klang in the west, Rawang in the north and Putrajaya in the south. The MBPJ consists of the mayor, plus 24 councillors who are appointed to serve a one-year term by the Selangor state government.

MAJLIS BANDARAYA SHAH ALAM (MBSA) The Shah Alam City Council or Majlis Bandaraya Shah Alam (MBSA) was originally the Shah Alam Municipal Council, until the area was granted city status on 10 October 2000. It comprises a mayor and 23 councillors.

The city of Shah Alam is located north of Petaling district and east of Klang district, while the MBSA’s main headquarters is located at Persiaran Perbandaran, Shah Alam.

MAJLIS PERBANDARAN SUBANG JAYA (MPSJ) The local authority in charge of Subang Jaya city and the southern parts of the Petaling district is the Subang Jaya Municipal Council or Majlis Perbandaran Subang Jaya (MPSJ).

With its headquarters located in UEP Subang Jaya, MPSJ was originally the Petaling District Council. In 1994, the Selangor state government decided to upgrade the authority to the status of a municipal council.

MPSJ borders the Kuala Lumpur City Hall (DBKL), MBSA, MBPJ, and the Klang Municipal Council (MPK).

MAJLIS PERBANDARAN KLANG (MPK) As mentioned above, the Klang Municipal Council is also known as Majlis Perbandaran Klang (MPK).

Located within the Klang district, Klang was the civil capital of Selangor prior to the emergence of Kuala Lumpur and Selangor’s current capital, Shah Alam.

MPK exercises jurisdiction for a majority of the Klang district, as the east of Klang district is under MBSA.

MAJLIS PERBANDARAN SELAYANG (MPS) Formerly known as Gombak District Council, the Selayang Municipal Council or Majlis Perbandaran Selayang (MPS) was established with the granting of municipal status on 1 January 1997 by the Selangor state government.

MPS is responsible for the administration of the Gombak district and other areas, such as Rawang and Setapak. 130 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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MAJLIS DAERAH HULU SELANGOR (MDHS) The Hulu Selangor District Council, or Majlis Daerah Hulu Selangor (MDHS) was established on 1 January 1975, based on Section 4 of the Local Government Act 1976. MDHS is made up of Asam Kumbang Local Council and Kalumpang Local Council.

The total area size under the administration of MDHS is approximately 270.38 km2, which consists of 13 divisions, including Kuala Kubu Bharu, Batang Kali, Bandar Baru Sg. Buaya, and 10 others.

MAJLIS DAERAH KUALA LANGAT (MDKL) Also known as Majlis Daerah Kuala Langat (MDKL), the Kuala Langat District Council was established on 1 January 1977. Its administration is a combination of 3 local authorities – Sg. Jarom Local Council, Tanjung Sepat Local Council, and Kuala Langat District Council.

The district’s last recorded population in 2011 was 272,893 – a 180% increase since 2001.

MAJLIS DAERAH KUALA SELANGOR (MDKS) Established in 1978 through the Selangor State Law Handbill 18/78, the Kuala Selangor District Council or Majlis Daerah Kuala Selangor (MDKS) is a of 5 local councils: • Kuala Selangor Local Council S ELANGOR • Tanjong Karang Local Council • Batang Berjuntai () Local Council • Ijok Local Council • Local Council

MDKS covers the administration of small towns such as Pekan Kuala Selangor, Ijok, Sungai Buloh, Pasir Penambang, and others. New development areas such as , Saujana Utama, and Desa Coalfields also fall under MDKS.

MAJLIS DAERAH SABAK BERNAM (MDSB) The Sabak Bernam District Council, or Majlis Daerah Sabak Bernam (MDSB) was established in 1977. Before MDSB was declared a District Council, it was first known as a Local Council and Municipal Authority. The jurisdiction of the council originally covered the following areas: • Sekinchan Local Council • Sungai Besar Local Council • Sungai Air Tawar Local Council • Sabak Bernam Municipal Authority

Since the council was declared as a District Council, it is now responsible for 12 areas, which includes Simpang Lima, Bagan Terap, Sungai Nibong, and Parit Baru.

MAJLIS PERBANDARAN AMPANG JAYA (MPAJ) The Ampang division is the smallest county in the Hulu Langat district, with an area of 3,859 hectares.

There are 12 villages under the administration of the Ampang Jaya Municipal Council, or Majlis Perbandaran Ampang Jaya (MPAJ), among which are Kampung Melayu Ampang, Kampung Tasik Permai, Kampung Pandan, and Kampung Cheras Baru. A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 131

MAJLIS PERBANDARAN KAJANG (MPKJ) Kajang and its surrounding areas are sub-districts located within the Hulu Langat district in Selangor state. The or Majlis Perbandaran Kajang (MPKJ) covers the entire Kajang sub- district, and is easily reached by roads and rails.

The MPKJ administration is responsible for areas such as Sungai Langat, Sungai Semenyih, and Sungai Chua.

MAJLIS PERBANDARAN SEPANG (MPSEPANG) The Sepang Municipal Council, or Majlis Perbandaran Sepang (MPSepang) is tasked with providing services and amenities to all Sepang residents. As a local municipal council, MPSepang is also responsible for the Development Plan and Community Service Plan.

Before the establishment of MPSepang, the local council was known as the Sepang Town Board, and then Sepang District Board. On 13 November 2002 the Executive Committee of Selangor decided to promote the board’s status, and MPSepang was founded.

To date, the jurisdiction of MPSepang encompasses an area of 56,150 hectares2 – excluding the area three nautical miles from the point of low tide. 132 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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WHO’S WHO IN GOVERNMENT AGENCIES general overview of major decision-makers with regard to foreign investment projects in malaysia

Town and Country Planning Department MINISTRY OF HOUSING AND LOCAL GOVERNMENT (KPKT) Local Government Department (JKT)

Jabatan Kemajuan Islam Malaysia (JAKIM) PRIME MINISTER DEPARTMENT (JPM) Economic Planning Unit (EPU)

Malaysian Investment Development Authority (MIDA) MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY (MITI) Malaysia External Trade Development Corporation (MATRADE)

Companies Commission MINISTRY OF DOMESTIC TRADE, of Malaysia (SSM) CO-OPERATIVES AND CONSUMERISM (KPDNKK) Intellectual Property Corporation of Malaysia (MyIPO) FEDERAL CABINET

MINISTRY OF HOME Immigration Department of Malaysia AFFAIRS

Inland Revenue Board Of Malaysia (LHDN) MINISTRY OF FINANCE (MOF) Royal Malaysian Customs Department (RMC/JKD M)

MINISTRY OF COMMUNICATIONS Multimedia Super Corridor AND MULTIMEDIA (MSC) / (MDEC) (KKMM) A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 133

Town and Country Planning Department Agency for approving new building and provision of Certificate of Fitness (CF) or Completion and Fire and Rescue Department Compliance (CCC) of Malaysia (JBPM)

12 Local Authorities in Selangor (PBT)

PETRONAS

BLESS (Business Licensing Support system)

Agency approving manufacturing licence and incentives such as pioneer status, principal hub Halal Industry Development and tax incentives Corporation (HDC)

The Special Task Force to Facilitate Business (PEMUDAH)

New company need to register their business and business name

Applicants can apply for visa and pass such as employment pass and long term social pass

SIRIM Berhad 134 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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Ministry of International AGENCIES UNDER MITI MIDA is committed to assisting Trade and Industry (MITI) investors by placing senior MITI was formed with the objective Malaysian Investment Development representatives from key government Authority (MIDA) of ensuring Malaysia’s development agencies such as the Royal in international trade and industry, Malaysia External Trade Malaysian Customs, the Department as well as to generate and create Development Corporation of Environment, Tenaga Nasional economic employment opportunities. (MATRADE) Berhad, and Berhad Malaysia Productivity Corporation in MIDA’s headquarters to ensure (MPC) that investors will be provided with SME Corporation Malaysia (SME advice on government policies and Corp) procedures. Small and Medium Enterprise Bank (SME Bank) Applications for projects which include manufacturing licenses, tax incentives, Malaysian Industrial Development Finance (MIDF) expatriate posts, duty exemptions on raw materials and components, Halal Industry Development duty exemption on machinery and Corporation (HDC) The ministry has various functions equipment for agricultural sector which include: Malaysia Automotive Institute (MAI) and selected services sector are also • Policy making for trade; Malaysia Steel Institute (MSI) evaluated by MIDA. • Encouraging foreign and domestic investors; Economic Planning Unit (EPU) • Development of SMEs; Malaysian Investment • Promoting Malaysia’s export Development Authority (MIDA) of manufacturing products and services by strengthening bilateral and multilateral region trade relations and cooperation; • Developing and improving entrepreneurial skills of the private MIDA serves as a principal agency tasked with promoting the sector especially of the Bumiputera EPU is an agency under the Prime manufacturing and services sectors in community; and Minister’s Department that is Malaysia. • Ensuring Malaysia obtains considered as the agency responsible maximum benefits for the for the preparation of development The Malaysian Industrial Development manufacturing sector. plans for the nation. Authority Act (MIDA Act) has led to the birth of MIDA in 1967, whereby it was The Ministry carries out its objectives Previously, it was established as the incorporated as a statutory body under and its function through several Economic Secretariat of the Economic the Act. MIDA’s roles include assisting agencies. Committee in 1966 where the focus of companies that plan to invest in the the unit was on development planning, manufacturing and services sectors, as as well as dealing with major problems well as to facilitate the implementation in planning, execution, and all forms of of their projects. foreign aid. These services include providing FUNCTIONS OF EPU information on the opportunities for (NON-EXHAUSTIVE) investments as well as facilitating companies that are looking for joint Planning; venture partners. Resource allocation; Monitoring; and Stakeholder facilitation. A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 135

The same year, the Government also Talentcorp Malaysia Digital Economy established the National Planning Corporation Sdn. Bhd. (MDEC) Development Committee (NPDC) with EPU as its secretariat. The NPDC was tasked with the responsibility of the formulation, implementation, progress evaluation, and revision of TalentCorp was established on development plans. 1 January 2011 under the Prime Launched in 1996, MDEC is a holistic, Minister’s Department. government-owned agency established Malaysia External Trade to pioneer the transformation of Development Corporation (MATRADE) Under the heading of “Attract – Nurture Malaysia’s digital economy. Stemming – Retain”, this national agency drives from the idea of Vision 2020, MDEC is Malaysia’s talent strategy towards the part of the plan to develop Malaysia goal of becoming a dynamic talent hub. into a fully-developed nation by year It does so by partnering with the public 2020. and private sector in the development and implementation of initiatives that Pursuing a digital future that unlocks ensure the right expertise needed in significant economic, environmental, MATRADE is an agency under MITI Malaysia is available. and social values within the nation, that seeks to develop and promote MDEC was entrusted to oversee the Malaysia’s exportation of products and Amongst many initiatives that development of the MSC Malaysia services to the world. Their primary Talentcorp spearheads in partnership initiative. The initiative is a platform role is to assist Malaysian exporters with academia or Malaysian to nurture growth of local technology in gaining a presence and expanding Employers, one of particular interest to companies, at the same time attracting their exports in overseas markets. potential investors could be the work foreign direct investments (FDIs) and it does for Professionals. Evidence of domestic direct investments (DDIs) In addition, MATRADE also assists opportunities is further supported by from global multinational companies. foreign companies in sourcing for the Critical Occupations List, which Its impact includes increasing suppliers of Malaysian products and identifies the skills required by the key Malaysia’s Gross National Index, services, with representation of over 40 sectors in Malaysia. bridging the income gap, and improving locations in major commercial cities. standard of living in Malaysia.

MATRADE’s functions as a whole include developing, promoting, facilitating, and assisting in service areas related to trade. FIND OUT MORE! https://www.talentcorp.com.my 136 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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Multimedia Super by the Bioeconomy International Four Pillars of the National Green Corridor (MSC) Advisory Panel (chaired by the Technology Policy 2009 Honorable Prime Minister of Malaysia). Category Description

Halal Industry Development Energy Seek to attain energy independence and Corporation (HDC) promote efficient utilisation. MSC by MDEC is a national initiative Environment Conserve and that aims to bridge the digital gap minimise impact on between Malaysia and its capacity to the environment. compete in the global digital economy. Economy Enhance the national economic Today, the MSC footprint has expanded HDC is an agency under the Ministry development to 42 other locations across the of International Trade and Industry through the use of country, playing host to more than (MITI) of Malaysia. Established on 18 technology. 3,800 companies from more than 40 September 2006, HDC coordinates Social Improve the quality countries, and employing more than the overall development of the halal of life for all. 150,000 high-income knowledge industry in Malaysia. Source: “Who We Are”. Malaysian Green workers, with 85% being Malaysians. Technology Corporation. 2016. With focus on development of halal (http://www.greentechmalaysia.my/aboutus/ corporate-information/) standards, audit, and certification, plus Malaysian Bioeconomy Development capacity building for halal products and SIRIM Corporation Sdn. Bhd. (Bioeconomy services, HDC promotes participation Corporation) and facilitates growth of Malaysian companies in the global halal market.

Malaysian Green Technology Corporation (Greentech)

Under the purview of the Ministry of Science, Technology and Innovation, SIRIM is a premier industrial research Bioeconomy Corporation is the lead and technology organization in development agency for bio-based Malaysia. With over four decades industries in Malaysia, under purview of experience, it is the mandated of the Ministry of Science, Technology, agency for research and technology and Innovation. It is responsible for Under the purview of the Ministry of development as well as the national executing the objectives of the National Energy, Green Technology and Water champion of quality. Under the motto, Biotechnology Policy (NBP), and acts (KeTTHA), Greentech is an organisation “Enabling Businesses, Enhancing to identify value propositions in both charged with catalysing green Lives”, SIRIM has always played a research and development as well technology deployment as a strategic major role in the development of as commerce by supporting these engine for socio-economic growth the country’s private sector. Using ventures via financial assistance and in Malaysia, in line with the National its unique advantages in research developmental services. Green Technology Policy 2009. and technology innovation, industry standards and quality, SIRIM offers The corporation is owned by the specialized solutions to serve the Minister of Finance Incorporated needs of all industry sectors, making it and Federal Lands Commissioner, the ideal technology partner for SMEs. governed by the Biotechnology Implementation Council, and advised A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 137

Together with its industry partners, SME Corp. was established on 2 UPEN SIRIM has enabled Malaysian products May 1996 under MITI to spur the Since September 2017, all contractor and services achieve due recognition in development of Small and Medium /supplier companies must be quality and innovativeness worldwide. Enterprises (SMEs). It was originally registered with UPEN before carrying known as the Small and Medium out any business transactions at the Notably, SIRIM is a global recognized Industries Development Corporation government department / agency level. institution and one of the nine founding (SMIDEC). In 2009, the agency’s members of the Global Research role was enhanced as the central This application is the minimum Alliance, a cooperation of leading coordinating agency under MITI requirement for contractors who are knowledge-intensive technology that formulates overall policies and registered with the Selangor State organisations from nine countries in strategies for SMEs. Economic Planning Unit to be eligible four continents. to participate in any work including It also coordinates the implementation tender or quotation to the Selangor SIRIM is also the secretariat of the of SME development programmes State Government departments. World Association of Industrial and across all 15 ministries and 65 Technological Organisations, an agencies, whereby information Registration can be made via the independent association of industrial collected is published as an annual online portal: https://tender.selangor. research organisations founded report known as the SME Integrated my/ If the contractors have submitted under the auspices of the United Plan of Action (SMEIPA). The the form, one is able to check the Nations, boasting 160 members in corporation also assumes the role of registration status online at http:// 80 countries. Of interest to investors the secretariat to the National SME smk.selangor.gov.my is SIRIM’s coordination of Malaysia’s Development Council (NSDC) that was participation in international established in 2004, which is chaired by Any inquiries can be made to the UPEN standardisation activities, where the Prime Minister of Malaysia. local authority officer Mr Abdullah bin Malaysia is a participating member in Abidin at abdullahabidin@selangor. over 80 ISO Technical Committees and The functions of SME Corp. include gov.my or 03-5521 2381 or Selangor Subcommittees. being a central point of reference, IT department officer Mr Amir Hisham providing data dissemination on SMEs bin Akaludin at amirhisham@selangor. and also providing advisory services gov.my or +60355447557. for SMEs in Malaysia. Using its One Referral Centre (OCR) and its 11 MBI Selangor state offices nationwide, it is able to Menteri Besar Selangor (Incorporated) provide business advisory services and or MBI Selangor was established FIND OUT MORE! information to all SMEs in Malaysia. under the Menteri Besar Selangor http://www.sirim.my/ Enactment. MBI is a corporate body The SME Masterplan (2012 – 2020) that that was established to administer seeks to accelerate the growth of SMEs assets and investments of the State SME Corporation Malaysia via innovation-driven and productivity- Government, and to represent the (SME Corp.) led strategies for Malaysia to achieve a State in economic and business high-income nation status by 2020 is activities that are beyond the state also being driven by agencies. government’s jurisdictions. MBI also plays a role towards promoting and SME Corp. builds close relationships supporting the state government’s through its industry associations development efforts as well as to carry and strategic partners from both the out social responsibility obligations for public and private sectors to foster the public. SME Corporation Malaysia is regarded and strengthen sector and industry- as Malaysia’s premier organisation for specific cooperation and collaborations More information can be obtained at the development of progressive SMEs to further support and promote the http://mbiselangor.com/ or via a call to to enhance wealth creation and the development of SMEs in Malaysia. +60355138898. social well-being of the nation. 138 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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TABULAR OVERVIEW OF GOVERNMENT AGENCIES, MINISTRIES, AND REGULATORY BODIES

ACRONYM NAME WEBSITE AIAC Asian International Arbitration Centre http://www.aiac.world BNM Bursa Malaysia Berhad http://www.bnm.gov.my CCM / SSM Bursa Malaysia Berhad http://www.bursamalaysia.com/market Customs Royal Malaysian Customs http://www.ssm.com.my DOE Royal Malaysian Customs http://www.customs.gov.my DOE Economic Planning Unit https://www.doe.gov.my EPU Economic Planning Unit http://www.epu.gov.my FELDA Federal Land Development Authority https://www.felcra.com.my FELDA Immigration Department http://www.felda.net.my IRB Inland Revenue Board http://www.imi.gov.my IRB Inland Revenue Board http://www.hasil.gov.my KKMM Kuala Lumpur Regional Centre for Arbitration http://kkmm.gov.my KPKK Kementerian Penerangan, Komunikasi dan Kebudayaan / http://www.kkmm.gov.my Ministry of Information, Communication and Culture Labuan FSA Labuan Financial Services Authority https://www.labuanibfc.com MAMPU Malaysian Administrative Modernisation and Management http://www.mampu.gov.my Planning Unit MCMC Malaysian Communications and Multimedia Commission https://www.skmm.gov.my MDeC Multimedia Development Corporation https://www.mdec.my MDTCC / KPDNKK Ministry of Domestic Trade, Co-operative and Consumerism http://kpdnkk.gov.my MHA / LLM Lembaga Lebuhraya Malaysia / Ministry of Highway Authority http://llm.gov.my MIDA Malaysian Investment Development Authority http://www.mida.gov.my MITI Ministry of International Trade and Industry http://www.miti.gov.my MOF Ministry of Finance http://www.treasury.gov.my MOHA Ministry of Home Affairs http://moha.gov.my MOHE Ministry of Higher Education https://www.mohe.gov.my MONRE Ministry of Natural Resources and Environment http://www.nre.gov.my MOSTI Ministry of Science, Technology and Innovation https://www.mosti.gov.my MOW Kementerian Kerja Raya / Ministry of Works http://www.kkr.gov.my MyIPO Intellectual Property Corporation of Malaysia http://myipo.gov.my PSD Public Service Department http://www.jpa.gov.my PWD / JKR Jabatan Kerja Raya / Public Works Department https://www.jkr.gov.my RECODA Regional Corridor Development Authority http://www.recoda.com.my RMP Royal Malaysian Police https://www.rmp.gov.my SC Securities Commission https://www.sc.com.my SEDA Sustainable Energy Development Authority http://seda.gov.my SPAD Suruhanjaya Pengangkutan Awam Darat / Land Public https://www.spad.gov.my Transport Commission UKAS Unit Kerjasama Awam Swasta / Public Partnership Unit http://www.ukas.gov.my A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 139

CHAPTER 8: LET’S GO TO SELANGOR!

All in all, Selangor is a unique state with almost everything you could wish for. As the most developed state in Malaysia with excellent infrastructure, such as highways and transportation, Selangor has the largest economy among the Malaysian states in terms of gross domestic product (GDP).

Major contributors to the state’s economy are manufacturing and services, as they together accounted for over 89% of the state’s total GDP1.

Alongside industries, agriculture is a thriving sector of Selangor’s economy, contributing 1.3% of the state’s GDP2. TRIVIA Selangor also has the largest population in Malaysia, with a high standard of living During the Selangor International as well as the lowest poverty rate in the country. Business Summit (SIBS) 2017, Menteri Besar Dato’ Seri Mohamed Azmin Let’s look at the main benefits that the state has to offer. Ali announced that Selangor has contributed 23% to the country’s GDP in 2016, reflecting a 0.1% increase from the previous year. This number 1 “GDP by State: National Accounts 2010-2015”. Department of Statistics, Malaysia. is confirmed by the Department of September 2016. Statistics, Malaysia. 2 Ibid above. 140 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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Thus, the LRT lines now connect the city centre with major Selangor like Petaling Jaya, Subang Jaya, Gombak, Puchong, and ; while the commuter rail lines link the city centre with Shah Alam, Petaling Jaya, Klang, Rawang, , and more.

Additionally, the MRT project was approved in December 2010. It’s Phase1 – which links Sungai Buloh to Semantan – commenced service on 16 December 2016, whilst Phase 2 of the line – which ends in Kajang – began on 17 July 2017.

According to MRT Corp., the four-car train sets with the capacity of 1,200 passengers at a time will be in place to serve some 400,000 passengers per day, with headway of 3.5 minutes.

PUBLIC TRANSPORTATION car services (eg. ) also play vital TRIVIA Selangor is linked to the rest of roles in Selangor’s integrated transport As part of the Selangor State Malaysia by comprehensive air, road, system. Government’s Green Technology Action and rail connections. Plan 2015-2018, the state-wide SMART The Selangor state government has Selangor free bus service was launched In the state, there is a variety of public also come up with the Selangor in 2015, primarily aimed at reducing transportation which comprises of Transportation Master Plan, with the cars on the road and reducing carbon public rail transport such as the Keretapi building of 316km of light rail transit emissions by encouraging people to use Tanah Melayu (KTM) commuter, Light (LRT), bus rapid transit (BRT), personal public transportation. In the meantime, Rail Transit (LRT) and Mass Rapid rapid transit (PRT), mass rapid transit the free buses also help to ease the Transit (MRT) networks; public bus (MRT) and a new KTM freight line services operating on a number of within Selangor. The aim of this plan burden of passengers from lower income specified routes including Smart is to provide 446km of public transport group, senior folks and students. Selangor free bus service introduced coverage by year 2035, at an expected by the State Government since 2015 cost of RM 64 billion3. as well as the Bus Rapid Transit (BRT) Sunway Line that aims to further boost On 29 August 2009, a RM 10 billion plan the connectivity of existing bus services to expand the LRT network began and and expedite the bus travelling time was completed by 30 June 2016. within Sunway.Taxis and private hire

3 “Selangor aims for 446km of public transport coverage by 2035”. Online. (http://www.themalaymailonline.com/malaysia/article/selangor-aims-for-446km-of-public-transport-coverage-by- 2035#pZRHuXxFALxpoMJj.97) A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 141

2 1

4 SUNGAI BULOH

Kampung 9 Selamat

Kwasa Sentral MRT LALUAN SUNGAI BULOH - KAJANG 9 MRT SUNGAI BULOH - Kota Damansara

KTM LALUAN TERMINAL SKYPARK Dalam KTM TERMINAL SKYPARK LINE pembinaan 10 UNDER CONSTRUCTION Surian Cochrane B1 Bukit Bintang (TRX) Penumpang perlu keluar daripada bangunan stesen untuk pertukaran ke laluan yang lain.* TTDI Taman Pertama Passengers are required to exit station building to switch lines.* Phileo Taman Stesen Pertukaran Damansara Penumpang TIDAK PERLU keluar daripada CHAN Midah bangunan stesen untuk pertukaran ke laluan yang lain. * Pusat Bandar SOW LIN Taman Interchange Station Damansara Merdeka Passengers are NOT REQUIRED to exit Mutiara station building to switch lines. * Akan datang. Semantan Muzium Stesen Projek Negara Taman Laluan Terminal Skypark Connaught COMING SOON. STATIONS ON TERMINAL SKYPARK LINE Taman TERMINAL Suntex 10 SKYPARK (Lapangan Terbang Sri Raya Sultan Abdul Aziz Shah) Bandar Tun Hussein Penumpang digalakkan untuk menggunakan kad MyRapid Touch ‘n Onn * Go (bagi laluan rel Rapid KL) atau kad Touch ‘n Go semasa menggunakan perkhidmatan tren bagi perkiraan tambang yang lebih rendah dan pertukaran yang lebih lancar di stesen pertukaran. Batu 11 Penumpang yang menggunakan tiket/token sehala yang ingin Ara Lembah membuat pertukaran ke laluan lain di stesen pertukaran adalah Damansara Subang Cheras tertakluk pada arahan penggunaan yang ditetapkan seperti yang Ecocity berikut: (Akan Datang COMING SOON) - membuat pertukaran di stesen pertukaran selepas keluar dari pintu automatik Kerinchi Bukit - mendapatkan tiket/token sehala baharu di mesin jualan tiket (TVM) Dukung yang telah disediakan sebelum membuat pertukaran. Glenmarie

Passengers are advised to use MyRapid Touch ‘n Go (for Rapid KL rail Sungai * lines) or Touch ‘n Go cards during their journey on the train to enjoy Jernih lower fares and convenience of switching line(s) at interchange Setia station(s). 10 Jaya Stadium Passengers with one-way tickets/tokens that need to switch to other lines at the interchange station is subject to user instructions as below: 9 Kajang - change lines at interchange station after exiting the automatic gate KAJANG - purchase new one-way tickets/tokens at Ticket Vending SUBANG Machines (TVM) before switching lines. JAYA B1 Kajang 2 (Akan Datang COMING SOON) B1 SUNWAY-SETIA JAYA

Sungai Gadut Rembau Tampin 2 Batang Melaka GEMAS NOTA : NOTE : Sila ikut langkah berikut apabila menggunakan stesen sambungan Rapid KL : Please observe the following steps for journey between Rapid KL connecting stations :- Dang Wangi dan Bukit Nanas Dang Wangi and Bukit Nanas Beli token untuk perjalanan hingga stesen Dang Wangi (jika dari LRT Laluan ) dan stesen Bukit Nanas (jika dari Purchase tokens up to Dang Wangi (if from LRT ) and Bukit Nanas (if from KL Monorail Line). Laluan Monorel KL). Keluar dari stesen destinasi tersebut dan beli token perjalanan baharu untuk memasuki stesen sambungan. Exit station upon arrival and purchase another new token to enter connecting station. Sultan Ismail dan Medan Tuanku Sultan Ismail and Medan Tuanku Beli token untuk perjalanan hingga stesen Sultan Ismail (jika dari Laluan LRT Ampang / ) dan stesen Medan Tuanku (jika Purchase tokens up to Sultan Ismail (if from LRT Ampang / Sri Petaling Lines) and Medan Tuanku (if from KL Monorail Line). dari Laluan Monorel KL). Keluar dari stesen destinasi tersebut dan beli token perjalanan baharu untuk memasuki stesen sambungan. Exit station upon arrival and purchase another new token to enter connecting station. KL Sentral (LRT Laluan Kelana Jaya), KL Sentral (Laluan Monorel KL) dan Muzium Negara (MRT Laluan Sg Buloh-Kajang) KL Sentral (LRT Kelana Jaya Line), KL Sentral (KL Monorail Line) and Muzium Negara (MRT Sg Buloh-Kajang Line). Beli token untuk perjalanan hingga stesen KL Sentral atau Muzium Negara (di laluan di mana anda berada). Purchase tokens up to KL Sentral or Muzium Negara (on the current line you are on). Keluar dari stesen destinasi tersebut dan beli token perjalanan baharu untuk memasuki stesen sambungan. Exit station upon arrival and purchase another new token to enter connecting station. Air Asia - Bukit Bintang (Laluan Monorel KL) dan Bukit Bintang (MRT Laluan Sg Buloh-Kajang) Air Asia - Bukit Bintang (KL Monorail Line) and Bukit Bintang (MRT Sg Buloh-Kajang Line). Beli token untuk perjalanan hingga stesen Air Asia - Bukit Bintang (jika dari Laluan Monorel KL) dan stesen Bukit Bintang (jika dari MRT Purchase tokens up to Air Asia - Bukit Bintang (if from KL Monorail Line) and Bukit Bintang (if from Laluan Sg Buloh - Kajang). Keluar dari stesen destinasi tersebut dan beli token perjalanan baharu untuk memasuki stesen sambungan. MRT Sg Buloh-Kajang Line). Exit station upon arrival and purchase another new token to enter connectiing station. Bagi pengguna kad MyRapid Touch ‘n Go, tambang akan ditolak berdasarkan perjalanan anda. For MyRapid Touch ‘n Go card users, fare will be deducted accordingly as you travel.

Source: MyRapid website 142 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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TOP 5 TOURIST ATTRACTIONS IN SELANGOR Name Location Description i-City Shah Alam A retail and commercial hub with millions of LED lights and a snow walk TRIVIA indoor park. The first line of Klang Valley MRT Project (SBK) implemented spans 51 National Zoo of Ampang Jaya The largest zoo in Malaysia with more Malaysia than 4,000 animals. kilometres and serves a corridor with 1.2 million Malaysian residents. Sultan Salahuddin Shah Alam One of the most stunning architectures Abdul Aziz Shah in the country. Mosque For those that prefer to drive, most of ’s top theme park. the major highways that run through Sunway the West Coast of the peninsular, including the North-South Expressway, TOP NATURE SITES IN SELANGOR serve Selangor as well. Name Location The high speed roadways or Firefly Sanctuary , Kuala Selangor expressways are tolled. Motorists Kuala Selangor Nature Park Taman Alam, Kuala Selangor using these expressways have an option of paying by cash, or by stored Malaysian Agriculture Park Bukit Cerakah, Shah Alam value cards such as the Touch ‘n Go Commonwealth Forest Park Rawang and SmartTAG. It is important to note Forest Research Institute of Malaysia Selayang that the government is moving towards (FRIM) cashless tolling, and have abolished Saga Hill Taman Saga, Ampang Jaya cash toll booths in certain areas. The option of paying by cash may cease to Waterfall Forest Park Kanching Templer Baiduri, Rawang exist within the year 2018. EXAMPLES OF SHOPPING MALLS IN SELANGOR TOURISM Apart from its efficient and easily Name Location accessible transportation system, Bandar Utama Selangor has a number of The Curve, e@Curve, IKEA, and IKANO Mutiara Damansara famous tourist attractions. Tropicana City Mall Other well-known attractions in Paradigm Mall Kelana Jaya Selangor include Batu Caves in Bandar Sunway Selayang, the Sultan Salahuddin Abdul Mines Wonderland Seri Kembangan Aziz Shah Mosque (also known as Shah Alam’s Blue Mosque), Shah Alam , , and Subang Jaya Gallery, Selangor State Library in Shah Summit USJ Alam, the Sultan Abdul Aziz Royal IOI Mall Puchong Gallery, Alam Shah Palace in Klang, AEON Bukit Tinggi Shopping Centre Klang GM Klang Wholesale City, and Pulau and Bukit Raja Shopping Centre Ketam off Port Klang. Setia City Mall, Plaza Alam Sentral, Shah Alam and SACC Mall There are also other notable theme parks in Selangor such as the Mines Wonderland in Sri Kembangan and Wet World Water Park in Shah Alam. A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 143

LEISURE (UKM), and the International Islamic Hours after its launch on June 11, Besides the aforementioned tourism University of Malaysia (IIUM). 2017, the Edusentral apartments options, Selangor also plays host to received overwhelming response with several beaches, more than 20 parks The state also has state-owned buyers snapping up all 505 residential and nature attractions, more than 100 universities and colleges, namely units from its second phase. shopping malls, more than 350 hotels Universiti Selangor (UNISEL), INPENS and resorts, and more than 40 golf International College, and International HEALTHCARE courses. Islamic University College Selangor There are more than 10 public hospitals (KUIS). in Selangor, including , The most popular beaches in Selangor , Shah Alam Hospital, are located at , Sepang Meanwhile, private universities include and . Gold Coast, Batu Laut Beach, and , SEGi University, Morib Beach. and the University of Tenaga Nasional For those that prefer private (UNITEN), to state the least. healthcare, there are more than 20 Those interested in taking short hikes private hospitals in the state, such during weekends are recommended to There are also international university as Assunta Hospital, Pantai Hospital head over to Bukit Gasing in Petaling campuses in Selangor, such as Klang, Sunway Medical Centre, and Jaya, Hutan Simpan Ayer Hitam in Monash University Malaysia, University Sime Darby’s Subang Jaya Medical Puchong, Hill in Semenyih, and of Nottingham Malaysia, and Centre. Denai Tiga Puteri in Kota Damansara. University Malaysia. SAFETY Other than that, as mentioned, there One of Selangor’s projects for In terms of safety, the Malaysian crime are more than 100 shopping malls in education is Edusentral by index statistics for a 7-year period from Selangor frequented by tourists and HCK Property Berhad. 2010 to 2016 showed a consistent and locals alike to cater to those who are significant reduction of 9% annually5. more partial to the city life. Being the first of the Edusentral projects, the development is spurred Throughout the country, there were As for golf courses, the more popular on its “stay, shop, and study” concept. 209,817 reported cases of crime in ones are Saujana Golf and Country the year 2009, whilst the number of Club in Petaling Jaya, Its suites are named after Ivy League reported cases of crime had dropped Golf and Country Club in Rawang, and universities – Yale, Stanford, and to 112,354 in 2016, showing a 47% Kota Permai Golf and Country Club as Cornell. Moreover, the Peninsula decrease throughout the years6. well as Glenmarie Golf and Country International School Australia is Club in Shah Alam. nestled in the project, providing international primary and secondary EDUCATION education to the residents of the There are many tertiary education apartments. institutions based in Selangor.

Most of these education institutions TRIVIA The Invest Selangor Talent Initiative established are concentrated in major towns by Invest Selangor, aims to connect industries and cities in Selangor, making the with institutions of higher learning and to give students the edge in today’s challenging state the largest higher education job market. This initiative is set to provide sector in Malaysia with more than students with a competitive package of skills 40 international schools and 150 and knowledge to contribute to a company’s success through early exposure to the relevant 4 WANT TO KNOW MORE? universities and colleges . Public industries and companies. universities in Selangor include the Read more about Edusentral Setia Alam at MARA University of Technology (UiTM), https://www.edusentral.net Find out more at: http://investselangor.my/Home/ the National University of Malaysia

4 “Invest Selangor Talent Initiative”. Invest Selangor’s Official Website. (http://investselangor.my/Home/) 144 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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Prior to 2015, there were different Reputable hotels in the state include The following is a list of the mentioned emergency numbers for different Hilton Petaling Jaya, Sunway Resort service providers. emergency services. To consolidate the Hotel and Spa, the Palace of the Golden emergency numbers in Malaysia into a Horses, and The Club Saujana Resort. LIST OF SERVICE PROVIDERS single number for public convenience, New hotels are also being introduced, Service Provider Contact the government created an initiative such as AVANI Sepang Goldcoast Number called MERS 999. Resort and Sheraton Petaling Jaya. Operator 101 Now, the emergency services in On the other hand, there are many (Domestic / Selangor may be reached by dialling apartments and serviced residences International) 999. This is a centralised emergency in the state that cater to the needs of Directory 103 number that will direct the call to those looking for a more permanent Assistance different emergency providers, be abode. Telekom Malaysia 100 it the police department, the fire Faults and Repairs department, or the nearest hospital, Petaling Jaya, Subang Jaya, and (Telephone depending on the emergency. Damansara are some of the more services) populated cities in Selangor, with Alam Flora (Waste 1800 88 0880 In Selangor, the average time of arrival recreational spots and bars that locals management of an emergency services provider and foreigners spend their weekends services) is approximately 5 to 15 minutes, and free time at. Indah Water (Water 03 – 2780 1100 depending on traffic conditions. filtration services) If need be, a venture into Selangor’s Selangor Water 03 – 2282 6244 neighbour – Kuala Lumpur – may Dam (JBA) also be helpful when one is looking SYABAS (Water 1800 88 5252 for suitable accommodation. Areas supply) like , , Hartamas, Tenaga Nasional 15454 INVESTOR TIP! and Dutamas are popular among (Electric In an emergency situation where a expatriates in Malaysia as they are breakdown) mobile phone cannot access the phone close to the Pos Malaysia 03 – 2274 1122 line, the number 112 may be dialled. and public transportation is not (Postal services) This number is the common emergency difficult to find. Bukit Bintang is also a telephone number that can be dialled popular area, nestled right in the Kuala Lumpur City Centre. INSURANCE free of charge to reach emergency Malaysia is also host to all the major services via satellite connection. UTILITIES insurance providers, including A majority of accommodations in international ones. HOUSING Selangor are equipped with electricity For this reason, it is easy for foreigners Another issue to address, especially for and clean water, especially for newly to obtain adequate insurance in expatriates, would be accommodation. constructed buildings. Also, most accommodations are already equipped whatever area needed from companies such as AXXA, Allianz, Great Eastern, There are many hotels and homestays with internet infrastructure. Prudential, and the many other in Selangor that are suitable for international players, as well as some temporary visits and short trips. However, due to bad weather, building renovations, and other factors, there local options. Mobile applications like Airbnb, may be service interruptions. During Agoda, and Booking.com allow a these interruptions, the relevant person to consider his or her choice of service providers may be contacted for accommodation thoroughly. more information on the issue and how it may be resolved.

5 https://www.nst.com.my/news/government-public-policy/2018/03/348610/ntp2017-crime-index-down-53pct-2010 6 https://www.pemandu.gov.my/assets/publications/annual-reports/NTP_AR2016_ENG.pdf A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 145

SETTLING DOWN IN MALAYSIA PERMANENTLY After staying in Selangor for a number of months or even years, many foreigners desire to settle down permanently in this beautiful, sunny state.

Fortunately, the Malaysian government welcomes people from all over the world to stay in Malaysia for as long as possible, provided they fulfil certain criteria.

There are two ways to settle down in Malaysia permanently, through: • Malaysia My 2nd Home (MM2H) To apply for MM2H visa, certain documents must be submitted to the Malaysian Programme; or Immigration Department, and the following financial criteria must currently be • Permanent Residency (PR) status. complied with to ensure a successful application:

Malaysia My Age Liquid Monthly House Fixed 2nd Home (MM2H) Programme Assets Income Option Deposit As explained in Chapter 5, the Malaysia Above 50 RM 350,000 RM 10,000 NIL RM 150,000 My 2nd Home (MM2H) programme is Below 50 RM 500,000 RM 10,000 NIL RM 300,000 an initiative promoted and supported Below 50 RM 350,000 RM 10,000 RM 1M+ (fully paid) RM 150,000 by the Malaysian government which Above 50 RM 350,000 RM 10,000 RM 1M+ (fully paid) RM 100,000 allows those who fulfil certain criteria to stay in Malaysia on a social visit pass with a multiple entry visa. conditional approval letter from the Nevertheless, it must be kept in Malaysian Immigration Department. mind that Malaysian PR holders are The MM2H visa permit is initially valid obliged to obey and observe the laws for a period of 10 years – depending on Additionally, all approved applicants in Malaysia at all times, are prohibited the validity of the applicants’ passports and their dependents are required from engaging in any political parties – and is renewable. It is open to citizens to submit a medical report from any or associations, and must take into of all countries recognised by Malaysia private hospital or registered clinic in account that their PR status can regardless of race, religion, gender, Malaysia. Plus, they must possess a be revoked at any time, if deemed or age. The applicants for MM2H are valid medical policy that is applicable necessary by the government. allowed to bring along their spouses, in Malaysia. unmarried children under the age of 21, and parents as dependents. Malaysian Permanent Residency Besides allowing foreigners to stay The journey in obtaining a PR in in Malaysia for an extended period Malaysia may be challenging, but in of time, the MM2H visa permit also the end, it is very rewarding. TRIVIA allows foreigners to conduct business The requirement for a valid medical overseas, educate their children, and Malaysian PR holders are able to stay policy is waived for any applicant above to retire or semi-retire in Malaysia. and remain in the country indefinitely, 59 years of age. seek employment freely, own a Successful applicants are also required business, acquire properties, and to comply with particular financial fixed enter and exit the country in a way that deposit placements upon receipt of the is similar to Malaysian citizens. 146 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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CATEGORIES OF MALAYSIAN PR ELIGIBILITY Category Description High Net Worth This is probably the easiest category to apply for due to the fewest number of requirements needed Individual by the State Immigration Office.

According to the Malaysian Immigration Department, those applying under this category must only fulfil one requirement – open a fixed deposit account with a minimum amount of USD 2 million at any bank in Malaysia. The deposit may only be withdrawn after a period of five years.

An added bonus is that the applicant’s spouse and children under 18 years old will also be eligible for a PR status after five years of stay in Malaysia.

Expert An application under this category requires a person with talent or skills in certain industries. These industries include health and medical, sports, science, technology, banking, and finance, among many others.

Applicants also need a recommendation by the relevant corresponding local agency to their field of expertise in Malaysia. Moreover, applicants are instructed to submit a certificate of good conduct from their country of origin.

While not clearly stated, this category is probably intended for those who are publicly known in their field of work.

Professional This category involves more demands than the previous, and is catered to eligible professionals.

Similar to the Expert category, those applying for PR status as a professional need to be recommended by a relevant local agency in Malaysia and must produce a certificate of good conduct from their country of origin.

However, unlike the previous path, the ‘professional’ applicant is compelled to have a minimum of three years working experience for either a government agency or a private company.

In addition, according to the Malaysian Immigration Department website, the PR status of an applicant in this category will only be decided within a month of application submission, but there is no guarantee that an applicant’s submission would be approved by that given time.

Spouse of a Malaysian The requirements for an application under this category is the most demanding of them all. citizen To be eligible for this category, applicants are required to be a spouse of a Malaysian citizen for a minimum of five years.

The applicant must also have been issued a long term visit pass and have been living continuously in Malaysia for a period of five years, along with having at least one Malaysian sponsor.

Application through a This is the most challenging way to obtain a Malaysian PR status. It requires an applicant to go point-based system through a point-based system and achieve a minimum of 65 points out of a total 120 in order to be considered.

In addition, applicants using this system need to have one Malaysian sponsor as well as a certificate of good conduct from their country of origin. A GUIDEBOOK FOR INVESTORS INVEST SELANGOR • DOING BUSINESS IN SELANGOR 147

All persons with Malaysian PR status It is highly recommended that a are required to change their identity foreigner make a will in Malaysia under cards to MyPR, which may be acquired the following circumstances: from the National Registration • They are living permanently in Department (NRD). Malaysia and would be considered WANT TO KNOW MORE? a ‘permanent resident’ of Malaysia Obtaining a PR status will definitely at the time of their passing; and A citizenship status represents the highest take time and effort. Having said • They own immovable properties award granted by the federal government to that, the hassle-free immigration foreigners. in Malaysia, for instance land and requirements and a few citizen-like buildings. benefits that come with the status For information on application requirements, will be worth the endeavour for those terms and conditions, and more, visit Failure to craft a will in Malaysia may wishing to make Malaysia their home. http://www.moha.gov.my/index.php/ mean that delays will occur in the en/maklumat-perkhidmatan-jpn/318- transfer of the deceased’s properties Once a person has held a PR status for perkhidmatan-agensi/servis-jpn/3935- and assets in Malaysia to his or her a period of time, he or she may apply for beneficiaries, wherever they may be. a Malaysian citizenship if wished. It is wise to bear in mind, however, that the LAST WILL AND TESTAMENT Furthermore, there may be issues Ministry of Home Affairs is responsible In the event of settling down in Malaysia such as inheritance tax in their home in ascertaining and ensuring only permanently, it may be wise to write or jurisdictions, therefore it is advisable qualified and deserving individuals are revise one’s existing will. to consult Malaysian legal experts to granted Malaysian citizenship status. ensure the will is up to local standards. The purpose of writing a will is for It may be interesting to note that at the BASIC CONSIDERATIONS FOR a person to leave behind a legacy time of writing, Malaysia does not have MALAYSIAN CITIZENSHIP for loved ones, as well as to ensure an inheritance tax regulation and there APPLICATIONS that they are well provided for in the is no forced heirship regime in place Good behaviour and no criminal unfortunate event of the testator’s for foreigners deciding to draft their record; death. will according to Malaysian standards. Has resided in Malaysia for a long time; In Malaysia, if a person dies without For those who own assets (and are having written a valid will then the regularly domiciled) in another country, High commitment and deep-rooted in the country; provisions under the Distribution Act the country’s inheritance tax may still 1958 will apply. Muslims, however, will be applied. It is therefore worthwhile Able to understand the language and culture, as well as fulfil the nation’s have their estate distributed according engaging inter-jurisdictional experts needs; to the Islamic heirship system, the in cases of complex wills. Contributes to the society and ‘Fara’id’. nation; and Will and Testament for Faithful and loyal to the nation. Foreigners in Malaysia This is so that the safety, harmony, Even though some may already have a unity, and public order in the country will which may have been signed and INVESTOR TIP! are not jeopardised. registered in their home country, it does not necessarily mean that all their Be sure to store original copies of wills, properties, personal matters, All citizenship applications shall be wishes will be carried out, particularly or related documents in a safe but presented to the National Registration when it comes to assets that they have Department of Malaysia (JPN). in their host country. accessible place.

Only those who meet the terms and conditions as stipulated by the Federal Constitution (Part III) are allowed to apply. 148 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

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Drawing Up A Will In Malaysia, there are three pre- LET’S GO requisites that must be satisfied when making a will before it is considered TO SELANGOR! valid. In conclusion, Malaysia is a fantastic country, and Selangor is an amazing GENERAL PRE-REQUISITES IN state to live in. DRAWING UP A WILL IN MALAYSIA Whether you decide to stay The testator must be at least here temporarily or, even better, eighteen (18) years of age. permanently, the benefits will always The testator must be of ‘sound outweigh the doubts. mind’ (“testamentary capacity”) as provided by Section 3 of the Wills We hope to see you here soon! Act 1959.

The will must be in writing, and must also be signed by the testator – or affixed with the testator’s mark – at the foot or end of the will in the presence of two witnesses. The will must be attested by two or more witnesses in the presence of the testator and each other.

150 INVEST SELANGOR • DOING BUSINESS IN SELANGOR A GUIDEBOOK FOR INVESTORS

www.investselangor.my

Invest Selangor Berhad (481741-M) (formerly known as “Selangor State Investment Center”)

No. F1-2-G, Jalan Multimedia 7/AG, CityPark, i-City, 40000 Shah Alam, Selangor Darul Ehsan, Malaysia

Tel : +(6) 03-5510 2005 Fax : +(6) 03-5519 6403 +(6) 03-5511 2008 E-mail : [email protected]