Doing Business in Malaysia
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2016 NOVEMBER Doing Business in Malaysia This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice or legal opinion. The information contained in this publication should not form the basis of any decision as to a particular course of action. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, Christopher & Lee Ong, its partners, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. The law is correctly stated as at 15 November 2016, and some of the publicly available information are obtained from various resources including the official websites of the relevant government departments and agencies. You are therefore advised to engage the services of a competent professional adviser (including but not limited to legal, tax and business consultants) so that the applicability of the relevant legislation or other legal development to the particular facts can be verified. Ministries, Regulatory Bodies and Agencies Acronym Name Website BNM Bank Negara Malaysia/Central Bank of http://www.bnm.gov.my/ Malaysia Bursa Bursa Malaysia Berhad http://www.bursamalaysia.com/mark Malaysia et/ CCM/SSM Companies Commission of http://www.ssm.com.my/ Malaysia/Suruhanjaya Syarikat Malaysia Customs Royal Malaysian Customs http://www.customs.gov.my/ DOE Department of Environment http://www.doe.gov.my/portalv1/en ECERDC East Coast Economic Region Development http://www.ecerdc.com.my/ Council EPU Economic Planning Unit http://www.moha.gov.my/index.php/ en/ FELCRA Federal Land Consolidation and http://www.felcra.com.my/ Rehabilitation Authority FELDA Federal Land Development Authority http://www.felda.net.my/ Immigration Immigration Department http://www.imi.gov.my/index.php/ms/ IRB Inland Revenue Board http://www.hasil.gov.my/ IRDA Iskandar Regional Development Authority http://www.irda.com.my KKMM Ministry of Communication and Multimedia http://www.kkmm.gov.my/ Malaysia/Kementerian Komunikasi dan Multimedia Malaysia KLRCA Kuala Lumpur Regional Centre for http://klrca.org/ Arbitration KPKK Ministry of Information, Communication and http://www.penerangan.gov.my/ Culture/ Kementerian Penerangan, Komunikasi dan Kebudayaan Labuan Labuan Financial Services Authority http://www.lfsa.gov.my/ FSA MAMPU Malaysian Administrative Modernisation and http://www.mampu.gov.my/web/en/ Management Planning Unit mampu MCMC Malaysian Communications and Multimedia http://www.skmm.gov.my/ Commission Page 2 of 162 Acronym Name Website MDeC Multimedia Development Corporation http://www.mdec.my/ MDTCC Ministry of Domestic Trade, Co-operative http://www.kpdnkk.gov.my/ and Consumerism MHA/LLM Ministry of Highway Authority/Lembaga http://www.llm.gov.my/background_ Lebuhraya Malaysia EN.aspx MIDA Malaysian Investment Development http://www.mida.gov.my/ Authority MITI Ministry of International Trade and Industry http://www.miti.gov.my/cms/index.jsp MOF Ministry of Finance http://www.treasury.gov.my/index.ph p?lang=ms MOHA Ministry of Home Affairs http://www.moha.gov.my/index.php/ en/ MOHE Ministry of Higher Education http://jpt.mohe.gov.my/eng/ MONRE Ministry of Natural Resources and http://www.nre.gov.my/ Environment MOSTI Ministry of Science, Technology and http://www.mosti.gov.my/ Innovation MOW Ministry of Works/Kementerian Kerja Raya http://www.kkr.gov.my/ MyIPO Intellectual Property Corporation of Malaysia http://www.myipo.gov.my/ NCIA Northern Corridor Implementation Authority http://www.koridorutara.com.my PSD Public Service Department http://www.jpa.gov.my/?lang=en PWD/JKR Public Works Department/Jabatan Kerja http://www.jkr.gov.my/ Raya RECODA Regional Corridor Development Authority http://www.recoda.com.my RMP Royal Malaysia Police http://www.rmp.gov.my/ SC Securities Commission http://www.sc.com.my/ SEDA Sustainable Energy Development Authority http://www.seda.gov.my SEDIA Sabah Economic Development and http://www.sedia.com.my Investment Authority SPAD Land Public Transport http://www.spad.gov.my/ Commission/Suruhanjaya Pengangkutan Awam Darat UKAS Public Private Partnership Unit/Unit http://www.ukas.gov.my/ Kerjasama Awam Swasta Page 3 of 162 Page 4 of 162 TABLE OF CONTENTS 1 Introduction ................................................................................................................................ 6 2 Legal Background and Judicial System ..................................................................................... 8 3 Establishing a Presence........................................................................................................... 12 4 Foreign Investment and Local Equity Participation Requirements .......................................... 21 5 Investment Incentives .............................................................................................................. 26 6 Taxation ................................................................................................................................... 32 7 Banking and Finance ............................................................................................................... 39 8 Foreign Exchange Administration ............................................................................................ 50 9 Capital Markets ........................................................................................................................ 56 10 Employment Law ...................................................................................................................... 64 11 Foreign Investment in Real Property ....................................................................................... 70 12 Franchise Law .......................................................................................................................... 76 13 Environmental Laws ................................................................................................................. 80 14 Intellectual Property ................................................................................................................. 84 15 Infrastructure ............................................................................................................................ 89 16 Telecommunications, Media and Technology ....................................................................... 118 17 Multimedia Super Corridor ..................................................................................................... 121 18 Labuan – International Business and Financial Centre ......................................................... 127 19 Economic Corridors ................................................................................................................ 131 20 Competition Law .................................................................................................................... 137 21 Private Healthcare .................................................................................................................. 142 22 Private Higher Education Institutions ..................................................................................... 148 23 Insurance ............................................................................................................................... 153 24 Personal Data Protection ....................................................................................................... 158 25 Acknowledgements ................................................................................................................ 161 Page 5 of 162 1 INTRODUCTION Malaysia is strategically located in the heart of South East Asia and offers investors a dynamic and vibrant business environment with ideal prerequisites for growth and profits. Malaysia is a federal constitutional monarchy comprising of thirteen states and three federal territories in both Peninsular Malaysia and East Malaysia. Kuala Lumpur is the Federal Capital of Malaysia whereas Putrajaya is the administrative capital where the seat of government is situated. Geography With its land area totalling 329,847 sq. km, Malaysia consists of Peninsular Malaysia and East Malaysia (the states of Sabah and Sarawak) which are separated by the South China Sea. Peninsular Malaysia shares its border with Thailand and sits north of Singapore while East Malaysia is located on the island of Borneo and shares its border with Brunei and the Indonesian territory of Kalimantan. The country enjoys a tropical climate with hot and humid weather all year round. Annual southwest and northeast monsoons also occur from April to September and November to February respectively. Demographics Malaysia has a population of approximately 29.5 million consisting of different ethnic groups with the dominant racial group being the Malays, Chinese and Indian. Ethnic Malays comprise some 50% of the population; Chinese constitute around 25%; Indians constitute 10%; Eurasians and indigenous peoples make up the rest. In terms of geographical distribution, 24 million inhabit Peninsular Malaysia where the population is mostly concentrated on the west coast. East