Business-friendly policies, affordable operational costs, skilled and multilingual workforce, strong infrastructure, and many other exciting facilities have made Malaysia one of the top countries in the world for business formation.
That’s why In the third quarter of 2024, Malaysia’s economy expanded by 5.3%. You can also become a part of this fast-growing business world by forming your business in Malaysia.
Still confused about whether Malaysia would be the best destination for your business or not? Within a while, we will clarify all of your confusion about why you should be serious about company registration in Malaysia.
Knowing about those facilities will influence your thoughts on company registration in Malaysia for foreigner.
6 Reasons Why Malaysia is a Top Destination for Business Formation?
- Forget Worries About Extra Tax Rates
- Skilled And Affordable labour
- Strong Economic Hub
- Supports Of Free Trade Agreements
- Stable Political Environment
- Stable Environment For Foreign Investors
1. Forget Worries About Extra Tax Rates
When forming a business in a country as a foreigner, tax is the first thing that the business owners worry about. In many countries, you may have to pay high corporate taxes. Thankfully, Malaysia is different from those countries. You can operate your business conveniently with low corporate tax rates.
According to the Global Competitiveness Report 2024, Malaysia is ranked as the 34th most competitive economy worldwide. Malaysia is business-friendly for both local residents and foreigners. A resident company has to pay a corporate tax rate of 17%. There are some conditions to follow for this tax rate. Non-resident companies have to pay tax on a CIT rate of 24%.
2. Skilled And Affordable labour
Different types of government projects are always ongoing to support human resource development. As a result, Malaysia produces lots of skilled labor each year. The labor cost is also affordable compared to other developing countries. At the same time, the Malaysian government is serious about education.
Most of the laborers are educated and skilled. This will be a blessing for any business to get educated labor at a reasonable cost. If you want to improve their skills, you can train them. The procedures will be easy as they are educated. Overall, this is a crucial point to consider on why Malaysia is a top destination for business formation.
3. Strong Economic Hub
Malaysia is one of the strongest economic hubs in Asia. If you want to expand your business in Asian markets, Malaysia could be the perfect choice. You will get almost all business facilities compared to India, China, and Singapore. Interestingly, operational costs will be lower in Malaysia compared to those countries.
According to the stats, Malaysia had 1,534,545 registered companies by the end of December 31, 2023. Also, an additional 17,039 companies were registered in the first four months of 2024. The growing numbers suggest that Malaysia is definitely a top destination for business formation.
4. Supports Of Free Trade Agreements
Malaysia is a member of the ASEAN Free Trade Agreement (AFTA). This is a trade agreement between ASIAN countries. According to the agreements, they will offer some free trade agreements for different types of businesses. It will assist the business in exporting and importing products at a low cost.
Also, it will remove some restrictions related to import-export. That attracts investors and foreigners to move forward with company registration in Malaysia. The free trade agreements are applicable for (Bilateral free trade agreements):
- Malaysia-Japan Economic Partnership Agreement (MJEPA)
- Malaysia-Pakistan Closer Economic Partnership Agreement (MPCEPA)
- Malaysia-New Zealand Free Trade Agreement (MNZFTA)
- Malaysia-India Comprehensive Economic Cooperation Agreement (MICECA)
- Malaysia-Chile Free Trade Agreement (MCFTA)
- Malaysia-Australia Free Trade Agreement (MAFTA)
- Malaysia-Turkey Free Trade Agreement (MTFTA)
The free trade agreements are also applicable to (Regional free trade):
- ASEAN, Australia and New Zealand Free Trade Area (AANZFTA)
- ASEAN-China Free Trade Agreements (ACFTA)
- ASEAN-India Free Trade Area (AIFTA)
- ASEAN-Japan Free Trade Area (AJFTA)
- ASEAN-Republic of Korea Free Trade Area (AKFTA)
- ASEAN-Hong Kong, China Free Trade Agreement (AHKFTA)
5. Stable Political Environment
To form a business in a country, the political environment is also a crucial point to consider. A country with an unstable political environment is never ideal for business formation no matter how many facilities they offer. You can stay tension-free about those factors while thinking about business formation in Malaysia.
The political environment is truly stable here with well-established laws. The Malaysia Investment Development Authority (MIDA) ensures regulatory transparency and fair business practices. According to the World Bank’s Political Stability and Absence of Violence/Terrorism index, Malaysia scored 0.17 in 2023, an improvement from 0.16 in 2022. You can expand your business with a reliable business ecosystem.
6. Stable Environment For Foreign Investors
How would it be if you get some Investment guarantee by the Government? That sounds unbelievable but it is true for Malaysia. “Investment guarantee agreements” will make that happen for your business in Malaysia. Malaysia has established Investment Guarantee Agreements (IGAs) with 80+ countries to ensure an environment for foreign investors.
According to this agreement, foreign investments are protected from nationalization unless fair compensation is provided. Also, it will bring a solution for settling disputes between investors and the Malaysian government through international arbitration. It will increase confidence among international businesses thinking about company registration in Malaysia.
The agreements are applicable to those countries:
- Albania
- Algeria
- Argentina
- Austria
- Bangladesh
- Belgo-Luxembourg
- Burkina Faso
- Canada
- China
- Cambodia
- Croatia
- Cuba
- Czech Republic
- Denmark
- Egypt
- Finland
- France
- Germany
- Ghana
- Guinea
- Hungary
- Iran
- Italy
- Jordan
- Kazakhstan
- Kuwait
- Lebanon
- Macedonia
- Mongolia
- Morocco
- Namibia
- Netherlands
- North Korea
- Peru
- Poland
- Republic of Chile
- Republic of Ethiopia
- Republic of Sudan
- Romania
- San Marino
- Saudi Arabia
- Senegal
- Slovak Republic
- South Korea
- Spain
- Sri Lanka
- State of Bahrain
- Sweden
- Switzerland
- Syrian Arab Republic
- Taiwan
- Turkey
- Turkmenistan
- United Arab Emirates
- United Kingdom
- United States
- Uruguay
- Uzbekistan
- Vietnam
- Yemen
- Zimbabwe
Wrap Up
Considering those above business facilities, Malaysia should be considered as a top destination for business formation. Their business-friendly policies, investment-related agreements, skilled labor, and the stats of growing business everything is a clear indication of that statement. If you are not sure about how to take the first step, you can get assistance from SFM Consulting Firm. They will assist you with company registration in Malaysia. Let’s do it.
