Regulations for foreign investors

Setting up a company

• Most foreign investors incorporate a private limited company (Sdn Bhd) with the Companies Commission of Malaysia (SSM) under the Companies Act 2016.
• A Sdn Bhd needs at least one shareholder and one director who ordinarily lives in Malaysia, plus a licensed company secretary.
• A foreign company can also register a branch or, for some activities, a representative or regional office approved by MIDA.
• Register for tax with LHDN and, where relevant, with the local authority (business premises licence) and SOCSO/EPF for staff.

Companies Act 2016 · SSM · MITI

Foreign ownership

• Manufacturing: since June 2003, foreign investors may hold 100% of new projects and expansions, with no export requirement and no excluded products.
• Services: the Companies Act sets no equity condition. Individual regulators may set limits for specific licences, for example in distributive trade, telecommunications, finance or professional services.
• Joint ventures with Malaysian partners are encouraged but generally not required.

MIDA Equity Policy

Manufacturing licence

• Under the Industrial Co-ordination Act 1975, a manufacturing company needs a licence from MITI (through MIDA) once its shareholders' funds reach RM2.5 million or it employs 75 or more full-time workers.
• Smaller companies are exempt, but must apply once they pass either threshold.
• Factories also need local authority, environmental (DOE) and fire safety (Bomba) approvals, which we coordinate with the relevant Perak agencies.

Industrial Co-ordination Act 1975 · MIDA

Tax incentives

• Malaysia's standard corporate tax rate is 24%. Qualifying projects can apply to MIDA for incentives such as Pioneer Status (income tax exemption) or Investment Tax Allowance.
• Incentives are approved project by project and depend on sector, value added, technology and location.
• The Perak State Government and its investment agency offer facilitation for approvals and, in some parks, land-related support.

MIDA · Income Tax Act 1967 · Promotion of Investments Act 1986

Buying property in Perak

• A foreigner needs written consent from the Perak State Authority to buy land or property (National Land Code, section 433B).
• Perak sets its own rules under Circular No. 12/2022 of the Director of Land and Mines. These cover minimum prices by local authority area, property types allowed, quotas, levy rates and special rates for MM2H participants.
• Current guides list a minimum of about RM1,000,000 for foreign buyers in Perak, for both landed and strata homes. Check the exact figure for your area before signing.
• Foreigners cannot buy low-cost or low–medium-cost housing, Malay Reserve land, or units allocated to Bumiputera buyers.
• Real Property Gains Tax for foreign sellers is 30% on disposals within five years and 10% from the sixth year.

National Land Code 1965 · Perak Land and Mines Office · RPGT Act 1976

Expatriate staff

• Foreign managers and specialists work under an Employment Pass, applied for by the company through the Expatriate Services Division (ESD).
• Pass categories depend on monthly salary and contract length. Category I and II holders may bring dependants.
• Companies are expected to train Malaysians and plan for succession for key roles.

Immigration Department of Malaysia · ESD (MYXpats)

Malaysia My Second Home (MM2H)

MM2H is a long-term residence programme for people who want to live in Malaysia. Under the revised programme, applicants must be at least 30.

• Participants must spend at least 60 days a year in Malaysia.
• Property bought under MM2H must also meet Perak's own MM2H price rates and state consent.

Ministry of Tourism, Arts and Culture (MOTAC) · MM2H guidelines

Moving money in and out

• Malaysia has liberal foreign exchange rules. Non-residents can bring in capital and send home profits, dividends, interest and sale proceeds in foreign currency.
• Malaysia has investment guarantee agreements and tax treaties with many countries, which protect investments and avoid double taxation.

Bank Negara Malaysia Foreign Exchange Policy · MITI