23 INTERNATIONAL TECH HUB | BDO LLP
WHAT SUPPORT IS THERE FROM GOVERNMENT FOR NEW BUSINESSES MOVING INTO THE TERRITORY? Historically, Malaysia has always campaigned aggressively to get foreign companies to set up here, whether that’s large multinationals or small start-up businesses. That trend continues, and there’s a wide range of generous incentive programmes for different size and sectors. Most significantly, the Government-sponsored Malaysian Investment Development Authority (MIDA) offers various tax incentives – including anything between five and ten years’ corporation and income tax-free holiday – for any new business fulfilling certain criteria, such as setting up in a particular location, performing a certain type of work, employing a certain number of people, and so on. Another key feature is Labuan, an autonomous region and offshore tax jurisdiction that lies on a small island off the coast of Borneo near Brunei and is home to several thousand international corporations. It’s easy to set up a company here as a foreigner, and you have access to Malaysia’s 70-odd dual taxation agreements with other countries. Tax rates are low, and you can choose between paying just 3% on profits or a modest flat fee. As a company incorporated in Labuan, your company will fall under Malaysian legislation and regulations, which means you can not only trade anywhere in Malaysia, but also enjoy frictionless access to the other nine Asian countries that make up the ASEAN Free Trade Area (AFTA). Setting up as a Labuan company is a very attractive option for international businesses, as the profits and even the wages that the directors draw from such a company would be completely exempt from Malaysian tax. Another unique programme the country offers is the Malaysia My Second Home Programme. Under this scheme, a qualifying foreigner can benefit straight away from a 10-year visa to stay in Malaysia. They can set up a business and enjoy pretty much all
the rights and freedoms of a Malaysian-born citizen. Applicants have to show they have sufficient resources to live in Malaysia without seeking employment or government assistance; people under 50, for example, need to show liquid assets above RM500,000 ($115,000) and a monthly income of >RM10,000 (c$2500). Malaysia is keen to support R&D and to encourage local companies to embrace digital technologies too. It was recently announced that companies will be reimbursed 150% for any expenditure or investment applied to their digital transformation programmes. In other words, for every $1 a company spends on R&D and digital transformation, it can claim back $1.50 – a generous grant scheme indeed. What’s the investor community like in Malaysia? As well as boasting 30-40 private equity and venture capital firms in the country, the biggest advantage in investment terms here is the proximity to Singapore, which is one of the largest capital markets in the whole region. Accessing capital from Singapore is very straightforward, and we get a lot of approaches from fintech and other companies coming via either country Most Singapore PE firms are set up to cover Malaysia and a number of other countries in the region too.
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