Having a valid business license is essential for starting a business in Malaysia

Before a business can legally start operating, businesses are required to comply with some form of licensing, which could be a;

1. General licenses - Licenses that is required for any business

2. Sector Industry Specific licenses

3. Activity Specific licenses

Business licenses are required by the legislation and administered by various government agencies, statutory bodies and local authorities. Business licenses include registrations, approvals, licenses and permits. The compliance requirements vary by industry, business activity and location.

The following listed licenses are required for a company to operate legally and is applicable to any business;

1. Company Registration (SSM / Companies Commission Malaysia)

2. Company and Employees Income Tax Registration (LHDN)

3. Employees Provident Fund (EPF)

4. Social Security Organisation (PERKESO)

5. Human Resources Development Fund (HRDF)

6. Business Premise Licenses and Signboard Licenses (State Authorities)

Businesses in Malaysia are required to apply for business premises licenses and signboard licenses from the respective State Authorities. The requirements for the application may vary according to each local authority.

Industrial / Sector Special License is a license for a specific industry or sector detailed by the Government. This includes the policies governing the development of a specific industry or sector in line with the development of government policy.

List of Industrial / Sector Special License are (most common):

1. Licenses related to the Manufacturing Sector

For further information, please see Manufacturing & Incentive Guide

2. Licenses related to the Wholesale Retail Trade

Licenses that are usually required by foreign-owned companies are Wholesale, Retail Business License. This WRT license applies to any Foreign Participation (i.e. foreign equity at 51% and above) in Malaysia Distributive Trade Services including wholesalers, retailers, franchise practitioners, direct selling trades, suppliers, who distribute goods into the domestic market, and commission agents or other representatives including international trading companies.

3. Licenses related to the Construction Sector

• All local or foreign contractors to register with the Construction Industry Development Board (LPIPM) or CIDB under Section 25 of Act 520 (Amendment 2011) before undertaking and completing any construction work in Malaysia unless they granted exemption under Section 40 (1) of the Construction Industry Development Board of Malaysia Act 1994 (Act 520).

• Referring to Section 25 (1) of Act 520 of the Construction Industry Development Board of Malaysia (CIDB):

"No person shall engage in work or completion, undertaking to carry out or complete any construction work or claim himself as a contractor, unless he is registered with the Board and to hold a valid registration certificate issued by the Authority under this Act".

As for Foreign contractors, registration is on project-basis.

4. Licenses related to the Mining Sector

Licenses and leases for prospecting licenses, exploration licenses and mining leases are granted by the State. Foreign investors undertaking mineral explorations and mining in Malaysia may be permitted to control 100% equity, and may also form joint ventures with local companies.

5. List provided is not complete and if you have any question on other industry specific licenses please contact us.

Activity-Specific licenses are licenses that regulate particular activities and could be applicable to one or more Industries or Sectors. This category of license requires investor to comply with sets of specific guidelines designed to protect the interest of the citizen, employment, safety of workers, environment and general public.

Examples of Activity-Specific Licenses are:

1. Certificate of Fitness for Certified Machinery

2. Approval for Expatriate Posts

3. Approval to install/resite/alter Air Pollution Control Equipment (bag filter and chimney)

4. Building Plan Approval

5. Sales Tax License

The above information is a general guideline for making the initial steps, decision and planning for the intended business by potential investors and business owners.