1. What are the key factors to consider before setting up a tech business in Malaysia?
Firstly, try to understand the market in Malaysia and to see if your solution or tech business is addressing a need or pain point for Malaysians.
Secondly, one should consider the method of market entry — if they want to enter the market on their own, partner, or joint-venture with a local.
Thirdly, find a place to “land”. For example, there are five digital hubs set up by the Malaysian government which includes Sunway Innovation Labs. Malaysia Digital Hub™ is a co-working space that allows the setup of tech and digital startups in a conducive environment. The space provides the opportunity for entrepreneurs to connect to global markets and the digital ecosystem. Malaysia Digital Hub provides global expansion opportunities for growing startups, ready access to high-speed broadband and fibre optic connectivity. It is also optimised for funding and facilitation opportunities, has a robust talent development ecosystem and is technologically focused to attract global tech companies as anchor tenants.
Being at one of the digital hubs also allows an entrepreneur or founder to apply for the Malaysian Tech Entrepreneur Program, where one can apply for either a one or five-year visa depending on the applicant’s experience. In our experience, applicants got their approval in 4-6 weeks.
Klang Valley (greater Kuala Lumpur) is a sprawling area, and although connected via highways, public transport and GRAB, one should consider where their clients or partners are before deciding their office location.
2. How do I register my startup? How long does it take to complete the registration process? What is the fee?
In Malaysia, to incorporate a private company or locally suffixed as Sdn Bhd, one needs to engage a company secretary and must name at least one director and one shareholder who has main residency or residence address in the country. The shareholder can also be the sole director of the company.
Depending if the ownership is Malaysian, a joint venture or a 100 per cent foreign, the paid-up capital requirements will differ.
The fees for the company secretary firms vary, but usually the fees are not more than US$1,000. A list of licensed Companies Secretaries can also be found at MAICSA.
To register an entity’s name and to check on the availability of the name, check with the Companies Commission of Malaysia (Suruhanjaya Syarikat Malaysia).
This can be done on their website, ssm.com.my. Bear in mind that booking a name may take time.
3. What are the documents to be submitted?
Key documents will be the directors’ personal details and a copy of identification.
4. Does the government provide any tax benefits to new startups?
In Malaysia, there is the Multimedia Super Corridor (MSC) status given to qualifying tech companies to enjoy a 5+5 years of tax breaks. However, at the time of writing, the governing agency MDEC is currently reviewing the eligibility and criteria of MSC and hence application is closed for now.
5. What are the different types of company registrations in MY?
Typically a startup can consider the following, with Sdn Bhd being the most common:
- Sole proprietorship
- Private Limited Company, known locally as Sdn Bhd
- Public Limited Company, known locally as Berhad or Bhd
6. How do I get patent/trademark for my business? How long does it take?
Patent and trademarks can be done under MyIPO.
Submission is immediate, in order to trademark your logo or business name, costing less than US$100.
Alternatively, there are lawyers you can engage for such filing if you would like to file a patent application for your invention.
Trademarks can be filed in the English or Malay.
7. Does the government provide seed funding to companies?
The first port of call for most startups here would be Cradle, who provides various grants and also funding. Other government agencies such as MDEC, MTDC, AIM and other agencies also provide funding/ grants if it meets their criteria.
However, startups should not purely rely on the government for funding. Funding opportunities also come in the form of early stage venture capitalists, equity crowdfunding platforms such as Pitchin or Ataplus, angel groups such as Malaysian Business Angel Network or Nexea Angels, and Accelerators such as Sunway iLabs.
8. I am a foreigner. Can I register my company in Malaysia? What are the rules?
Yes, you can, but it impacts the minimum paid-up capital. It is recommended that one consult a local company secretary company for such advice.
9. What are the factors to consider while expanding geographically?
- Proximity and accessibility to the market – Malaysia is the gateway to Southeast Asia which has a population of more than 600 million. With low cost carrier Airasia’s hub being here and Malaysia being centrally located in Southeast Asia, one can easily take a two-hour flight from Kuala Lumpur to key capitals in the region.
- Cost and availability of talent – Depending on your business and needs, a startup needs to ensure there are enough suitable talents within the organisation. Malaysia’s living costs and cost to hire talents are significantly lower, compared to, say, Singapore.
- Infrastructure – Malaysia is fairly developed with strong broadband and mobile coverage, high credit card penetration and over 30 e-money players.
- Language – Malaysians are trilingual with proficiency in Malay, Chinese and English being a key consideration when it comes to reaching out key markets in Asia such as Chinese or Indonesian market from here.
- Availability of funding – These days, most venture capitalists in the region, including Sun SEA Capital, have a regional coverage.
- Supportive ecosystem – In Malaysia, agencies such as MDEC or MAGIC helps connect startups to the relevant players in the ecosystem. There are similar agencies in countries in the region.
10. Any other relevant information?
At Sunway, we have various methods of supporting a startup.
- We provide startups access to Sunway City to be a testbed for innovations. Sunway has 12 diverse business verticals with a build-own-operate model in our property development division.
- We have Sun SEA Capital, a series A regional VC in collaboration with Koichi Saito and Kuan Hsu of KK fund to support startups to grow in Malaysia and regionally.
- We have Sunway Ventures to provide funding as corporate venture capital and also to connect startups to the group’s business units.
- We have Sunway Innovation Labs which has a 20,000 sq ft co-working space and a Makerspace in Sunway University to provide space, facilities and mentorship.
- Our Sunway Education Group institutions supports entrepreneurship with available student talents, knowledge, and available physical resources such as labs and libraries; in addition to partnerships with leading universities like UC Berkeley.
About the author:
ST Chua is Principal at Malaysia-based Sun SEA Capital. He has a wealth of global experience including founding and exiting a hospitality business and developing a multi-million online daily-deal business across 29 countries globally as the Global Business Developer of Germany-based venture capital Rebate Networks, a VC firm based in Germany. He has also co-founded multiple ventures, including a FMCG distribution company, Predictry (a predictive analytics company), and Perfectsen (financial-tech startup).
His experience also includes being a part of the mergers and acquisition team of Maxis, a product specialist for Nokia, and a strategy consultant with global brands including Renova, Hermes and the Gucci Group.
This article was first published on e27 on October 29, 2018.
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