Business licensing in Malaysia.

Malaysia has a complex system of business licensing designed to regulate various sectors, ensure compliance with local laws, and protect consumers and the environment. Understanding this licensing framework is crucial for anyone looking to establish or expand a business in the country.

This article provides a comprehensive overview of business licensing in Malaysia, covering the types of licences required, the application processes, key regulatory bodies and sector-specific requirements.

Overview of business licensing in Malaysia

In Malaysia, business licensing is a multi-tiered system involving federal, state and local authorities. The specific licences required depend on various factors, including:

• Type of business entity (e.g., sole proprietorship, partnership, private limited company)
• Nature of business activities
• Location of the business
• Sector or industry

Types of business licences in Malaysia

There are three types of business licences in Malaysia:

• General licences
• Sector/industry-specific licences
• Activity specific licences

What are general licences?

General licences are the basic licences that most businesses in Malaysia need to operate, regardless of their specific industry or activities. These licences ensure that the business is legally registered and complies with basic local regulations.

General licences include:

Business registration licences

These licenses are fundamental and apply broadly across different types of businesses:

• Company registration
• Company and employee’s income tax registration
• Employees provident fund (EFP)
• Social security organisation (PERKESO)
• Human resources development fund (HRDF)
• Business premise licences and signboard licences

Local council licences

Most businesses require a premise licence from the local municipal council where the business operates. This licence ensures compliance with local zoning laws, health regulations and safety standards.

Signboard licences

Businesses typically need a licence for any signage displayed on their premises, obtained from the local council.

Key regulatory bodies

Companies Commission of Malaysia

The Companies Commission of Malaysia (SSM) is the primary body responsible for the registration and regulation of businesses in Malaysia.

Malaysian Investment Development Authority

Malaysian Investment Development Authority (MIDA) is the government’s principal agency for the promotion of the manufacturing and services sectors in Malaysia. It provides guidance on licensing requirements for various industries.

Ministry of Domestic Trade and Consumer Affairs

This ministry oversees various business-related matters, including consumer protection and certain types of business licences.

Local municipal councils

These bodies handle local business licences and enforce local regulations.

Sector/industry-specific licences

These licences are required for businesses operating in particular sectors or industries. They ensure that companies comply with regulations specific to their field of operation. These licences often involve more stringent requirements and regulations specific to the sector, ensuring specialised compliance and standards.

Manufacturing sector

A manufacturing licence is mandatory for companies involved in any of the following:

• High technology or new manufacturing activities
• Expansion and adaptation of agricultural projects
• New agricultural projects
• Expansion of product lines
• Commercialisation of R&D findings

To apply for the licence, Form ICA 10 must be submitted together with the following supporting documents:

• Copy of the Memorandum and Articles of Association or Constitution
• Certificate of Incorporation (Section 17)
• Registered Address (Section 46)

Companies may apply for an exemption confirmation letter if they meet either of the following criteria:

• Paid-up capital does not exceed RM 2.5 million
• Fewer than 75 employees

Wholesale and retail trade sector

The Wholesale and Retail Trade (WRT) licence is essential for foreign companies engaging in distributive trade services, including:

• Wholesalers, retailers, franchise practitioners, direct sellers and suppliers
• Distribution of goods in the domestic market
• Agents or representatives of international trading companies

The requirements include:

• Minimum paid-up capital of RM 1 million
• Full company setup, including a valid business location with a tenancy agreement and a phone line

A WRT licence is required before applying for a DP10 work permit with the Immigration Department of Malaysia.

Telecommunication sector

Licences for companies operating in this sector may include:

• Network facilities provider licence
• Network service provider licence
• Content applications service provider licence

Broadcasting sector

Companies involved in broadcasting must obtain the relevant licences from the Malaysian Communications and Multimedia Commission (MCMC).

Oil exploration sector

Companies seeking to establish oil and gas reserves in Malaysia must sign a production-sharing agreement with Petronas, the Malaysian state oil company.

Construction sector

Companies engaging in building and construction activities must obtain a licence from the Construction Industry Development Board (CIDB).

Banking sector

The Malaysian Central Bank licences and regulates businesses in banking, money broking, merchant banking and other financial activities under the Banking and Financial Institutions Act, 1989.

Public houses

A public house licence is required for establishments that sell liquor or alcoholic beverages. This licence must be obtained from the relevant local authorities and is typically valid for a period ranging from six months to one year. The approved liquor serving times under this licence may vary and can include:

• 10:00 AM to Midnight
• 10:00 AM to 10:00 PM
• 10:00 AM to 9:00 PM

A temporary public house licence is required for serving liquor during festive seasons. This licence is valid only for the specific festive period stated in the application.

Food and beverage sector

Businesses in the food and beverage sector are required to obtain the following licences:

• A food establishment licence from the local health department.
• Halal certification (if applicable) from the Department of Islamic Development Malaysia (JAKIM)
• Food handler training certificates for all relevant staff

Tourism and hospitality sector

Companies operating in the tourism and hospitality sector must secure:

• A tourism licence from the Ministry of Tourism, Arts and Culture
• Specific licences depending on the nature of services, including travel agency, tour operator, or tourist guide licences
• Licences for hotel and accommodation operations

Financial services sector

Entities in the financial services sector require:

• Licences from Bank Negara Malaysia (the Central Bank) for activities such as banking, insurance and money services
• Licences from the Securities Commission Malaysia for operating capital market services

Education sector

Educational institutions must obtain the following approvals:

• Ministry of Education approval for primary and secondary schools
• Ministry of Higher Education approval for colleges and universities

Healthcare sector

Operators in the healthcare sector must be licensed as follows:

• Ministry of Health licenses for hospitals, clinics and other healthcare facilities
• Malaysian Medical Council licenses for medical practitioners

Activity-specific licences

Activity-specific licences are required for particular activities that a business might engage in, regardless of its primary industry. These licences often relate to specific operations or services offered by the business.

Activity-specific licenses include:

• Certificate of fitness for certified machinery
• Approval of expatriate posts
• Approval to install, resite or alter air pollution control equipment
• Building plan approval
• Sales tax license
• Fire brigade approval

These licences ensure that specific activities are carried out in compliance with relevant regulations, even if they are not the primary focus of the business.

Basic requirements for the business licence application

Requirements to apply for a business licence are:

• Copy of business registration certificate/confirmation of establishment (section 17)
• Copy of section 58
• Copy of section 78
• Copies of proposed spatial grants, titles or lease agreements
• Copy of Construction Certificate of Occupation
• Location map or plan
• Use of floor installations or fountains
• Ad pitch (advertising must meet the requirements for language requirements)
• Photo of applicant’s passport
• Copy of applicant NNKN form

Business licence payment method

Payment for licences can only be made at the City Council/City Hall by:

• Cash
• Money order
• Remittances
• Bank draft
• Credit card

Business licence processing time

The licence approval process can take one month to six months, depending on the type of industry license. Before approving the application, the ministry will conduct a business inspection.

Conclusion

Business licensing in Malaysia, while complex, is a necessary and manageable aspect of establishing and operating a business in the country. The government’s ongoing efforts to streamline processes and improve the ease of doing business are making the licensing landscape more navigable for both local and foreign businesses.

Success in obtaining and maintaining the necessary licences requires thorough research, careful planning, and, often, collaboration with local experts. By understanding the regulatory landscape, staying informed about changes and maintaining good relationships with relevant authorities, businesses can effectively navigate Malaysia’s licensing requirements.

How Acclime can help with securing business licences

With deep expertise in local regulations, Acclime offers comprehensive support to businesses at every step of the licensing journey. From identifying the specific licences required for your business to managing the application process and ensuring ongoing compliance, Acclime’s tailored services help businesses avoid common pitfalls and streamline operations.

Whether you are establishing a new business or expanding an existing one, Acclime’s guidance ensures that you meet all licensing requirements efficiently, allowing you to focus on growing your business with confidence.