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Tourism In Malaysia

Malaysia is a Southeast Asian country situated on the Malay Peninsula which is known for its diverse culture, lush landscapes, tropical islands and delicious cuisine. With a federal constitutional monarchy consisting of thirteen states, it has three federal territories separated by the South China Sea into the two regions of Peninsular Malaysia and East Malaysia on the island of Borneo, writes Thomas Hughes.
 

The country also shares borders with Thailand, Indonesia and Brunei. West Malaysia, contains Malaysia’s major cities including Kuala Lumpur, Johor Bahru and Georgetown and is more populated with developed settlements, whilst East Malaysia is larger and more abundant in natural resources, most notably in large oil and gas reserves. Kuala Lumpur is the nation’s capital and the largest city in the country covering an area of 243 km2 (94 sq mi). It is among the fastest growing metropolitan regions in Southeast Asia in population and economic development, serving as Malaysia’s cultural, financial, political and economic centre. 

The city was ranked the 6th most-visited city in the world on the Mastercard Destination Cities Index in 2019, housing three of the world’s ten largest shopping malls. The large service sector features prominently in Kuala Lumpur, with several local and foreign banks and insurance companies operating within the city. Kuala Lumpur is also favourably positioned to become a global Islamic financing hub with a growing selection of financial institutions offering Islamic financing and a strong presence of Gulf financial institutions.
 

A STRONG FDI SECTOR

Foreign Direct Investment in Malaysia has played a significant role in the country’s economic development, with the nation being notably adept in attracting FDI, due to its strategic location, well-developed infrastructure, skilled workforce and supporting government policies. Foreign Direct Investment in Malaysia tends to be focused primarily on sectors such as manufacturing, services, electronics, oil and gas, with the government implementing various initiatives to promote FDI, including tax incentives, streamlined investment procedures and the establishment of special economic zones. Malaysia attracted an impressive RM 893.2 billion in FDI during the first quarter of 2023, representing a RM 14.1 billion increase compared to the last quarter of 2022 (RM 879.1 billion). The attraction of foreign investments has been incentivised further by the Madani Economy Framework announced by Prime Minister Datuk Seri Anwar Ibrahim, with the objective of positioning Malaysia as an even more competitive investment destination. Political stability has always underpinned Malaysia’s attractiveness as an investment destination, and with the Prime Minister recently reassuring foreign investors that there is no concern of political instabilities within Malaysia, the country is making waves in the right direction. 
 

THE MALAYSIAN ECONOMY

The economy of Malaysia is the fifth largest in Southeast Asia and the 36th largest in the world in terms of Gross Domestic Product. As an open state-orientated and newly-industrialised market economy, the country has a low official unemployment rate of 3.9% and a labour force of 15 million. As the world’s 23rd largest exporter and 25th largest importer, Malaysia’s major exports consist mainly of tin, rubber, cocoa, pineapple, tobacco, palm oil and petroleum, with Malaysia’s exports being one of the largest in volume and value of palm oil products in the world, after Indonesia. Manufacturing contributes to a significant portion of the country’s economy, accounting for over 40% of GDP.

Malaysians benefit from a relatively affluent lifestyle compared to many of their neighbours in Southeast Asia, and this is due to a relatively low national income tax, a fast-growing export-oriented economy, highly affordable local food and transport fuel, as well as a fully subsidised single-payer public healthcare system. Moreover, the infrastructure of Malaysia is one of the most developed in Asia, with its telecommunications network being second only to Singapore’s in Southeast Asia, with 4.7 million fixed-line subscribers and more than 30 million cellular subscribers. Malaysia also has seven international ports and fresh water is available to over 95 per cent of the population, with ground water accounting for 90% of the freshwater resources. The country has a large amount renewable energy resources and great potential for the development of large-scale solar power.
 

TAXES AND BUSINESS IN MALAYSIA

The World Bank’s Doing Business 2020 report ranked Malaysia in the top 12 out of 190 economies for ease of doing business. Corporate income tax in Malaysia is a direct tax paid to the government, imposed on both resident and non-resident companies that receive income from Malaysia. The corporate income tax rate varies based on the type of company. In 2016, the Inland Revenue Board of Malaysia lowered the effective tax rate to 24% for companies with capital exceeding 2.5 million ringgit. For smaller companies, the rate is 19%. For the registration of all businesses in Malaysia, (including foreign companies) the process of setting up a business entity is governed by the registrar of business, also known as the Suruhanjaya Syarikat Malaysia (SSM) or Companies Commission of Malaysia. A company is considered a tax resident in Malaysia if any time during the period of the year of assessment, management and control of its affairs or at least one meeting of the Board of Directors are exercised in Malaysia. The main incorporation options to choose from include:
 

Sendirian Berhad (SDN BHD), a Private Limited Company, or Berhad (BHD), a Public Limited Company:

These are companies limited by shares, which require a minimum of one shareholder, at least one company director, and a company secretary. The documents to be lodged with SSM include a company constitution, Section 201 (a statutory declaration by company director(s) of having not been either declared bankrupt or convicted of any offence), Section 236(3) (a declaration by a person before appointment as Company Secretary), and identity cards/passports of all director(s) and the company secretary. The difference between SDN BHD and BHD, is that the former must not have more than 50 shareholders and its shares are not open to the public, unlike the latter. In Malaysia, there is also the option of incorporating an unlimited company, whose incorporation procedure and required documents are the same as a company limited by shares. The difference is that the constitution of an unlimited company must state that the liability of its members is unlimited.
 

Sole Proprietorship or Partnership:

These can include any form of trade, commerce, profession, or activity done for profit, excluding those specified in the Schedule of the Registration of Businesses Act of 1956 (ROBA 1956) and ROBA Rules 1957. If the business is entirely owned by an individual under their personal name, it is called a Sole Proprietorship. If the business is owned by two or more persons and not exceeding 20 persons, it is known as a Partnership. Registration (for one to five years) must be done within 30 days of the starting of the business.
 

Limited Liability Partnership (LLP):

This is an alternative business structure formed by professionals such as Chartered Accountants, Company Secretaries, Lawyers – regulated under the Limited Liability Partnerships Act of 2012. Features include flexibility of formation, maintenance, and termination; protection of limited liability to its partners (meaning any debts are borne by the assets of the LLP and not that of its partners); and legal status of a corporate entity capable of suing and being sued. The SSM has recently made efforts to transform and streamline the Malaysian business registration process online, depending upon which type of business structure is needed. 
 

TOURISM, RETIREMENT VISAS AND RELOCATION TO MALAYSIA

Tourism is the third-largest contributor to Malaysia’s GDP, after the manufacturing and commodities sectors and Malaysia once ranked 9th in the world for tourism arrivals. In an effort to diversify the economy and make Malaysia’s economy less dependent on exports, the government promoted an increase tourism to Malaysia, eventually resulting in this industry becoming Malaysia’s third largest source of foreign exchange income. Malaysia’s top tourist destinations are the Mulu Caves, Perhentian Islands, Langkawi, Petronas Towers and Mount Kinabalu. The nation is also renowned as one of the most preferred medical tourism destinations with modern private healthcare facilities and highly efficient medical professionals. 
 

Malaysia has a retirement visa that could perhaps be one of the best on Earth. Malaysia My Second Home (MM2H) was introduced by the Malaysian government as a way for non-Malaysians to retire and live in Malaysia for an extended period of time and provides expats with a 10-year multiple entry visa, that is automatically renewed on its expiry at the end of the first ten years.

The other long-term residency program for Malaysia is the Sarawak Malaysia My Second Home (S-MM2H) Programme, and both are initiatives by the Government of Malaysia to attract and allow foreigners who fulfil certain criteria to stay in Malaysia for as long as possible, on a 5 or 10 year renewable Pass with Multiple-Entry Visa. This is open to all foreigners from any country, regardless of background or origin, and applicants are also able to bring spouses and unmarried children under the age of 21 as dependents.   EG

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