Many investors are always caught off guard by the shortcuts they tend to take, thinking that Malaysia is just like any other third world nation such as Indonesia or Vietnam or Cambodia where corruption is rampant and normally, our friends from the American continent are the ones caught out in the tangle, trying to sort out the mess which could be avoided if they heeded the advisory of the consultants.
Rule 1
There are no short cuts in doing business in Malaysia. Rules do change often during or near a budget reading, which falls in early March or so (subjective, do read the papers) but not that much, normally to your advantage. Rules are there to protect yourself from getting conned from scams, locals and foreign alike. As how biased it may be, African nationals and Colored folks tend to use Malaysia as a base to launder their dirty business, and thus causing more restrictions to the legitimate investor.
Rule 2
Pay the proper fees. It is better to cost you now then getting a steady flow of money bled out from your tight budget in getting to get things fixed. This includes start up fees (incorporation,legal and secretarial fees), banking fees and getting a place to start your business.
Rule 3
Give yourself AMPLE TIME. Just as how you heard the time keeping nightmares of the Arabian deals, Malaysia is governed by Federal and State rulings. Each state has it's own ups and downs and timings to get things done. Incorporation takes about 2 weeks to complete, from name searches, to filing and getting the certificate issued out. This is subjective to any local and public holidays which normally involves the Sovereigns and Islamic Holidays such as Eid (VERY VERY LONG HOLIDAYS!) [Normally called Aidul Fitri or Hari Raya Puasa and Aidul Adha or Hari Raya Kurban in relation to the Haj]. Chinese New Year and some other holidays that land on either a Monday or Friday will be dealt with a super long holiday where the officers are gone home to their villages or homeland.
Northern Islamic States such as Kelantan , Kedah (Sovereign of Penang) and Terengganu practices the Islamic Holiday system, meaning Sunday to Thurday working days for the government and some companies work Monday to Fridays, including Banks. However, Cheques and Interbank fund transfer don't effect on Fridays and Sundays, especially if drawn on a Federated State or Outstation Branches such as Sabah, Sarawak and Labuan.
Cheques takes 3 days to clear despite the CTCS SPICK clearing system in place. They will however, debit your bank account the same night it is presented, and funds available on 3rd day at 0700hrs. Ensure you don't do a piggy back cheque issue , example you bank in A cheque on monday and issue your vendor a cheque on the same day, dated on that day itself. It will bounce and cause you a RM100 fine and a marker on your account for bouncing cheques to the the Central Bank and Credit Bureaus. Should you bounce 3 cheques in a year, all your accounts, including those signatories personal ones will be closed, and the marker ACCOUNT CLOSED, BOUNCE CHEQUE will stay on your name and record for SEVEN YEARS! It's a far worse punitive measure than a bankruptcy. BE WARNED. Also, if a police report is lodged, you will be charged fr fraud for issuing dodgy cheques which means JAIL TERMS. They seem to adapt the Singapore method of doing things, which the same goes to Arabian peninsular. Arrange a Secured Overdraft if possible.
Rule 4
BE PATIENT. If handling the Government Agencies or Statutory Bodies, be ready to hop about, getting things done. Local Municipal Licenses and alike REQUIRE the LOCAL CONTACT who is the director to get the permits up.He or She will act as the guarantor should anything screw up and goes to court to answer for your misdemeanor. So pay up for that kind of bail bond. Cost wise, it usually cost RM1200 per year to get him or her to sit on your board of directors plus a service fee of about RM300-500 each time they have to be called out to handle the government affairs. Think of this as a time wasted fee as fuel and time cost, just as how precious yours is.
Rule 5
READ THE FINE MANUAL. Company Acts are simple, and many of the laws are available for sale in many good bookshops. The Attorney General website has the raw list of laws in play and available for you to read them online. Do take the time to read them.
Rule 6
Understand what is being said. A company is defined by how much shares it is AUTHORISED to issue (or do business with) with the number of shares being Paid Up. A company is liable to the amount of shares it is paid up to, and usually when a credit check is done, how strong the company is, usually subjected to the amount of shares issued and paid up. By default, ALL COMPANIES ARE AUTHORISED TO RM100,000 and Mandatory to have 2 Shares issued with 2 Directors. The Directors may not be the subscribers to the shares.
Putting the money in the bank account or fixed deposit (certificate of deposit) for a month will usually suffice to warrant share issues and it cost money to issue shares and have the authorised capital increased. The Companies Commission (SSM) fees does not include any legal and stamp duty due on those documentation. All documentation require stamping in order to have it legalised.
Rule 7
Always have a good lawyer handy to deal with your dealings. They usually handle local conveyances and corporate legal affairs. Word of mouth is the best recommendation so far. The more professional and senior they are, the costly the fees are, just as anywhere will be.
Rule 8
Deposits are mandatory for many things. This includes TELECOMMUNICATIONS, INTERNET, UTILITIES, SERVICES.
Range of deposits includes RM3000 for Fixed Phone Lines, RM1500 Per Cellular Line (corporate or foreign entity), Rentals (3+2+1 months being 3 months rent advance, 2 months Utilities and 1 Month advance payment)...costing anywhere between RM15,000 and above, averaging RM3000 a month rent since power bills for offices cost usually about RM3000 per month at least excluding service fees.
If you are talking about cheap rents in semi industrial lots where it may be your workshop and office alike, Tenaga Nasional (TNB) the power company will usually ask about RM10,000 in deposits depending on your power load, with 3 phase 415V input peaking at 100 Amperes and the local water company asking about RM1,000 being that companies tend to touch a minimum RM200 water bill and a habitual late paymaster.
Rule 9
Listen to the local guide. Don't be an arrogant person as the more arrogant you are, the more you are putting your head on the chopping block. Malay Singaporeans tend to do this and have thus failed in many ventures and calls their fellow compadres a thief and liar but this is usually their own doing for not doing their homework properly. Leave your arrogance at home and act as if you are a stupid nut, for it will bear more gain.
Rule 10
Respect the local rules and traditions. Each state and locale have their own way to get things done and just because the Federal Government says so, does not mean they will follow suit as individual state administration overrides the Federal ruling in terms of property ownership and rights. Many lands are Bumiputera Reserve only and thus cheap, but this is meant to the local Malay and aboriginal tribes only. Sabah and Sarawak have a far more complex ruling in terms of their own immigration laws and MAY REQUIRE A PERMIT to enter the state. Just because you have a Permanent Resident or Permit to stay, does not entitle you to enter Borneo. It will state on your pass saying "To Enter and Remain in West Malaysia and Sabah till......". Your passport will be required to travel to those areas and Border Zones (DMZ) in Northern States of Perlis, Kedah, Perak and Kelantan.
At times, CURFEWS ARE IN PLACE. Do take note and read the local papers.
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