- What is required for starting a representative office in Malaysia?
A representative office incorporated with the approval from Malaysian Investment Development Authority (MIDA) when fulfilled the criteria of minimum RM300,000 per annum for operational expenditure. Other than that, the representative office should be financed by funds emanating from sources outside Malaysia.
- Is there any restriction on hiring local or foreign staff for this representative office?
The number of expatriates allowed would depend on the functions and activities of the Representative Office. Expatriates would only be considered for the managerial and technical level. The duration of the work permit would be on a two-year basis and it is renewable.
- What are the permissible activities for representative office in Malaysia?
- planning or coordinating of business activities
- gathering and analysis of information or undertaking feasibility studies pertaining to investment and business opportunities in Malaysia and in this region
- identifying sources of raw materials, components or other industrial products research and product development
- as a coordination centre for the corporation’s affiliates, subsidiaries, agents in the region
- other activities which will not result directly in actual commercial transactions.
- What are the activities that are not allowed under representative office?
- engage in any trading (including import and export), business or any form of commercial activities
- lease warehousing facilities (any shipment/transhipment or storage of goods shall be handled by a local agent or distributor)
- sign business contracts on behalf of the foreign corporation or provide services for a fee
- participate in the daily management of any of its subsidiaries, affiliates or branches in Malaysia.
- How to apply for the registration of representative office?
- Application (excluding banking, financial and tourism services) for a Representative would be submitted to the Malaysian Investment Development Authority (MIDA) – Fill in the form ‘Application for Establishment of Representative Office (RE) / Regional Office (RO) and/or Expatriate Posts (RERO-1 Form)
- Application for a Representative Office relating to banking and financial services would be submitted to the Central Bank of Malaysia/Bank Negara Malaysia.
- Application for a Representative Office relating to tourism services would be submitted to the Ministry of Tourism, Malaysia.
- What are the criteria to set up representative office in Malaysia?
It is for a foreign company of minimum two-years (2) establishment in the manufacturing and services sector is entitled to apply for 2 to 5 years’ approval to set up a representative office in Malaysia to perform permissible activities for its Head Office. The representative office does not undertake any commercial activities but only represents its Head Office to undertake designated functions and permissible activities by MIDA. The operation cost of representative office is completely funded from sources outside Malaysia by their Head Office. The representative office setting up in Malaysia is not required to be incorporated under the Malaysia Companies Act 2016. The office’s approval can be accompanied by their expatriate post and the number of expatriates allowed depends on the functions and activities of the representative office in Malaysia. The approved expatriates together with their family will be given a 2-years work permit.
- What are the benefits of applying for the approval of setting up a representative office in Malaysia?
The application process is fast and easy. You can apply using profiles and documents of your firm in your home country. It takes between 4 weeks for the applications to be approved and you can wait for the approval while still living in your home country. Other than that, you are given a three-year window period to ascertain the viability of the business opportunities available and decide whether you want to set up shop in Malaysia before making any investments. Then, you, your spouse and children will receive three years expatriate work Visa. Once approved, it is easy to start and to get visa endorsement for the office. With the work Visa, your spouse is allowed to be employed by any company within the country.