Operating a Business

flag Malaysia Malaysia: Operating a Business

In this page: Legal Forms of Companies | The Active Population in Figures | Working Conditions | The Cost of Labour | Management of Human Resources

 

Legal Forms of Companies

Sendiran Berhador SDN BHD is a Private Limited Company.
Number of partners: Minimum: 2
Maximum: 50
Capital (max/min): Minimum two ordinary shares of MYR 1 each
Shareholders and liability: Liability is limited to the nominal value of the subscribed shares.
Berhad is a Public Limited Company.
Number of partners: Minimum: 2
Maximum: No limit
Capital (max/min): Minimum two ordinary shares of MYR 1 each
Shareholders and liability: Liability is limited to the nominal value of subscribed shares.
Perkongsion Liabiliti Terhad or PLT is a General Partnership
Number of partners: Minimum 2 and maximum 20.
Capital (max/min): No minimum
Shareholders and liability: Liability is limited to the nominal value of subscribed shares.
General Professional Associations
SMI Association of Malaysia
 

Business Setup Procedures

Setting Up a Company Malaysia East Asia & Pacific
Procedures (number) 8.00 7.25
Time (days) 17.50 29.73

Source: Doing Business - Latest available data.

 
For Further Information
Consult Doing Business Website, to know about procedures to start a Business in Malaysia.
Companies Commission of Malaysia
The Competent Organisation
The Companies Commission of Malaysia (SSM) has the power, as the representative of the Ministry of Domestic Trade and Consumer Affairs, to register, form and strike off Malaysian companies and enterprises. Its main functions are administration and implementation of the applicable laws, registering of companies and enterprises, keeping official company and enterprise dossiers, and making company directors aware of ethical rules. The SSM is also a watchdog organisation.
 

Recovery Procedures

Principle
For the formalities of company restructuring and recovery, visit The Asia Pacific restructuring and insolvency.
Minimum Debt-to-Capital Ratio Triggering Liquidation
None
Bankruptcy Laws
Bankruptcy Act of 1967
Reorganization and Rehabilitation Laws
Bankruptcy Act of 1967 and the Companies Act of 1965.

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The Active Population in Figures

201820192020
Labour Force 15,523,12615,780,71615,904,215

Source: International Labour Organization, ILOSTAT database

 
201720182019
Total activity rate 68.00%68.54%68.64%
Men activity rate 80.34%80.85%80.94%
Women activity rate 54.81%55.39%55.49%

Source: International Labour Organization, ILOSTAT database

 
Employed Persons, by Occupation (% of Total Labour Force) 2015
Wholesale and retail trade; repair of motor vehicles and motorcycles 16.8%
Manufacturing 16.5%
Agriculture, forestry and fishing 12.5%
Construction 9.3%
Accommodation and food service activities 8.2%
Education 6.4%
Public administration and defence; compulsory social security 5.3%
Administrative and support service activities 4.5%
Transportation and storage 4.4%
Human health and social work activities 4.1%
Professional, scientific and technical activities 2.6%
Financial and insurance activities 2.5%
Information and communication 1.5%
Mining and quarrying 0.7%
Arts, entertainment and recreation 0.6%
Water supply; sewerage, waste management and remediation activities 0.5%
Real estate activities 0.5%
Electricity, gas, steam and air conditioning supply 0.4%
 
For Further Statistics
ILO, Laborsta Malaysia
For Further Information About the Labour Market
International Labour Organisation

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Working Conditions

Opening Hours
 
  • Legal Weekly Duration
48 hours a week.
  • Maximum Duration
Working hours must not be over 9 hours a day and 48 hours a week.
  • Night Hours
Between 10 pm and 5 am (prohibited for women)
Working Rest Day
One rest day a week is laid down by the law.
Paid Annual Vacation
8 days for less than two years' length of service, 12 days for two to five years' length of service, and 16 days for more than five years' length of service.
Retirement Age
There is no legal age for retirement in the private sector even if the EPF (Employment Provident Fund) considers people are eligible from 55 for men and 50 for women.
Child Labour and Minimum Age For Employment
Children under 14 must not work between 8 pm and 7 am the following day; they must not work more than 3 consecutive hours without a 30 minute break; they must not work more than 6 hours a day, and if they go to school, the total time must not be more than 7 hours, time spent at school included.
Informal Labour Market
The informal sector allows a large part of the population to survive. Malaysia has a score of 3/5 according to the index of economic freedom linked to the informal market (Heritage Foundation).

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The Cost of Labour

Pay

Minimum Wage
According to the government data, the minimum wage was MYR 1,2000 per month in 2020.
Average Wage
Average montly salary for employees: MYR 3,224; median montly salary: MYR 2,441(source: Department of Statistics Malaysia, 2019).
Other Forms of Pay
  • Pay For Overtime
Paid one and a half times the normal rate of remuneration.
  • Pay For Rest Days Worked
Paid twice the normal rate of remuneration (or three times for working on a public holiday).
 

Social Security Costs

The Areas Covered
Accident at work, disability.
Contributions
Contributions Paid By the Employer: Employees’ Provident Fund (EPF)

  • below 60 years of age: 12% for income up to MYR 5,000, 13% for income equal or above MYR 5,000
  • age 60 and above: 4%

Employment Injury Insurance Scheme (EIIS) and Invalidity Pension Scheme (IPS): based on the employee’s monthly wages, up to a maximum of MYR 69.05 for the employer.
Contributions Paid By the Employee: 11% or 5.5% (depending on the age) for retirement pension and 0.50% for insurance and workplace accident (capped at MYR 4 000 per month).

Competent Organization
Social Security Organisation (SOCSO)

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Management of Human Resources

 

Recruitment

Method of Recruitment
Private and public recruitment agencies, Internet, individual interview.
Recruitment Agencies
A list of private recruitment agencies is available on the website of the Ministry of Human Resources.
Recruitment Websites
JobsDB Malaysia
 

The Contract

Type of Contract
Called "Contract of Service" or "Contract of Employment", the contract is deemed to exist as soon as the employee starts to work. There are fixed-term contracts and open-ended contracts.

Breach of Contracts

  • Retirement
There is no legal age for retirement in the private sector but the EPF (Employment Provident Fund) considers people are eligible from 55 for men and 50 for women.
  • Dismissals
A dismissal needs three oral warnings beforehand in front of witnesses, then three written warnings, followed by a conciliation meeting.
  • Other Possible Methods
Collective procedure (voluntary separation scheme) or limited procedure (retrenchment) of downsizing, contracts reaching their their expiry date.
Labour Laws
Attorney General's Chambers
Consult Doing Business Website, to obtain a summary of the labor regulations that apply to local entreprises.
 

Dispute Settlement

 

Conciliation Process

Cases of Dispute
Immigrant workers and women are the most vulnerable; the most frequent abuses are non-payment of wages, confiscation of travel documents, not observing rest periods, physical violence.
  • Legal Framework
Industrial Relations Act 1967
  • Procedure
The Industrial Relations Act 1967 sets out the procedure to be followed.
 

Judicial Structures

  • Legal Framework
Industrial Relations Act 1967
  • Competent Legal Body
Industrial Tribunal, Labor Office
 

Social Partners

Social Dialogue and Involvement of Social Partners
There are two national organisations: the Malaysian Trade Union Corporation (MTUC) and the Congress of Unions of Employees in the Public and Civil Service (CUEPACS).
Unionisation Rate
9.5% of workers are unionized.
Unions
National Union of Journalists Malaysia
Regulation Bodies
Ministry of Human Resources
 
 

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Latest Update: May 2022