Cost of Doing Business in Malaysia

28 August 2015

The Malaysian Investment Development Authority has evaluated the primary costs of conducting business in Malaysia for the benefit of potential investors. The following is a brief summary of their compiled cost estimates: for further advice and assistance, do contact MIDA, the agency for the promotion and coordination of industrial development in Malaysia.

Average Cost for Company’s Secretarial Services

(Private Limited Company) – RM2,000 USD625

Incorporation of a Bhd. (Public Limited Company) – RM3,500 USD1,094

Average Rental Rates of Prime Office Space

Gross rent per sq. metre per month

  /AVG /AVG
Alor Setar, Kedah – RM21.50-27.00 /24.25 USD6.72-8.44 / 7.58
Georgetown, Penang – RM27.00-30.00 / 28.50 USD8.44-9.38 / 8.91
Ipoh, Perak - RM10.70-20.40 / 15.55  USD3.34-6.38 / 4.86
Kuala Lumpur - RM64.60-102.25 / 83.43 USD20.19-31.95 / 26.07
Petaling Jaya, Selangor - RM37.70-53.80 / 45.75 USD11.78-16.81 / 14.30
Seremban, Negeri Sembilan -  RM19.40-25.80 / 22.60 USD6.06-8.06 / 7.06
Melaka -  RM10.70-27.00 / 18.85 USD3.44-8.44 / 5.94
Johor Bahru, Johor -   RM27.00-32.30 / 29.65 USD8.44-10.09 / 9.27
Kuantan, Pahang - RM13.00-27.00 / 20.00 USD4.06-8.44 / 6.25
Kuala Terengganu, Terengganu - RM21.50-27.00 / 24.25   USD6.72-8.44 / 7.58
Kota Bharu, Kelantan - RM10.70-27.00 / 18.85  USD3.34-8.44 / 5.89
Kota Kinabalu, Sabah -  RM16.70-27.00 / 21.85  USD5.00-8.44 / 6.72
Kuching, Sarawak -  RM27.00-32.30 / 29.65  USD8.44-10.09 / 9.27

*-Rental excludes the Petronas Twin Towers

Cost of Industrial Land and Factory Building

Location Selling Price per Square Foot of Industrial Land Selling Price per Square Foot of Floor Area Rental of Factory Building per Square Foot per Month
Perlis RM10.00 – 15.00 USD3.20 – 4.80 RM100 – 150 USD32 – 48 RM120 USD0.38
Kedah RM23.00 USD7.36 RM2.00 USD0.64 RM0.50 – 0.70 USD0.16– 0.22
Penang Island RM60.00 – 65.00 USD19.20 – 20.80   Mainland RM18.00 USD5.63 Island RM168.00–400.00 USD53.76– 128.00   Mainland RM141.00 -330.00 USD45.12– 105.60 Island RM1.50–3.53 USD0.48– 1.13   Mainland RM0.70 -1.70 USD0.22– 0.54
Perak RM10.00 – 15.00 USD3.20 – 4.80 RM97.00 – 115.00 USD30.00 – 36.00 RM0.50 – 0.70 USD0.16 – 0.22
Selangor RM10.00 – 15.00 USD3.20 – 4.80 RM70.00 – 306.00 USD22.40 – 97.92 RM1.10– 3.00 USD0.35 – 0.96
Negeri Sembilan RM10.00 – 15.00 USD3.20 – 4.80 RM70.00 – 306.00 USD22.40 – 97.92 RM0.90 – 2.00 USD0.29 – 0.64
Melaka RM10.00 – 15.00 USD3.20 – 4.80 RM50.00 – 108.00 USD16.00 – 56.00 RM1.00 – 4.00 USD0.32 – 1.28
Johor RM10.00 – 15.00 USD3.20 – 4.80 RM140.00–200.00 USD44.80– 64.00 RM1.20 – 2.20 USD0.38 – 0.70
Pahang RM10.00 – 15.00 USD3.20 – 4.80 RM50.00 – 127.00 USD15.63 – 40.00 RM0.40 – 0.60 USD0.13 – 0.19
Terengganu RM10.00 – 15.00 USD3.20 – 4.80 RM60.00 – 99.00 USD19.00– 31.00 RM0.40 – 0.65 USD0.13 – 0.20
Kelantan RM10.00 – 15.00 USD3.20 – 4.80 - RM0.35 – 0.45 USD0.11– 0.14
Sabah*** -KKIP   -POIC RM10.00 – 15.00 USD3.20 – 4.80   RM10.00 – 15.00 USD3.20 – 4.80 RM145 USD45   RM1.40 USD0.45
Sarawak RM10.00 – 15.00 USD3.20 – 4.80 RM92.00 – 155.82 USD26.00 – 43.32 RM0.40 – 0.80 USD0.11 – 0.22

Average Cost of Constructing Factory Building

Factory with reinforced concrete structure - RM65.00-230.00 | USD20.80-73.60

Steel portal frame on reinforced concrete - RM75.00-250.00 | USD24.00-80.00

Factory with clean room facilities - RM120.00-130.00|US38.40- 41.00

Corporate Income Tax

Resident and non-resident companies 25%

Resident companies with paid-up capital of RM2.5 million (USD781,250) and less at the beginning of the basis period of a year of assessment

  • On the first RM500,000(USD 156,250) chargeable income 20%
  • On the subsequent chargeable income 25%

Sales Tax

Sales tax is imposed on certain imported and locally manufactured goods under the Sales Tax Act 1972. The tax rate ranges from 5-10% for the majority of goods except for food preparations other than alcoholic and non-alcoholic compound preparations (other than those of the heading No. 33.02) used for making beverages, which falls under the tariff code 2106.09.490 with a tax rate of 20%.

Sales tax is also imposed on petroleum and petroleum products according to specific rates.

Service Tax

A service tax of 6% is imposed on the taxable services provided by taxable persons under the Service Tax Act 1975. Services include services provided by professionals (such as lawyers, engineers, architects, surveyors, consultants), advertising firms, private hospitals, insurance companies, communication companies, hotels and restaurants.

Contributions to EPF

The compulsory contributions under the Employees Provident Fund (EPF) Act 1991 are:

Age Group 55 Years and Below

Employers

  1. Monthly wages RM5,000 (USD 1, 606) and below
  2. Minimum of 13% of the employees’ monthly wages
  3. Monthly wages exceed RM5,000 (USD1,606)
  4. Minimum of 6% of the employees monthly wages

Employees

  1. Minimum of 5.5% of the employees monthly wages

All foreign workers and expatriates and their employers are exempted from compulsory contributions. They can, however choose to contribute, and the applicable rates are as follows:

Age Group 55 Years and Below

Employers - RM5.00 (USD1.56) per employee per month

Employees - 11% of the employees’ monthly wages

(Third Schedule (Part B) of the EPF Act 1991)

Age Group 55 - 75 Years

Employers - RM5.00 (US$1.56) per employee per month

Employees - 5.5% of the employees’ monthly wages

(Third Schedule (Part D) of the EPF Act 1991)

Gas and Fuel Costs

  Per litre

Petrol(unleaded)
-Retail
-Bulk Consumers*


RM1.90
RM1.88


USD0.61
USD0.60

Diesel
-Retail
-Bulk Consumers*


RM1.80
RM1.65


USD0.58
USD0.53

Medium Fuel Oil

RM1.61

USD0.52

  Per kg

LPG
-Bottled
-Bulk Consumers*


RM1.85
RM2.13


USD0.59
USD0.68

Note: Kuala Lumpur prices quoted

*Prices may fluctuate based on contracts and current crude oil market conditions

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