Malaysia: Regional 2024 Doing Business In Update

Published on Apr 23, 2024

2024 Malaysia Regional Update

Firm Name: Shearn Delamore & Co.
Jamie Moon Hoong Goh, Hui Ting Hee, Nicholas Choi Chuan Tan

1. How is the political environment impacting business in or with your country?

Since forming a unity government at the end of 2022, Malaysia has actively promoted foreign investment. The Prime Minister has visited many nations, such as China, Singapore, Japan, South Korea, and the USA, and has secured significant investment commitments from these countries.

The government has also launched various initiatives across different sectors, such as manufacturing and renewable energy, to enhance the business landscape. In the manufacturing sector, the New Industrial Master Plan 2030 has been implemented to develop the sector and boost Foreign Direct Investment (“FDI”). Renewable energy initiatives such as (i) the Large Scale Solar Programme for developing solar photovoltaic plants and (ii) the Low Carbon Energy Generation Programme, which relates to power generation projects utilizing non-solar resources, have been introduced.

2. Which countries have you previously collaborated with and do you see potential for future collaboration with on cross-border matters within the region?

Malaysia is a hotbed for foreign investments, as evidenced by the 15.3% increase in FDI inflow in 2023 compared to 2022. This increase in FDI is reflected in the deals we were part of in the past year, where we collaborated with many countries, such as China, Australia, Singapore, and Thailand, on various cross-border transactions across different sectors, including manufacturing, education, and energy.

Malaysia is continuing to actively promote foreign investment into the country in 2024. In the past three months, the Prime Minister's visits to countries such as Germany, Australia, and Indonesia have reportedly secured substantial investment commitments.

Malaysia’s commitment to attracting investment, exemplified by establishing a special economic zone in Johor and its participation in free trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), is poised to enhance international collaboration and boost FDI in the near future.

3. What legislation has recently changed or is changing that a potential international client should be aware of?

There have been several legal developments in Malaysia in the last few months that should be taken note of by those doing business in Malaysia.

Firstly, a beneficial ownership reporting framework for companies has been introduced. This framework requires companies to record the details of the company's beneficial owner(s) in a register of beneficial owners. Companies may also require the registered shareholders to disclose the beneficial owners' identities in the shareholding chain.

Secondly, a Capital Gains Tax (“CGT”) regime has been introduced in Malaysia, which would generally apply to the disposal of capital assets such as unlisted shares by certain entities, including Malaysian companies and Limited Liability Partnerships. The deal process should include key obligations for disposers under the CGT regime, such as the timing for filing CGT returns and payment.

Thirdly, a general merger control regime will soon be introduced in Malaysia. While not yet in place, this is an important upcoming development for investors to consider as it will impact the Malaysian deal process, timeline, and rules and customs moving forward.