Malaysia has always welcomed investments in its manufacturing sector. Desirous of increasing local participation in this activity, the government encourages joint-ventures between Malaysian and foreign investors.
Equity Policy for New, Expansion or Diversification Projects
Since June 2003, foreign investors could hold 100% of the equity in all investments in new projects, as well as investments in expansion/diversification projects by existing companies, irrespective of the level of exports and without excluding any product or activity.
The equity policy also applies to:
i. Companies previously exempted from obtaining a manufacturing licence but whose shareholders’ funds have now reached RM2.5 million or have now engaged 75 or more full-time employees and are thus required to be licensed.
ii. Existing licensed companies previously exempted from complying with equity conditions, but are now required to comply due to their shareholders’ funds having reached RM2.5 million.
Equity Policy Applicable to Existing Companies
Equity and export conditions imposed on companies prior to 17 June 2003 will be maintained.
However, companies can request for these conditions to be removed and approval will be given based on the merit of each case.
In Malaysia companies are govern by the Companies Act, 2016. This Act does not stipulate any equity conditions on Malaysian incorporated companies. However, to increase local participation in business, the government encourages joint-ventures/ partnership between Malaysian and foreign investors.
Specific equity conditions may be imposed for specific approvals, operating licences, permits or registrations by the regulating Ministries/Agencies, depending on the activities undertaken.
Specific equity policy for services activities covered in the series of guidebooks which can be obtained from the relevant booklets.
A company, which equity participation has been approved will not be required to restructure its equity at any time as long as the company continues to comply with the original conditions of approval and retain the original features of the project.
Protection of Foreign Investment
Malaysia’s commitment in creating a safe investment environment has attracted more than 8,000 international companies from over 40 countries to make Malaysia their offshore base.