This guest blog on how to begin eCommerce in Malaysia is provided by our legal partner in Malaysia, Jeff Leong Poon & Wong. Minor formatting changes and image additions have been made by TMO Group.
Step 1: Register your Business
To enter the Malaysian e-commerce market, you should first establish a corporate vehicle for your business operations. There are various types of business entities from which you could choose:
- a sole proprietorship or a partnership under the Registration of Businesses Act 1956 (“ROBA”);
- a limited liability partnership under the Limited Liability Partnerships Act 2012;
- a private limited company, a public company or a foreign company under the Companies Act 2016.
All entities differ in nature, and contain different requirements. For example, only Malaysian citizens and permanent residents may register a sole proprietorship or partnership. Other aspects such as personal liability, types of capital contribution, number of shareholders or partners, legal status and management of the entity, annual compliance costs, liability for debts of the business, and audit requirements should also be considered before deciding on any legal entity.
Once you’ve decided on a suitable legal vehicle, the next step is to register your new business with the Companies Commission of Malaysia (“CCM”). For the registration of a company under the Companies Act 2016, you are required to obtain the approval of the CCM for the name of your business. Prior to submitting an application for the reservation of your business name with the CCM, you could perform a company name search with the CCM to check the availability of the proposed business name. Upon the CCM’s approval for the proposed business name, you may proceed to submit an application for the incorporation of your new business. Your business name will be reserved for a period of 30 days to a maximum of 180 days from the date of the CCM’s approval.
Individuals who operate smaller businesses on social media platforms for the purpose of making profits should also be registered with the CCM under ROBA. Should any individual carry on an unregistered business, he / she may face a fine not exceeding RM50,000 or imprisonment for up to 2 years, or both.
You should also register your business with the Inland Revenue Board of Malaysia and declare income earned accordingly.
Depending on the nature of your business, there may be additional licences, permits or approvals to obtain from other relevant authorities prior to the date of commencing operation.
Step 2: Establish the Main Tool
You should engage an internet service provider to host your website using a domain name of your choice. Should you choose to adopt the “.my” domain name, you would be required to register your domain name with the Malaysian Network Information Centre (“MYNIC”)
Depending on the complexity and nature of your business, you may need to engage a third-party contractor to assist you with the development and maintenance of your website. Pursuant to the Consumer Protection (Electronic Trade Transactions) Regulations 2012, the following business information is required to be disclosed on your website
- name of the person, business or company;
- registration number of the business or company;
- e-mail and telephone number, or address of the business owner;
- a description of the main characteristics of the goods or services;
- the full price including transportation costs, taxes and any other costs;
- the method of payment;
- the terms of conditions; and
- the estimated time of delivery of goods or services.
In addition to the above, your website must allow buyers to rectify any errors prior to the confirmation of any purchase. It is also a Malaysian legal requirement that your website shall acknowledge receipt of all orders to the buyers without any undue delay.
Last but not least, if you need to contract with a third-party operator of payment systems, you should ensure that the operator of your choice is licensed and registered with the Central Bank of Malaysia.
This article is written by Joy Lim PK, a Senior Associate from Jeff Leong Poon & Wong, a law firm in Malaysia.
The guidance provided above is for your general information only and do not constitute legal or professional advice. Please be advised to refrain from acting based on the information herein without seeking advice from a qualified legal professional.
If you’re interested in learning more about eCommerce in Malaysia and how to get started there, check out our free Malaysia eCommerce Market Starter GuideA general guide to the eCommerce Market in Malaysia: statistics, market entry and marketing strategies, industry insights, legal requirements.Malaysia eCommerce Starter Guide. If you’d prefer a wider perspective on the Southeast Asian region, check out our free Southeast Asia eCommerce Outlook 2023This free PDF takes a broad view of eCommerce across five of Southeast Asia's most exciting markets: statisics, market structure, trends, entry strategy.Southeast Asia eCommerce Outlook.
