The uncertainty of the past two years has posed new challenges for CFOs, management and finance teams equally in terms of finances and operations. This has included a greater need for more frequent reporting, financial planning and analysis, and cash flow management, among other things. 

What can the finance department do to tackle these new challenges? More crucially, what are the most trustworthy and adaptable solutions out there? With these new pain points comes new working methods, processes, and controls, which CFOs and the management must ensure enough flexibility to allow finance staff to be productive and empowered at work. 

One option to streamline finance better is by outsourcing the accounting function. As a key team member, you might already be aware of the need to outsource. But how can you get the necessary buy-in from the senior management? Here, we will attempt to give out some pointers to get alignment from the management and ultimately, get them to agree and start outsourcing. 

What accounting services can you outsource?

• Accounts receivable and account payable
• Bookkeeping services
• Cash flow and budget preparation  
• Tax return review and filing

Convincing The Management to Outsource Accounting 

Convincing the management to outsourcing parts of the Company’s accounting functions can be challenging and intimidating. Here are some points you can consider talking to your management to evaluate the need to outsource.  

Identifying the needs, pain points of the accounting and finance department

Finance experts are now intimately involved in the day-to-day operations of their companies, offering strategic direction and assisting in high-level decision-making. Transactional tasks and record keeping are no longer the sole focus of finance staff. Finance roles are evolving in new and fascinating ways as the importance of financial planning and analysis grows. This, however, brings additional challenges and areas for finance teams to analyse. 

With the evolving journey which involves new responsibilities and complexities, it causes a drop in the performance. Mainly through such tasks as preparing necessary accounting documentations, and queries to be answered from respective stakeholders. To cope with the evolution, it is necessary for management to train and sharpen their employee skills. 

Without the right skills and proper training, many operations and tasks would be a flop and causing extra time wasted. In order to train employees to upskill their capabilities, it takes up a lot of time and money, which also leads to pending workflows and piling up of deadlines that would have to be crossed. 

How can the management overcome this? 

In order to reap a benefit, management can outsource their accounting tasks and operations to an accounting outsourcing partner. The management can address concerns and talk to their prospective accounting outsourcing partner on how they can help reduce this risk that is faced. This reduces the burden of training employees in house or hiring more in house employees with the required skills, as it leads to more cash out than cash in. With this, the management can work on prioritising the right task to boost the company’s revenue in house and reach other required targets and plan more efficiently as they can focus on their core business in house without worries. 

Management may fear sharing their confidential information in their accounting section with a completely unknown company to work with. This is why management can start with small projects to build trust with the accounting partner and go through thorough research when finding one. As the trust is formed and comes down to a solid foundation, if the management is happy with the work quality delivered, then the management can go on with larger projects or more complex tasks to work with. 

Learning about past outsourcing projects

It’s helpful to understand the reservations your manager could have by learning about past outsourcing projects they have handled. There must be a reason why they stop outsourcing at one point. Some common reasons how an outsourcing project might go wrong included:

• Prioritising lower-cost labour over quality work 

One of the most common reasons for outsourcing accounting is to save money. However, it is crucial to remember that the cheapest choice may not necessarily be the best option in the long run. It is just as vital to engage the correct outsourced partner.

When you outsource solely to save money, you risk compromising on labour quality, therefore negating the goal of outsourcing. So, rather than being influenced solely by vendor rates, you can suggest focusing on the other significant advantages of outsourcing which includes specialised skills, greater flexibility in meeting your objectives, enhanced capacity for core capabilities, and the ability to scale quickly, among other things. 

• Engaging with an outsourcing partner without conducting thorough research 

Most clients will merely look at an outsourced partner candidate’s general background when recruiting them, however this is insufficient. Outsourced partners should possess not just great technical skills but also strong soft skills such as effective communication, time management, and problem-solving. As a result, it is critical to think about a few essential elements that could influence your decision. 

Here are some questions that will influence your decision 

1. Does the outsourcing partner share the same core values, beliefs, and company culture as you? 
2. Do they have a lot of long-term clients? That could reflect a low turnover rate and good communication from the vendor to the client. 
3. Do they have experience in handling the exact tasks you are outsourcing? 

Lastly, make sure you evaluate the vendor’s previous track record by looking at client comments across many platforms. This data can help you make a better informed decision.

• Not setting clear expectations 

Understanding what to outsource and what are your own expectations for how the processes will be handled are two separate things. Make sure you understand why you are outsourcing and what you plan to accomplish, and then explain these goals to your outsourcing provider. Failure to do so may result in sloppy communication, missing deadlines, and a general outsourcing meltdown. 

• Legal and contractual procedures was done wrongly 

Unlike in-house hiring, the legal outsourcing process is less standardised and heavily influenced by the vendor’s location. You may be required to sign different additional documents that are not part of the legal process in your nation. After the contracts have been signed and the work has begun, the outsourcing troubles begin – simple mistakes in the agreement can lead to significant consequences that can poison the entire dynamics between you and your vendor. 

Thus, all these concerns have to be addressed before presenting a case for outsourcing to your management. 

Ways to avoid blunders when outsourcing your accounting 

• Determine your outsourcing goals 

If, for example, you are engaging with an accounting outsourcing team, you should express your expectations and goals outwardly. This always helps you to stay well aligned within your reason for outsourcing and the KPIs which you are looking to achieve through the outsourcing process.  Setting clear expectations from the start assure that there will be no resource constraints or workload bottlenecks afterwards.

Here is how to communicate clearly with your outsourcing  provider:

• Define your present task, the quantity and quality of resources you will need, your KPIs, and any specific technology details, along with other things that are important to know.
• Communicate your anticipated timeline to review the progress according to designated milestones.
• Tell your outsourcing partner what kind and frequency of communication you are looking for.
• Consider holding an orientation session with your outsourcing partner to clear any ambiguities regarding their roles and obligations.

Transparency with potential vendors can encourage them to invest more in your firm. Some vendors may withdraw from the process early owing to incompatibility thus saving you time and money.

• Be meticulous and thorough.

Prepare a Non-Disclosure Agreement (NDA) for the outsourcing partner to sign, as well as any other necessary regulatory documentation. Discuss every aspect of the process, including scenarios in which your vendor fails to deliver or makes a mistake, and don’t forget to address data security concerns. Compensation, working circumstances, partnership obligations, ownership information, and other pertinent terms should all be included in your contract. 

• Implement continuous communication 

Integrate calls, feedback loops, and other communication tactics into your project plan to ensure that communication is a key component of the workflow. Plan to visit each other’s offices to conduct in-person encounters that will help you understand each other better and build your empathy. 

You should also maintain a good track of communication with the key person in charge of your task and requirements in order to stay in the loop of how your things are working out, and you know who to mainly refer to when goals, KPIs or any other circumstances aren’t going as planned. 

• Find the middle ground 

Take a step back and evaluate your firm objectively: its size, number of employees, potential for expansion, income, brand awareness, and so on. If you are still in the early stages of your business, avoid hiring a huge outsourcing firm. The money you would spend on it would be enough to pay for an in-house specialist’s salary. At the same time, avoid going with the lowest priced vendor in the market because you will be more likely to get poor outcomes.

Conclusion 

You’ve seen how beneficial outsourcing your accounting really is, and you’re on your way to get the greenlight from management. The next step is finding the right accounting partner for your business. There are various firms out there to assist you in taking control of the future of your business by delegating a little bit of your responsibility.

Ledgen has a team of professional accountants to assist you and ensure all your accounting needs are met and follow all compliances with full security. Ledgen has dealt and worked with multiple clients from various ranges of industries and levels and provided excellent services. Contact Ledgen today to get your accounts outsourced rightly and safely. 

Hiring a company secretary is a legal obligation in Malaysia for a business to be considered legitimate. In today’s article, we’ll be talking in depth about what a company secretary is, what they do, and how to appoint one. Whether you’re just starting to incorporate a business in Malaysia or looking for an expert whom you can consult, this article might help you shed some light on the topic. 

What is a Company Secretary?

A Company Secretary is a professional whose function in a corporate setting is to provide advice on regulatory and compliance matters under the Malaysia Companies Act, 2016  and ensure that all paperwork, resolutions, statutory documents, and procedures that occur within the company are compliant with Malaysian government regulations.

A Company Secretary must be at least 18 years old and a member of any professional body prescribed by the Ministry of Domestic Trade, Cooperatives, and Consumerism. This individual must also have a residency in Malaysia. 

Can a company secretary be appointed at the point of incorporation? 

The appointment of a company secretary is not necessary at incorporation but a company secretary must be appointed within 30 days of the company’s date of incorporation, according to section 236 of the Companies Act 2016. 

Importance of a company secretary 

Under the Companies Act, 2016, every organisation must appoint a qualified company secretary. Being an advisor to the board of the company, the company secretary needs to have the required skills and knowledge to ensure legal and regulatory business protocols are implemented and that the organisation is operating in compliance with the legal guidelines and regulations. The Companies Act, 2016, for example, requires companies to submit certain documents to the registrar by specified timeframes, which is the job of company secretaries. 

A more practical and cost-effective solution for business owners to ensure corporate compliance is to engage outsourcing corporate secretarial services, which will allow them to focus on the day-to-day running of the business. They will also have peace of mind because the corporate secretarial matters will be handled by a team of professionals. You should consider outsourcing if and when these issues are a priority: 

• Accuracy 
•  Specialist expertise 
•  Cost-Effectiveness 
•  Reliability and impartiality
•  Reduced Risk of non-compliances and penalties

Who can be a Company Secretary?

According to Section 235 of Companies Act 2016, the requirement to become a Company Secretary shall be:

• A natural person
• 18 years of age and above
• A Malaysian citizen or Permanent resident in Malaysia (who resides in Malaysia by having a principal place of residence)
• A person licensed by the Companies Commission of Malaysia under Section 20G of the Companies Commission of Malaysia Act 2001 or a member of any one of the professional bodies prescribed by the Ministry of Domestic Trade, Cooperative and Consumerism
• Is not convicted of any crime or declared as bankruptcy

The professional body prescribed by the Ministry of Domestic Trade, Cooperative and Consumerism include those who have licence from:

• Malaysian Association of Company Secretaries (MACS)
• Malaysian Institute of Chartered Secretaries and Administrators (MAICSA)
• Malaysian Institute of Certified Public Accountants (MICPA)
• Malaysian Bar (BC)
• Malaysian Institute of Accountants (MIA)
• Advocates’ Association of Sarawak (AAS)
• Sabah Law Association (SLA)

How can a Company Secretary be appointed?

In accordance with Section 236 of Companies Act 2016, a Company may appoint a Company Secretary:

• The Board of Director shall appoint a secretary and determine the terms and conditions of such appointment
• The appointment of the first Company Secretary should be done within 30 days from the date of incorporation of a Company.  

Engaging the correct person to assist with the formation is the simplest approach for a company to choose a Company Secretary. There will be no delay in the appointment of the First Company Secretary in this manner.

The Role of a Company Secretary in Your Business

The most common misconception about a Company Secretary’s job responsibilities is that this person is only responsible for the company’s annual compliance. A Company Secretary is also responsible for advising the Board of Directors on legal concerns and ensuring the Company complies with government regulations, which is not far from the truth.  

• Advises on registration and governance of a Company

Even if a person can incorporate a company on his own, it is always preferable to hire a licensed Company Secretary to start the process. This is to keep the procedure from becoming complicated.

A Company Secretary holds a crucial position within a business to ensure that you are well prepared to meet your corporate responsibilities. The Company Secretary must be able to provide expert resources to enable you to be fully compliant and have access to opportunities to grow your business.  Areas of advisory for a company secretary may cover business restructuring, mergers and acquisitions, sound corporate governance, and the procedure for striking off or winding up a company.

• Ensures the Company abide by the rules and regulation imposed by the Government

The Companies Act of 2016 has made it easier to run a private limited company (Sdn. Bhd.). A company must comply with not only the Companies Act 2016, but also other requirements such as the Tax Act, licences, EPF, SOCSO, and so on. To provide necessary services, the Company Secretary can suggest the client contact relevant governing authorities.

• Documents meetings minutes and resolutions

A Private Limited Company (Sdn. Bhd.) is no longer required to hold an Annual General Meeting under the Companies Act 2016 (AGM). However, it is not the case for a Public Limited Company (Berhad). As a result, the Company Secretary must attend any meeting called by the Board of Directors. They will need to ensure:

• Preparation of meeting agenda is done accordingly
• Ensure meetings are properly called, constituted, and carried out in accordance with the Companies Act and/or constitution of the company

Upon conclusion of the meeting, the Company Secretary shall prepare the minutes and record all decisions and conclusions made by the Company in the said minutes.  

• Ensures Company details are up to date

The company information, such as directors, shareholders, shares, and the constitution, is promptly updated. A Company Secretary must notify SSM within 30 days of the date of event or a resolution being passed if any modifications occur. The Company Secretary keeps other documents such as the constitution (if any), minute books, financial accounts, meeting minutes, and resolutions at the registered office.

• Records Financial Year End (FYE) of a Company

The financial year-end date is when the company’s annual financial account is closed. The Company Secretary should be notified after the board has decided on the Company FYE so that a resolution can be prepared to record the decision. Normally, this is done before the preparation and audit of the year-end financial statements.

• Appointment of Auditor

Even though a Private Limited Company (Sdn. Bhd.) can choose to have its financial statements audited if they meet the following criteria:

• Dormant companies
• Zero-revenue companies
• Threshold-qualified companies

As a company grows, it is still necessary to hire an auditor. Before offering services, the auditor must be appointed and give his or her consent to act.

• Verification of stakeholders’ identity and lodge declaration of beneficial ownership

Going through the Know Your Client (KYC) protocol is one of the first steps in forming a company. This stage is for the Company Secretary to verify the identity of the directors, shareholders and beneficial owners as required under the Anti-Money Laundering and Counter-Terrorism Financing requirements of Malaysia. 

Following the receipt of information from stakeholders, the Company Secretary will need to obtain and keep records of declarations and identification documents of the stakeholders.

• Lodge of annual compliance as per required by SSM

The Malaysian Companies Commission – Suruhanjaya Syarikat Malaysia (SSM) has mandated that each Company Secretary file two documents:

• Annual return – filed every anniversary (incorporation) date annually
• Financial statement (audited / unaudited) – filed within 6 months after FYE

These documents must be filed within the stipulated deadline. For companies that fail to comply with the Companies Act 2016’s requirements, the directors shall be committing an offence under the law and on conviction, will be liable to a fine or imprisonment. The deadlines provided must be strictly adhered to by the companies.

Conclusion

In conclusion, if you want experienced, cost-effective, and dependable company secretarial services, you can consider outsourcing company secretarial services. Choosing to outsource is a wise move for business owners. It allows you to entrust professionals with the company’s day-to-day operations and to promptly handle issues relating to the company’s core activities.

Thinking of setting up a company in Malaysia or looking to appoint a company secretary? Reach out to us at Ledgen Group and see how we can assist in your business journey. Ledgen has been operating for about 20 years, armed with experience in providing statutory compliance services. 

Towering skyscrapers, double-decker trams on a busy road, bright neon street signs, and bustling harbours. These images of Hong Kong have enthralled the whole world for decades. In the 21st century, Hong Kong has evolved into a dynamic city with strong growth possibilities. 

The region retains its distinction as one of the world’s free commercial environments, with few regulatory limitations and a reputation for efficiency. It is often regarded as an ideal place for investors and entrepreneurs. This continues to ring true for Hong Kong as more and more companies and startups are launching their business in the vibrant metropolis. 

So what makes the Special Administrative Region so enticing to a lot of people? Let’s look at some compelling reasons why you should consider Hong Kong as your next business destination. 

• Low & Simple Tax System

Hong Kong is known around the world for its straightforward and low-tax structure, making it one of the most business-friendly places. Most foreign investors are attracted by the favourable tax system in Hong Kong. 

A business operating in Hong Kong benefits from the territorial source principle, for which any profits sourced outside Hong Kong is not subject to Profits Tax. The advantage of setting up a business in Hong Kong is that there is no capital gain tax, sales tax, VAT, or withholding tax on dividends and interests.

Corporations are taxed at a statutory tax rate of 16.5%, whereas unincorporated firms are taxed at 15%. Effective from the year of assessment 2018/2019, a Two-Tiered Profits Tax Regime has been implemented which lowers the tax rate for the first HK$2 million of assessable profits for both corporations and unincorporated companies to 8.25% and 7.5% respectively, with the remaining profits being taxed at the current tax rate of 16.5% for corporations and 15% for unincorporated companies. It aims to significantly reduce the tax burden of most tax-paying small and medium-sized enterprises. 

The two-tiered rates are available to only one “entity” within a group of “linked entities.” To accomplish this, the group must first determine which entity will benefit and then select accordingly.

• Accessible & Key Location 

Hong Kong is strategically located in a key area of the Asia Pacific, connected by air and sea travel to Asia’s strongest economies in Japan, South Korea, Taiwan, Southeast Asia and beyond.

Hong Kong’s proximity to some of the world’s largest and most robust economies have made it the most convenient base for doing business in Asia and has maximised opportunities for mutually convenient engagement with Asia’s key markets. 

Moreover, being one of Asia’s busiest aviation hubs, its award-winning airport serves flights to and from over 200 worldwide destinations. Hong Kong International Airport’s handy downtown check-in service and high-speed Airport Express train make business travel in and out of the city effortless and enjoyable. 

Few other cities can match Hong Kong’s fortuitous positioning in the heart of enterprising Asia. The city’s commercial and geographical access to the region’s high-growth markets, combined with its comprehensive international transport connections and economic advantages, make it Asia’s top spot for strategic events that get down to business both in Hong Kong and beyond.

• Main city in the Greater Bay Area 

Being the most international city in the Greater Bay Area, Hong Kong plays a key role in the Greater Bay Area development and also acts as a gateway to the Mainland Chinese market. Cities in the China coast have been transformed into major industrial hubs partly due to their accessibility to Hong Kong. 

The development of the Greater Bay Area further deepens the cooperation between Guangdong, Hong Kong and Macao, fully leverages the composite advantages of the three regions, facilitates in-depth integration within one another, and promotes coordinated regional economic development. Its long-term goal is to develop an international first-class bay area ideal for living, working and travelling.

As a result of Hong Kong’s role in the development of the Greater Bay Area, Hong Kong, Macao, Guangzhou, Shenzhen, Zhuhai, Foshan, Zhongshan, Dongguan, Huizhou, Jiangmen and Zhaoqing are now integrated into one of the largest economic and business hubs in the world, contributing a colossal US$1669 billion in Gross Domestic Product (GDP) as of 2020. 

Through the development of the Greater Bay Area, Hong Kong companies are able to increase their market size and create more opportunities for Hong Kong businesses.

• Role in the Belt and Road Initiative (“B&R”)

Conveniently located at the centre of the Asia-Pacific region, Hong Kong has successfully acted as a central hub for communication and transport in the Asia-Pacific region. Hong Kong’s well-developed infrastructure and efficient high-end logistics services greatly supports and serves the B&R construction. 

As one of Asia’s top asset management centres, Hong Kong is able to meet the demand for wealth and risk management services generated by B&R projects. As a key link and the prime platform for the B&R, and with the Central Government’s support, Hong Kong can capitalise on its unique advantages to connect the Mainland with other B&R regions, in areas such as the international project financing, offshore Renminbi (RMB) business, professional services, as well as economic and trade co-operation.

• Free Market Economy

One of the benefits of establishing a business in Hong Kong is that the local economy is based on free trade, a free and open market, and free entrepreneurship. There are no limits on investments in Hong Kong, both inbound and outbound. There are also no limits on foreign ownership or foreign exchange controls.

Hong Kong’s free-market economy is also attributed to its large foreign exchange reserves, low public debt, a robust banking system, a strong legal system, a business-friendly environment, and a tough anti-corruption regime. All these characteristics help the region to stand as a promising commercial destination.

• Full Business Ownership

A foreigner can hold 100% of a firm that is formed and based in Hong Kong, and the law does not impose any local residency restrictions. This permits a foreigner to be the sole shareholder and director. Another advantage of launching a business in Hong Kong is that you do not need a physical address to do business there. Only a registered office address is required. Additionally, businesses can open multi-currency bank accounts.

The company is also eligible for offshore company status if the directors are not Hong Kong citizens. In that situation, you only have to pay taxes on profits made within Hong Kong’s jurisdiction. Having this autonomy and ownership makes Hong Kong a desirable location for businesses.

• Support to Small and Medium Enterprises (“SMEs”)

The HKSAR government understands that vitality and business performance are critical to the advancement of the economy. Thus, the Trade and Industry Department has initiated multiple services aimed at facilitating the development of SMEs in Hong Kong and helping them improve their competitiveness to help them achieve wealth and success.

To achieve the objective, the Trade and Industry Department provides SMEs with a comprehensive range of free business information through the Support and Consultation Centre, a first stop provider of business information and advisory services as well as offers various funding schemes to SMEs.

Conclusion

When considering where to base your business, Hong Kong is a great option. The prime location, low tax rates, and free and open market of Hong Kong, together with the development of the Belt & Road Initiative and Greater Bay Area brings great opportunities to a wide spectrum of businesses. Connect with our company incorporation experts at Ledgen to start incorporating your business in Hong Kong. 

Malaysia is one of the most prosperous and economically powerful countries in Southeast Asia. Its economy has risen at a 6.4% yearly rate during the past half-century. Malaysia has quickly industrialised over the twentieth century, moving away from traditional agriculture and mining to contemporary commercial infrastructure. If you have (or plan to start) a business or firm in Malaysia, there are a few things you should be aware of, such as the Employer’s Statutory Obligations under the Employment Act. 

Starting A Business in Malaysia

Malaysia is blessed with rich natural resources like gas, crude oil, palm oil, and timber. Since its independence in 1957, the nation has also been a player in car manufacturing, construction, and electronics, among other key sectors. It’s little wonder that foreign investment has been fairly good, supported by a government that aims to turn the country into one of the region’s major financial centres.

Read more: Why You Should Venture Into Malaysia This Year

Malaysian Employment Law

Malaysia’s employment law is governed by the Employment Act 1955. It specifies the minimal benefits that employees in Malaysia should receive. Any language in an employment contract that provides less favourable benefits than those defined by the Employment Act will be considered null and unenforceable, and the minimum benefits provided by the Employment Act will supersede.

Below are some of the employer’s statutory obligations that are required by law.

• Statutory Salary Deductions
• Annual Leave
• Sick Leave
• Public Holidays
• Terminations of Employment

1. Statutory Deductions From An Employee’s Salary 

All employers are required by law to deduct the following from each of their employees’ salaries:

• Monthly income tax deductions
• Employee contribution to EPF, also known as  Employees Provident Fund
• Employee’s contribution to SOCSO, to social security organisations
• Employee contribution to EIS, also known as the Employment Insurance System contribution

Once you’ve made the following deductions as an employer, you’ll need to make sure that these contributions are deposited into your employees’ SOCSO and EPF accounts. As a result, it would be prudent to include these additional expenditures in your headcount and payroll budget.

Some scenarios may arise under the Employment Act that warrants additional deductions from your employee’s pay. For example:

• Overpayment of employee wages due to an error on the part of the employer. However, the deductions can be made only for the period of the preceding 3 months
• Deductions for payment instead of notice, for instance, when an employee resigns before serving the full notice of time as specified in the contract
• Deductions that are made to recover the payment of advance wages. However, no interest should be charged on the advances
• Deductions that are made to satisfy any other written law

Any employee may request that you, as an employer, make additional deductions from his or her compensation for the following reasons:

• Deductions to facilitate payments to co-operative or loan societies, trade unions for subscriptions or entrance fees, etc.
• Deductions for payments for shares that your company is selling, that your employee would want to purchase

2. Annual Leave 

All employers are required to allow for paid annual leaves for their employees. The following are the minimal conditions for annual leave as established in the Employment Act:

• If an employee has worked for your company for fewer than 2 years, then they will be entitled to a total annual leave of 8 days.
• If an employee has worked for your company for more than 2 years, but less than 5 years, this employee will be entitled to a total annual leave of 12 days.
• If an employee has worked for your company for more than 5 years, this employee will be entitled to a total annual leave of 16 days.

3. Sick Leave 

Sick leave for your employees should be handled as follows, in accordance with the Employment Act:

• Employees who have worked for your company for less than 2 years will be given a sick leave entitlement of 14 days
• For employees who have worked for your company for more than 2 years, but less than 5 years, their sick leave entitlement will be 18 days
• Employees who have worked for your company for more than 5 years will be given a sick entitlement of 22 days

Employees covered by the Employment Act shall be entitled to 60 days of hospitalisation leave each year if such occurrence necessitates so. However the 60 days will be reduced by the number of sick leave already taken in the calendar year.

4. Public Holidays 

Every year, all employees covered by the Employment Act would be entitled to a minimum of 11 public holidays. The following five public holidays must be observed:

• National Day
• Birthday of Yang di-Pertuan Agong
• Birthday of Ruler of the Yang di-Pertua Negeri of the state in the which the employee works
• Labour day
• Malaysia day

The remaining 6 public holidays can be chosen from the list of gazette public holidays by the employer. Employers are also subjected to state holidays following local state laws of their operating addresses. For example, Good Friday is a public holiday observed only in the eastern states of Sabah & Sarawak where there is a significant Christian population. In contrast, the first day of the Muslim fasting month is a holiday only in Johore, Kedah, and Malacca. 

5. Termination of Employees 

Under Malaysia’s Employment Act, an employer needs to give a notice of termination in advance, regardless of whether these are the conditions of their contract. To fire your staff, you must give them a good reason and an explanation. This is applicable whether or not the employee is covered under the Employment Act.

If you don’t give your employees a good reason and an explanation, it could be deemed as  unfair dismissal.

Conclusion

Starting and maintaining an enterprise in Malaysia can be a breeze when working with the right people. The company incorporation specialists at Ledgen can assist and ensure that you are on the right track in managing your obligations as an employer.

Over the years, Ledgen Group (formerly Ecovis Bizcorp) has successfully assisted thousands of clients with setting up their businesses. But we don’t just stop once your business is set up. Ledgen continues to support our clients by providing a comprehensive solution to them at every stage, within Malaysia to across regions in Asia and beyond.

Malaysia is one of the most promising nations in Asia, which makes it a popular venue for inventors and businesses. Although marred by economic impacts from the pandemic, the Asian Development Bank still predicts a strong 6.0% rebound for the country in 2021 and to stabilize at about 5.7% in 2022. Like many places, 2020 has been tough for Malaysians. But the economic outlook and potential for investment remain positive in the future.

In today’s article, we’ll look at some enduring qualities that the Malaysian financial ecosystem has to offer and why businesses are still considering it as a good place to venture into.

Reasons to start a business in Malaysia 

1. Strong Support System

The Malaysian government has often been friendly and welcoming to foreign investments and businesses. Many policy-makers have a very pro-business stance, implementing policies that improve the business environment for private enterprises. Tax incentives and financial subsidies are also offered to companies with pioneer status. The nation also allows foreigners to establish 100% foreign-owned companies and has an established financial sector.

Government Support During the Pandemic:

To assist businesses and employees through the economic turmoil caused by the pandemic, the government introduced a hiring incentive programme (PenjanaKerjaya) and a wage subsidy programme.

• Hiring Incentive Programme: Monthly cash incentives are given to companies employing new people for 6 months.
• Wage Subsidy Programme: Corporations can receive up to RM1,200 per retained employee each month for 3 months.

In August 2020, it was reported that the programme had helped employ more than 11,000 people and up to 2.4 million jobs have been saved by the wage subsidy programme. Schemes like this show Malaysia’s commitment to helping provide businesses with assistance and stability, increasing confidence in the country.

2. Solid Infrastructure

Malaysia has an excellent infrastructure which is positioned to well-serve the businesses in the country. Excellent air, land, and sea cargo facilities make transporting goods efficient and reliable. The international sea and air connections provide multinational corporations with an accessible route to deliver their goods and services to places all over the world. With good highway networks linking the country to Thailand in the north and Singapore at the tip of the peninsula in the south, connectivity between neighbouring nations also promises excellent international trade opportunities.

The telecommunications infrastructure is one of the best developed in the region, supporting a range of domestic and international communication services. This is excellent for any business that has operations in other locations. Better telecommunications 5G infrastructure is also in planning and development, paving a way for faster internet speeds with higher bandwidths and capacity for the industry to do more.

3. Well-Educated Workforce   

Many expats will find it easy to communicate with locals as English is a common language spoken in Malaysia, along with Bahasa Malaysia, Chinese, Tamil and various dialects. It is fairly common to use English as the medium of communication, especially in the private sector.

Malaysia’s talent pool has been developed and supported by many institutions that open up opportunities for more young people to hold diplomas, degrees and certificates. A growing number of the population are also Master’s degree holders, indicating specialised skills ripe for the workforce. With English mastery, certified qualifications and an admirable work ethic, Malaysia’s workforce continues to become a pulling factor for investors and foreign businesses.

4. The Heart of ASEAN & Southeast Asia

Southeast Asia has seen rapid development in recent years and is one of the main regions fuelling global GDP growth. ASEAN is an intergovernmental organisation promoting cooperation among 10 Southeast Asian countries, and it is also the third-largest trade bloc in the world. Malaysia has been a key member of the organisation since its inception in 1967.

Located at the heart of ASEAN with strong cooperation with other major regional powers like Indonesia, Singapore, and Thailand, Malaysia offers easy access to a USD 400 billion market.

As ASEAN progresses and its members grow more affluent, the consumer spending power of its huge population will grow. Malaysia is strategically positioned to take advantage of this important market locally and internationally, acting as the perfect hub for businesses in the region.

5. Continuous Economic Growth

Malaysia is a country on the move. From a country dependent on agriculture and primary commodities in the sixties, Malaysia has today become an export-driven economy spurred on by high technology, knowledge-based and capital-intensive industries. Bank Negara Malaysia has projected Malaysia’s economy to grow between 5.3% to 6.3% in 2022. Despite some setbacks, Malaysians continue to look forward and progress and keep a positive outlook for the future.

6. Affordable & Enriching Living Standards

Many would look to Malaysia to learn the success stories of living in a heterogeneous multicultural society. As a cultural melting pot, Malaysia offers an enriching experience unlike anywhere else in the world. The cultural diversity creates a vibrant environment, as well as a more inclusive workforce.

Malaysia’s relatively inexpensive cost of living coupled with the energetic lifestyle makes it a great place for foreign professionals to live. Expats will  enjoy a good quality of life with affordable healthcare, tourism, and services.

7. Business-Friendly Policies 

Malaysia has become an attractive manufacturing and export base in the region thanks to many government policies that aim to maintain a business-friendly environment with opportunities for growth and profits. The private sector in Malaysia has continuously worked well with the public sector in achieving the nation’s development objectives.

The Free Trade Zones (FTZ) and Digital Free Trade Zones (DFTZ) are one of the many examples of Malaysia’s eagerness to work with international players. Other examples include permitting foreigners to be allowed 100% shareholdership in certain service and manufacturing industries. Malaysian law has also evolved to provide better protection to investors and intellectual property, empowering decision making and innovation.

Conclusion 

Ledgen Group has helped countless clients to start businesses over the years, whether it’s a venture into Malaysia or other key regions in Asia. We continue to serve our clients by offering a comprehensive solution at every step of their business, from incorporation to regional expansion, in several countries.

Ledgen has now expanded our business across key Asian regions to be the trusted statutory compliance solutions provider in Malaysia, Singapore, and Hong Kong. Kickstart a Malaysian success story with us and start your venture here strong.