· operations in Malaysia. Malaysia is also being promoted as a regional centre for shared...

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1 Malaysia-Your Ideal Location for Regional Establishments

Number of Regional Establishments Approved as at 31st December 2012

Regional Establishments ApprovedAttractive investment incentive packages, including tax incentives and a liberal policy on foreignequity participation and employment of expatriates are granted to encourage the establishment of theseRegional Establishments.

The 2011 Global Services Location Index (GSLI) byAT Kearney measures the attractiveness of offshorelocations in 50 countries against 39 measuresacross three major categories; financialattractiveness, people skills and availability, andbusiness environment. Asia makes a particularlystrong showing in this year’s Index, with India,China and Malaysia claiming the top three spots.

The Malaysian government has identified theservices sector as an area that offers numerousopportunities for growth and the sector is beingactively promoted. Regional establishments, whichinclude Operational Headquarters (OHQs),International Procurement Centres (IPCs), RegionalDistribution Centres (RDCs), Regional Offices(ROs) and Representative Offices (REs) are amongthose activities promoted.

Malaysia’s world class infrastructure, goodconnectivity and strategic location within ASEANare some of the main reasons why MNCs continue

to choose Malaysia to locate their regionalestablishments. Attractive investment incentivepackages including tax incentives and liberalpolicies on foreign equity participation andemployment of expatriates are other factors citedby these MNCs for the establishment of theseoperations in Malaysia.

Malaysia is also being promoted as a regionalcentre for shared services. Most of theseestablishments in Malaysia are engaged in businessprocess outsourcing (BPO) activities, includingprovision of shared services such as data entry,transaction processing and document management,customer contacts such as call centres,telemarketing and customer service, commoncorporate functions such as finance/accounting,human resource, IT, and technical support as wellas R&D services to support their operations in theAsia Pacific region.

RE1,807 (57%)

RO870 (27.5%)

RDC28 (0.9%)28

IPC232 (7.3%)

OHQ231 (7.3%)

HQ1 (7.3

32

8 (0.9%

IP

3%)

PC

RR

(7.3%)

RDCRDC0 9%

CC

RE1,807 (57%)

%)%)

O70 0 (27.5%)

Source : MIDA

Malaysia-Your Ideal Location for Regional Establishments 2

OHQ

USA - General Electric, Du Pont, DowChemicals, PepsiCo, GreyCommunications, Hess Oil & Gas,Air Products, Henry Schein,Kellogg’s, Freudenberg-Nok,Spansion, Schlumberger, BakerHughes, Intel, Transocean, Agilent,IBM, Mars Foods, Hewlett-Packard,E-Storm, Harman, United Brands

Japan - Sharp Electronics, Japan TobaccoInternational, Bridgestone, NGKSpark plugs, NEC Infrontia,Sumitomo. Nippon Electric Glass,Nippon Menard, Oji Paper Asia

Germany - BASF, Muehlbauer, Eppendorf,Arvato, Siemens, Nordenia, Bayer,Binder, A. Hartrodt

Australia - IBA Health, IEV Group, Leighton,Linfox, Wagners, Worley Parsons,Execujet, Paradigm, Ansell, Dome,Delta Asia, Cochlear, Avanser

UK - RMC Industries, British-AmericanTobacco, Diagonal ConsultingGroup, Fosroc Asia, Ikon Science,Avocet Mining, OHM Surveys,Fitness First, G4S Management,Velosi

Switzerland - Novartis Corporation, SBM Group,Omya Group, Tetra Pak

France - Lafarge, Thales International,Monier, Bionersis S.A

Netherlands - Flexsys, Prometric, Friesland Foods,Dow Corning, Barry Callebaut,Organon, Mammoet, Subsea, Core,Acision

Sweden - Volvo, UCB Group, AscomNorway - Aker Kvaerner, Wilhelmsen, AGRSingapore - NOL Global, ACE Asia Pacific,

Global Footware, International SOSHong Kong - Aramis, OMG, DBC, PromatBelgium - Oleon

IPC

Japan - Matsushita, Sharp, Sony, Kenwood,TDK Corporation, Canon Opto,Murata, Sumiden, Katolec, Nifco,Ohshima, G-Tech, Hitachi, JVCElectronics, NEC Electronics, BrotherEngineering, Sharp-Roxy, NittoDenko, Mitsumi, Mitsubishi, NipponWiper Blade, Nidec

USA - Dell, Knowles, Darden, SmartModular Technologies, Jabil

Germany - Robert Bosch, Henkel, B. BraunTaiwan - Acer, Inventec Electronics, TitanFrance - Mapa Spontex, Safic-AlcanHong Kong - Lee Kum KeeNetherlands - Flextronics, Benchmark ElectronicsSingapore - Ghim Li, Woleco, Jackspeed Leather,

World Kitchen, Om Materials

RDC

Germany - Osram Opto Semiconductors, BMW,EPCOS AG, Siteco Group, BDAgriculture, Siteco Group, BDAgriculture

Japan - UMW ToyotaUK - Scapa GroupBelgium - AgfaFrance - Sidel GroupFinland - AmerSpain - AcerinoxCanada - International Merchandising IncIndia - BEMLHong Kong - CPM Sdn. Bhd.

RE/RO

Australia - Australian Aviation Training CollegeNorway - Westard Industri ASUSA - Hobsons, International Metals,

Nextech SolutionKorea - Hyundai Rotem Company, Korean

Register of Shipping, SK Energy Co. LtdSingapore - Imago Production, Userx Ptye. Ltd.,

IMI Inpro TecUK - Cambridge Education Group LimitedThailand - Bangkok Airways

Some of the world renowned MNCs which have established Regional Operations in Malaysia:


An OHQ generally refers to a locallyincorporated company that providesqualifying support services to itsoffices or related companiesregionally and globally.

IncentivesAn approved OHQ company iseligible for:

• Full tax exemption for a period of10 years for income derived fromthe following sources:-

Business IncomeIncome arising from servicesrendered by an OHQ company toits offices or to relatedcompanies outsideMalaysia

InterestIncome derivedfrom interest onforeign currency loansextended by an OHQcompany to its offices or torelated companies outsideMalaysia

RoyaltiesRoyalties received from R&D workcarried out in Malaysia by anOHQ company on behalf of itsoffices or related companiesoutside Malaysia• Dividends paid from the exempt

income will be exempted fromtax in the hands of itsshareholders

• The income generated by anOHQ company in providingqualifying services to its relatedcompanies in Malaysia will notbe taxed during its tax-exemptperiod, provided such incomedoes not exceed 20% of itsoverall income derived byproviding qualifying services

Eligibility CriteriaCompanies that meet the followingcriteria can apply for OHQ statusand incentive:-

• Locally incorporated under theCompanies Act, 1965

• A minimum paid-upcapital of RM0.5 million

• A minimum totalbusiness spending(operating expenditure)of RM1.5 million per

year

• Appoint at least threesenior professional/managementpersonnel

• Serve at least three relatedcompanies outside Malaysia

• Have a sizeable network ofcompanies outside Malaysia for itsrelated companies

• Have a well-established networkof companies that employ asignificant and substantial numberof qualified professionals,technical and supportingpersonnel.


• Carry out a minimum of threequalifying services such as generalmanagement and administration;business planning and coordination;procurement of raw materials,components and finished products,technical support and maintenance,marketing control and sales promotionplanning, data/informationmanagement and processing, R&Dwork carried out in Malaysia on behalfof its offices or related companieswithin or outside Malaysia, trainingand personnel management to itsoffices or related companies within andoutside Malaysia and treasury and fundmanagement services to its offices andrelated companies outside Malaysia.

Other BenefitsAn approved OHQ company can alsoenjoy the following benefits:-

• Open foreign currency accounts withlicensed onshore banks to retain anyamount of export proceeds in foreigncurrency.

• Open foreign currency accounts withlicensed onshore banks, licensedoffshore banks in Labuan or overseasbanks for crediting foreign currencyreceivables, other than exportproceeds, with no limit imposed onthe overnight balances.

• Obtain any amount of domesticcredit facilities in ringgit.

• Obtain any amount of foreigncurrency credit facilities fromlicensed onshore banks and licensedmerchant banks in Malaysia, andfrom any non-resident, provided theOHQ does not on-lend to, or raisethe funds on behalf of, any resident.

• Invest abroad any amount, includingextension of credit facilities to itsrelated companies, to be funded withforeign currency funds or borrowing.It may also convert any amount ofringgit for investment abroad if itdoes not have domestic creditfacilities or up to RM10 million percalendar year if it has domestic creditfacilities.

• Expatriates posts will be approvedbased on the requirements of theOHQ. And the expatriates will betaxed only on the portion of theirchargeable income attributable to thenumber of days that they are inMalaysia.

Equity RequirementsA company granted OHQ status andincentive is allowed 100% foreignequity ownership.


International ProcurementCentresAn IPC is a locally incorporatedcompany which carries on abusiness in Malaysia to undertakethe procurement and sales of rawmaterials, components and finishedproducts for its group of related andunrelated companies in Malaysiaand abroad. This would includeprocurement from, and sales madeto, local sources and third countries.

Regional DistributionCentresAn RDC is a collection andconsolidation centre for finishedgoods, components and spare partsproduced by its own group ofcompanies for its own brand to bedistributed to dealers, importers orits subsidiaries or other unrelatedcompanies within or outside thecountry. Among the value-addedactivities involved are bulk breaking,re-packaging and labeling.

IncentivesAn approved IPC/RDC statuscompany can be considered for:

• Full tax exemption of its statutoryincome for 10 years; and

• Dividends paid from the exemptincome will be exempted from taxin the hands of its shareholders.

Eligibility CriteriaCompanies that meet the followingcriteria can apply for IPC/RDC statusand incentive:-

• Incorporated under the CompaniesAct, 1965

• A minimum paid-up capital ofRM0.5 million

• A minimum total businessspending (operating expenditure)of RM1.5 million per year

• Utilisation of Malaysian ports andairports

• A minimum annual sales turnoverof RM50 million by the third yearof operation for IPC/RDC status orRM100 million for tax incentive


• Direct export at least 80% of thetotal annual sales value, including30% via drop shipmentarrangement and domestic sales ofnot more than 20% of total annualsales value.

Other BenefitsAn approved IPC/RDC statuscompany will be able to enjoy thefollowing facilities and benefits:

• Expatriate posts based on therequirements of the IPC/RDC

• Open one (1) or more foreigncurrency accounts with licensedcommercial banks to retain itsexport proceeds without any limit

• Enter into foreign exchangeforward contracts with licensedcommercial banks to sell forwardexport proceeds based on itsprojected sales

• Bring in raw materials,components or finished productswith customs duty exemption intofree commercial zones (FCZs),licensed manufacturingwarehouses (LMWs) and bondedwarehouses for re-packaging,cargo consolidation andintegration before distribution to itsfinal consumers.

Equity RequirementsA company granted IPC/RDC statusand incentive is allowed 100% foreignequity ownership.


A Representative Office/RegionalOffice of a foreign company basedin Malaysia performs permissibleactivities for its headquarters/principal. Such offices should betotally funded from sources outsideMalaysia and are not required tobe incorporated or registered underthe Companies Act, 1965 or beregistered with the CompaniesCommission of Malaysia (CCM).

A Representative Office collectsrelevant information regardinginvestment and businessopportunities to develop bilateraltrade relations and promote theexport of Malaysian goods andproducts.

A Regional Office servesas the coordinationcentre for its affiliates,subsidiaries and agentswithin the Asia Pacificregion. It is responsiblefor conducting

designated activities within theregion it operates.

An approved Representative/Regional Office is allowed to carryout the following activities:-

• Planning or coordination ofbusiness activities

• Gathering and analysing ofinformation or undertakingfeasibility studies on investmentand business opportunities inMalaysia and the region

• Identifying sources of rawmaterials, components or otherindustrial products

• Research and productdevelopment

• Act as a coordination centre forthe corporation’s affiliates,subsidiaries and agents in theregion.

An approved Representative/Regional Office is not allowed tocarry out the following activities:-

• Engage in any trading (includingimport and export), business orany form of commercial activity

• Lease warehousing facilities. Anyshipment/transshipment orstorage of goods must be carriedout through a local agent ordistributor


• Sign business contracts on behalf ofthe foreign corporation or provideservices for a fee

• Participate in the dailymanagement of any of itssubsidiaries, affiliates or branchesin Malaysia

• Conduct any business transactionor derive income from itsoperations

Expatriate EmploymentCompanies applying forOHQ/IPC/RDC status can alsorequest for expatriate posts, namelyKey Posts and Time Posts. Key Postsare posts that are permanently filledby foreigners and Time Posts areposts that are filled by foreigners fora specific period of time.

An approved Representative/Regional Office is allowed toemploy expatriates at themanagerial and technical level.Expatriate posts are usuallyapproved for a period of three (3)years. Expatriates working inRegional Offices are taxed only onthe portion of their chargeableincome attributable to the numberof days they are in Malaysia.

Applications for OHQ/IPC/RDC status, incentives and expatriate posts aswell as approval for establishment of Representative Offices and RegionalOffices should be submitted to MIDA.


Malaysia is strategically located in theheart of Southeast Asia – one of theworld’s fastest growing regions.Situated between the Indian Oceanand the South China Sea, and at thesouthernmost tip of the AsianContinent, Malaysia is well servicedby all major air and shipping lines.This easy access to the rest of theworld has today made Malaysia anattractive centre for trade, investmentand tourism.

Malaysia lies in the equatorial zonewhere no seasons mark the passing ofthe months. The country is generallywarm throughout the year withtemperatures ranging from 25˚C to32˚C in the lowlands and between21˚C to 28˚C in the highlands. Thecountry has a total land area of329,847 km2 and consist of 13 statesand three Federal Territories i.e.Kuala Lumpur, Putrajaya and Labuan.Peninsular Malaysia stretches fromThailand in the north to Singapore inthe south, while the states of Sabahand Sarawak straddle the northernand western coasts of Borneo.

Malaysia’s cosmopolitan populationof 29 million is a unique mix of someof the world’s oldest civilisations –

the Malay, Chinese and Indiancivilisations. This has blessed thenation with a rich cultural heritageand has made Malaysia anoutstanding example of aharmonious, multi-religions andmulti-racial society. In PeninsularMalaysia, the main races are theMalays, Chinese and Indians. InSabah and Sarawak, the Kadazansand Ibans form the largest ethnicgroups respectively.

Malaysia has a stable and fast-growing economy with a forecastedGross Domestic Product (GDP)growth of 5.0 – 6.0% for the year2013. Manufactured goods,especially electrical and electronicproducts, are the major contributorsto the nation’s GDP. The Malaysianeconomy has performed remarkablywell over the years due to thecountry’s political stability, the soundfinancial and economic policiesadopted by the government, and theefficient management of its naturalresources which include oil and gas.Even more impressive is the fact thateconomic growth in Malaysia wasachieved within an environment ofrelatively low inflation.

Background ofMalaysia


WHY MALAYSIA

Economic Strength

• GDP growth : 5.0 - 6.0% (2013f)• Gross national savings : 32.19% of GNI

(2013f)• Unemployment rate : 3.3% (2013f)• Inflation (CPI) : 2.5% (2013f)• Natural resources - oil, gas, tin, timber,

palm oil, rubber*f = forecast(Source : Central Bank of Malaysia, Department of Statistics& Malaysian Institute of Economic Research, Malaysia)

Supportive Government Policies

• Pro-business policies • Responsive government • Liberal investment policies • Attractive tax and other incentives • Liberal exchange control regime • Intellectual property protection

An Educated Workforce

• Talented, young, educated and productiveworkforce

• Multilingual workforce speaking two orthree languages, including English

• Comprehensive system of vocational andindustrial training, including advanced skillstraining.

• Harmonious industrial relations withminimal trade disputes

Developed Infrastructure

• Network of well-maintained highways andrailways

• Well-equipped seaports and airports • High quality telecommunications network

and services • Fully developed industrial parks, including

free industrial zones, technology parks andMultimedia Super Corridor

• Advanced MSC Malaysia Cybercities andCybercentres

A Vibrant Business Environment

• Market-oriented economy • Well-developed financial and banking

sector, including the Labuan InternationalOffshore Financial Centre

• Wide use of English, especially in business • Legal and accounting practice based on the

British system • Large local business community with long

history in international business • Large foreign business community in all

business sectors • Extensive trade links – country’s total trade

was valued at RM 96.7 billion (as atFebruary 2013)*

• Balance of trade – RM 11.48 million (asforecasted in 2013)

*(Source : Department of Statistics Malaysia)

Quality of Life

• Friendly and hospitable Malaysians • Safe and comfortable living environment • Excellent housing, modern amenities, good

healthcare and medical facilities • Excellent educational institutions including

international schools for expatriate children • World-class recreational and sports facilities • Excellent shopping with goods from all over

the world

MIDA’s Overseas Offices

ASIA-PACIFIC

AUSTRALIAConsul-Investment/DirectorConsulate of MalaysiaMalaysian Investment Development AuthorityLevel 6, MAS Building16 Spring StreetSydney, NSW 2000, AustraliaTel: (612) 9251 1933 Fax: (612) 9251 4333E-mail: [email protected]

JAPANTokyoDirectorMalaysian Investment Development Authority32F, Shiroyama Trust Tower4-3-1, Toranomon, Minato-kuTokyo 105-6032, JapanTel: (813) 5777 8808Fax: (813) 5777 8809E-mail: [email protected]: www.midajapan.or.jp

OsakaDirectorMalaysian Investment Development AuthorityMainichi Intecio 18F3-4-5 Umeda, Kita-kuOsaka 530-0001, JapanTel: (816) 6451 6661Fax: (816) 6451 6626E-mail: [email protected]

PEOPLE’S REPUBLIC OF CHINAShanghaiConsul (Investment)Consulate General of Malaysia(Investment Section)Malaysian Investment Development AuthorityUnits 807-809, Level 8Shanghai Kerry CentreNo. 1515, Nanjing Road (West)Shanghai, 200040People’s Republic of China Tel: (8621) 6289 4547/5298 6335Fax: (8621) 6279 4009E-mail: [email protected]

GuangzhouDirectorMalaysian Investment Development AuthorityUnit 1804B-05CITIC Plaza Office Tower233 Tianhe Be RoadGuangzhou, 510610People’s Republic of ChinaTel: (8620) 8752 0739Fax: (8620) 8752 0753E-mail: [email protected]

TAIWANDirector (Investment Section)Malaysian Friendship & Trade CentreMalaysian Investment Development Authority12F Suite A, Hung Kuo BuildingNo. 167, Tun Hua North RoadTaipei 105, TaiwanTel: (8862) 2713 5020/2718 6094Fax: (8862) 2514 7581E-mail: [email protected]

KOREA, REPUBLIC OFCounsellor (Investment)Embassy of Malaysia (Investment Section)Malaysian Investment Development Authority17th Floor, SC First Bank Building100, Gongpyung-dong, Jongro-guSeoul 110-702, Republic of Korea Tel: (822) 733 6130/6131Fax: (822) 733 6132E-mail: [email protected]

UNITED ARAB EMIRATESDirector/Consul InvestmentMalaysian Investment Development AuthorityConsulate General of Malaysia(Investment Section)Unit 2205, 22nd Floor, Tower ABusiness Central Tower, Dubai Media City(P.O. Box: 502876) DubaiUnited Arab EmiratesTel: (9714) 4343 696/4343 697Fax: (9714) 4343 698E-mail: [email protected]

INDIADirector/Consul InvestmentMalaysian Investment Development AuthorityConsulate General of Malaysia (Investment Section)81 & 87, 8th Floor, 3rd North Avenue Marker MaxityBandra Kurla Complex, Bandra (E)Mumbai 400051, IndiaTel: (9122) 2659 1155/1156Fax: (9122) 2659 1154E-mail: [email protected]

SINGAPOREDirector/Consul InvestmentMalaysian Investment Development AuthorityNo. 7, Temasek Boulevard 26-01, Suntec Tower One Singapore 038987 Tel: (65) 6835 9326/9580/7069Fax: (65) 6835 7926E-mail: [email protected]

THAILANDDirector/Investment CounsellorMalaysian Investment Development Authority3601, 36th Floor, Q. House Lumpini Building South Sathorn Road Tungmahamek, Sathorn Bangkok 10120, ThailandTel: (66) 2677 7487Fax: (66) 2677 7488E-mail: [email protected]

EUROPE

SWEDEN Economic CounsellorEmbassy of MalaysiaKarlavägen 37, P.O. Box 26053S-10041 Stockholm, SwedenTel: (468) 791 7942/440 8400Fax: (468) 791 8761E-mail: [email protected]

UNITED KINGDOMDirectorMalaysian Investment Development Authority17 Curzon StreetLondon W1J 5HR, United KingdomTel: (4420) 7493 0616Fax: (4420) 7493 8804E-mail: [email protected]

GERMANY, FEDERAL REPUBLIC OFFrankfurtDirector/Consul InvestmentMalaysian Investment Development AuthorityConsulate General of Malaysia(Investment Section)17th Floor, Frankfurt KastorPlatz der Einheit 160327 Frankfurt am Main, GermanyTel: (4969) 7680 7080Fax: (4969) 7680 708-20E-mail: [email protected]

MunichDirectorMalaysian Investment Development Authority6th Floor, BurkleinhausBurkleinstrasse 1080538 Munich, GermanyTel: (4989) 2030 0430Fax: (4989) 2030 4315E-mail: [email protected]

FRANCEDirectorMalaysian Investment Development Authority42, Avenue Kleber75116 Paris, FranceTel: (331) 4727 3689/6696Fax: (331) 4755 6375E-mail: [email protected]

ITALY Consul-InvestmentConsulate of Malaysia (Investment Section)Malaysian Investment Development Authority5th Floor, Piazza Missori 320123 Milan (MI), ItalyTel: (3902) 3046 521Fax: (3902) 3046 5242E-mail: [email protected]

NORTH AMERICA

LOS ANGELESConsul (Investment)Consulate General of Malaysia(Investment Section)550, South Hope Street, Suite 400Los Angeles, California 90071United States of AmericaTel: (1213) 955 9183/9877Fax: (1213) 955 9878E-mail: [email protected]

SAN JOSEDirectorMalaysian Investment Development Authority226, Airport Parkway, Suite 480San Jose, California 95110United States of AmericaTel: (1408) 392 0617/8Fax: (1408) 392 0619E-mail: [email protected]

NEW YORKConsul (Investment)Consulate General of Malaysia(Investment Section)313 East, 43rd Street, New YorkNew York 10017United States of AmericaTel: (1212) 687 2491Fax: (1212) 490 8450E-mail: [email protected]

BOSTONDirectorMalaysian Investment Development AuthorityOne International Place, Floor 8Boston, MA 02110United States of America Tel: (1617) 338 1128/338 1129Fax: (1617) 338 6667E-mail: [email protected]

CHICAGODirectorMalaysian Investment Development AuthorityJohn Hancock Center, Suite 1515875, North Michigan AvenueChicago, Illinois 60611United States of AmericaTel: (1312) 787 4532Fax: (1312) 787 4769E-mail: [email protected]

HOUSTONDirectorMalaysian Investment Development Authority6th Floor, Suite 630 Lakes on Post Oak 3050 Post Oak Boulevard Houston, TX 77056 United States of AmericaTel: (1713) 979 5170 Fax: (1713) 979 5177/78E-mail: [email protected]

AFRICA

REPUBLIC OF SOUTH AFRICAEconomic CounsellorHigh Commission of MalaysiaGround Floor, Building 5Commerce Square Office Park39 Rivonia RoadSandhurst, SandtonJohannesburg, Republic of South AfricaTel: (2711) 268 2307/268 2314Fax: (2711) 268 2204E-mail: [email protected]

MIDA’s HeadquartersMalaysian Investment Development Authority, MIDA Sentral, No.5, Jalan Stesen Sentral 5, Kuala Lumpur Sentral, 50470 Kuala Lumpur, Malaysia

Tel: (603) 2267 3633 Fax: (603) 2274 7970 E-mail: [email protected] Website: www.mida.gov.my

For more information, please contact:Regional Establishment & Supply Chain Management DivisionLevel 27, MIDA SentralNo. 5, Jalan Stesen Sentral 5, Kuala Lumpur Sentral, 50470 Kuala Lumpur, MalaysiaTel: 603-2267 3633 (ext. 6676) Fax: 603-2274 5483E-mail: [email protected] Website: www.mida.gov.my

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