REPRESENTATIVE OFFICE / REGIONAL OFFICE IN MALAYSIA
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A Representative Office/Regional Office of a foreign company/organisation in the manufacturing and services sector is an office which is established in Malaysia to perform permissible activities for its head office/principal. The Representative Office/ Regional Office do not undertake any commercial activities and only represents its head office/principal to undertake designated functions. The Representative Office’s/ Regional Office’s operation is completely funded from sources outside Malaysia. The Representative Office/ Regional Office is not required to be incorporated under the Malaysia Companies Act 1965. The setting up of a Representative/Regional Office requires prior approval by the Government of Malaysia.

A.Definition
  1. Representative Office

    A Representative Office is an office of a foreign company/ organisation approved to collect relevant information on investment opportunities in the country especially in the manufacturing and services sector, enhance bilateral trade relations, promote the export of Malaysian goods and services and carry out research and development (R & D).

  2. Regional Office

    A Regional Office is an office of a foreign company/organisation that serves as the coordination centre for the company’s/organisation’s affiliates, subsidiaries and agents in South-East Asia and the Asia Pacific. The Regional Office established is responsible for the designated activities of the company/ organisation within the region it operates.

B.Activities Allowed

The approved Representative/Regional Office is established to perform the following permissible activities for its head office or principal:-

  • Gathering and analysis of important information or undertaking feasibility studies on investment and business opportunities in Malaysia and the region;
  • Planning or coordination of business activities;
  • Identifying sources of raw materials, components or other industrial products;
  • Undertake research & product development;
  • Act as a coordination centre for the corporation's affiliates, subsidiaries and agents in the region; and
  • Other activities which will not result directly in actual commercial transactions
C.Activities Not Allowed

However, an approved Representative/Regional Office is not allowed to carry out the following activities:-

  • Be engaged in any trading (including import and export), business or any form of commercial activity
  • Lease warehousing facilities; any shipment / trans-shipment or storage of goods shall be handled by a local agent or distributor
  • Sign business contracts on behalf of the foreign corporation or provide services for a fee
  • Participate in the daily management of any of its subsidiaries, affiliates or branches in Malaysia

If you wish to undertake the above business activities, you may do so by locally incorporating a company under the Malaysian Companies Act 1965.

D.Eligibility Criteria of applicant
  • The proposed operational expenditure of the Representative/Regional Office must be at least RM300,000 per annum.
  • The Representative/Regional Office should be financed by funds emanating from sources outside Malaysia.
E.Duration of Establishment
  • Company and Others (including non–profit organizations not relating to trade)
  • Minimum of two (2) years depending on the merits of each case.
  • Government and Trade Association
  • Duration is based on requirements of the applicant.
F.Expatriate Post

A Representative/Regional Office will be given expatriate post and the number allowed would depend on the functions and activities of the Representative/Regional Office. Expatriates will only be considered for managerial and technical posts.

The proposed expatriate must be currently employed by the applicant company or its subsidiary or within the group. An expatriate working in a Representative Office is subject to normal income tax in Malaysia. However, an expatriate working in a Regional Office is taxed only on the portion of their chargeable income attributed to the number of days that they are in the country.

G.Application
  • The application (excluding banking, financial and tourism services) for a Representative/ Regional Office would be submitted to the Malaysian Investment Development Authority (MIDA).
  • The application for a Representative Office relating to banking and financial services would be submitted to the Central Bank of Malaysia/Bank Negara Malaysia
  • The application for a Representative Office relating to tourism services would be submitted to the Ministry of Tourism, Malaysia.
H.The Banking Sector
  1. A foreign institution which intends to set up a Representative Office in the banking sector should obtain the prior written approval of the Central Bank, Bank Negara Malaysia.
  2. A foreign institution is defined as an institution which carries on any business outside Malaysia, which corresponds, or is similar to the banking business, finance company business, merchant banking business, discount house business, money-broking business,building credit business, credit token business, development finance business, factoring business and leasing business.
  3. A Representative Office of a foreign institution in the banking sector is an office established in Malaysia to perform permissible activities for its head office/principal. The Representative Office should be totally funded from sources outside Malaysia.
  4. Permissible Activities are as follows:
    • supplying trade and other economic and financial information on Malaysia to overseas interests and vice versa;
    • assisting Malaysian exporters in finding new markets through the services of their international offices and vice versa;
    • assisting foreign interests in establishing joint-venture companies in Malaysia; and
    • seeking opportunities for their respective banks to provide and to participate in the management and syndication of foreign currency loans to the Malaysian corporation, including identifying Malaysian companies which require offshore financing.
  5. The Representative Office will be subjected to the following conditions:
    • not permitted to conduct banking or any other form of business in Malaysia;
    • engage in activities which are representational in nature and serve as a contact/liaison point;
    • appointment of any expatriate Chief Representative or Assistant Representative should be in consultation with Bank Negara Malaysia. Only one expatriate would be allowed at all times, except in the initial years of operation; and
    • submit to Bank Negara Malaysia reports of its activities on a half-yearly basis ie. at the end of June and December each year

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