Category:

Asia has played host to many business friendly jurisdictions for new companies, and since the constraining regulations in the face of Covid-19, a lot of entrepreneurs have been looking to Singapore for their next or first business registration. And no-doubt a lot of you who’ve looked into Singapore have already asked whether or not it’s big neighbor, Malaysia, fares in comparison, it being a relatively cheaper market to operate in.

So, we at Air Corporate, who help companies register their businesses in both Hong Kong and Singapore completely online, are here to do all the hard research for you, and put together a comprehensive guide to doing business in Singapore vs Malaysia.

Economics: Singapore vs Malaysia

Singapore is a city-state located on the southern tip of peninsular Southeast Asia, bordered by Indonesia to the east and south, Malaysia to the west and southwest, and the South China Sea to the north. It has an area of 581 km2 (220 sq mi) with a population of 5.5 million people. The country’s economy is based primarily on services, especially financial services, tourism, trade, shipping, telecommunications, and manufacturing. Its main trading partners are Japan, United States, Australia, Europe, and mainland China.

Malaysia is a federal constitutional monarchy consisting of 13 states and two federal territories. It shares land borders with Thailand, Laos, Cambodia, Vietnam, East Timor, and Indonesia. The capital city is Kuala Lumpur. With a total area of 1,904 km2 (741 sq mi), it is the second largest state in Malaysia after Sabah. In 2010, its estimated population was 28.3 million, making it one of the world’s most densely populated countries. Its economy is dominated by oil and gas industries, as well as agriculture, mining, and manufacturing. Major trading partners include Japan, United States, Australia, Europe, and mainland China.

Employment Opportunities

Both Singapore and Malaysia offer numerous job opportunities.

Singapore offers a wide variety of careers including banking, finance, engineering, IT, healthcare, legal services, marketing, management consulting, media, pharmaceuticals, real estate, retail, science, technology, transportation, tourism, and more.

Malaysia offers a wide range of career options including banking, finance, information technology, medicine, construction, engineering, hospitality, logistics, manufacturing, petroleum, power generation, property development, research, and telecommunications.

Singapore and Malaysia share a common history and usually their business hiring, education, and employment law will look very similar in lots of ways. It’ll come down to the industry you intend to operate in and in what capacity hiring makes up your company’s performance that will depend on which country you should register in.

Singapore’s Workforce

Singapore’s workforce is highly educated and skilled. According to the World Economic Forum, Singapore ranks first globally for overall quality of life, and third for business environment.

The government provides free education from primary school through university level. There are no tuition fees at any level. Students can also receive scholarships or grants to help cover their costs.

In addition, there are many vocational training programs available that provide students with skills needed in today’s workplace.

In terms of employment opportunities, the government actively encourages companies to hire foreign workers. Foreigners make up about 20% of the workforce.

Foreign workers have access to social security benefits such as health insurance and unemployment insurance. They may also be eligible for housing subsidies and other allowances.

There are also incentives offered to encourage businesses to set up shop in Singapore. For example, they can apply for tax exemptions if they create jobs for locals.

There are also various types of visas available for foreigners who want to work in Singapore. These include short term working visas, long term working visas, permanent residency visas, and student visas.

Malaysia’s Workforce

Malaysia’s workforce is made up mostly of Malaysians. However, there are also significant numbers of foreign workers.

According to the International Labour Organization, Malaysia has one of the highest percentages of migrant workers in the world. About half of all Malaysian workers come from neighboring countries like Indonesia, Philippines, Thailand, India, and Myanmar.

Migrant workers often do not enjoy the same rights as local employees. Many employers use them as cheap labor without providing adequate wages or benefits.

Malaysians are required to pay mandatory contributions into Social Security and National Health Insurance schemes.

Business Incorporation & Set-Up

Both countries offer a wide variety of incorporation services. The process of incorporating a business varies depending on whether it’s an individual, partnership, corporation, limited liability company (LLC), or trust.

Singapore

• Registering a company under the common Pte Ltd. filing class in Singapore requires only 1 director and 1 shareholder.
• At least 1 director must be a local Singapore resident.
• Singapore companies can be 100% foreign-owned.
• Company formation can be done same-day.
• Annual general meetings must be held every calendar year.
• Registration fee – S$315 (US $223)

Malaysia

• Registering a company under the common Pte Ltd. filing class in Singapore requires only 2 directors and 2 shareholders.
• Both directors must be a local Malaysian citizen.
• Malaysian companies can be 100% foreign-owned after a review from a foreign investment committee. Foreign shareholders with less than 30% of shares do not need approval.
• Company formation can be done in 2-3 days.
• Annual general meetings must be held every calendar year.
• Registration fee – MYR 1,000 (US$238)

Income Tax

Tax Type	SINGAPORE	MALAYSIA
Corporate Tax	17%	24%
Capital Gains Tax	0%	0-30%
Income Tax	0% – 22%	0% – 28%
-Dividends – Interests – Royalties	0% 15% 10%	0% 15% 10%
Double Taxation Relief	Yes	Yes
Foreign-Sourced Income Tax	May be over-ruled by Tax Authorities	No

Tax Exemptions and Incentives

Tax exemptions do exist in Malaysia and Singapore, as well as foreign investment incentives, particularly in the aftermath of the Covid-19 pandemic.

Singapore

Singapore offers a rebate program for taxes, among other exemptions regarding new companies, industry-specific subsidies, and startup incentives.

Tax Rebates

Companies that qualify for SUTE can enjoy a 75% tax exemption on the first SGD 10,000 and an additional 50% exemption on the next SGD 190,000.

Malaysia

Immigration Requirements

Both countries require work passes (colloquially known as work visas) which allow foreign workers to work and remain as residents.

Singapore

In Singapore, it’s required to have:

• A job offer
• Work in managerial, specialized, or executive level jobs
• Have acceptable qualifications and/or university degree
• Earn a fixed income according to the chart below:

Sectors	Current minimum qualifying salary for new applications. (This also applies to renewals from 1 September 2023)	Minimum qualifying salary for renewals before 1 September 2023.
All (except financial services)	At least $5,000 (increases progressively with age, up to $10,500 for candidate in mid-40s)	$4,500 (increases progressively with age, up to $8,400 for candidate in mid-40s)
Financial services	At least $5,500 (increases progressively with age, up to $11,500 for candidate in mid-40s)	$5,000 (increases progressively with age, up to $9,300 for candidate in mid-40s)

Malaysia

Malaysia’s employment pass is broken down into 3 different classes, which each have their own requirements. Refer to the chart below.

Employment Pass Category 1 – Executives, CEO, Project managers, etc.

Monthly Salary	RM10,000
Contract Length	5 Years
Renewable?	Yes
Foreign Domestic Helper allowance	Yes

• You must have a monthly salary of at least RM10,000.
• You must have a work contract of up to five years.
• The EP can be renewed.
• You are allowed to hire a Foreign Domestic Helper.

Employment Pass Category 2 –  Managerial, lecturers, directors, architects, etc.

Monthly Salary	Between RM5,000 and RM9,999
Contract Length	2 Years
Renewable?	Yes
Foreign Domestic Helper allowance	Yes

• You must have a salary between RM5,000 and RM9,999.
• You must have a work contract of up to two years.
• The EP can be renewed.
• You are allowed to hire a Foreign Domestic Helper.

Employment Pass Category 3 – designers, craftsmen, food technologists, etc.

Monthly Salary	between RM3,000 and RM4,999
Contract Length	2 Years
Renewable?	Yes (maximum of 2 renewals)
Foreign Domestic Helper allowance	No

• You must earn a monthly salary between RM3,000 and RM4,999.
• You must have a work contract of up to two years.
• The EP cannot be renewed more than two times.
• You are not allowed to hire a Foreign Domestic Helper.

On a Final Note

Overall Malaysia and Singapore share a lot of similarities thanks to their shared history and shared border, but the legal differences are quite apparent, depending on where one would want to do business. Singapore is certainly more laisses-faire in it’s incorporation laws, offering near 0% income tax benefits, same day incorporation, and so on. Malaysia, while not as snappy and easy to incorporate in, is still quite quick in global rankings of speed of incorporation. Malaysia offers a vast geography with resources that can offer companies more manufacturing options than in Singapore.

Are you interested in registering your business in Singapore? Get started today with Air Corporate, and we’ll help you navigate the incorporation process in Singapore for as little as US $90.