Doing Business in Singapore vs Malaysia

Starting a business abroad is a very planning-heavy task, and generally the first thing one needs to figure out before planning anything else, is where should the company be based? Even if the company is to be remotely registered in another country, where it’s registered is crucial to one’s incorporation and set up headaches, income and corporate tax reporting, foreign trade, and more.

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

YesYes

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

YACorporate Income Tax RebateCapped at
202025%$15,000
201920%$10,000
201840%$15,000
201750%$25,000
201650%$20,000
2013 to 201530%$30,000
Startup Incentives
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:
SectorsCurrent 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 servicesAt 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 Salarybetween 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.

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