Should You Start A Business In Malaysia Or Singapore?

When considering starting a business in Asia, two destinations that may come to mind are Malaysia and Singapore. Malaysia is favoured for its ideal location with easy access to neighbouring markets. On the other hand, Singapore has become a breeding ground for tech and finance.

Some global indexes have ranked Singapore as one of the easiest places to start a business, but Malaysia is not far behind. So how do these two Asian countries compare against each other? Let’s take a look.

How Startup-Friendly Are Malaysia And Singapore?

Malaysia has made significant strides in becoming more startup-friendly than in the past. Its main cities, Kuala Lumpur and Penang nurture startups through their accelerator and incubator programmes, in addition to co-working spaces.

The government has become increasingly active in their startup support, launching initiatives like the Malaysia Digital Economy Blueprint to boost startup numbers in the country.

Manufacturing and logistics remain two of the biggest sectors here and offer extensive opportunities for new entrepreneurs looking to innovate.

Singapore’s economy is geared for startups, with SGInnovate and Startup SG being around for some time to help new business owners. But with its extensive global connections comes the price of competitiveness and costly expenditure for day-to-day business operations.

The Cost Of Living In These Countries

Malaysia: Expenses like food, rent and transport are considerably lower here compared to Singapore. Even in main cities which are typically more expensive, a startup would be able to survive here even on a tight budget. Office spaces can range from £150 to £500 while salaries can vary from £500 to £1200 for junior positions.

Singapore: While Singapore’s infrastructure and transport are world-class, it is one of the most expensive countries to live in. You can expect to pay between £600 and £2,000 for an office rental and salaries range from £2000 to £3,700.

For budget-conscious entrepreneurs, Malaysia would be the more affordable option. However, Singapore’s facilities are unmatched and worth the price.

Tax Regulations In Malaysia And Singapore

Malaysia: The corporate tax rate is between 15% and 17% for small to medium size enterprises (SMEs). For bigger companies, this is increased to 24%. Some industries like manufacturing and biotech have tax incentives to nurture the growth of these sectors.

Singapore: While the corporate tax rate is 17%, new businesses can pay significantly less than this. There are a range of tax incentives including the Startup Tax Exemption to encourage new businesses.

Neither Malaysia nor Singapore have capital gains tax and both have incentives that are startup-focused.

What Language Or Cultural Barriers Could Foreigners Encounter?

Malaysia: The official language is Malay however English is spoken in the main areas and in business settings. It’s also common to hear some Chinese dialects but foreign entrepreneurs can get by without a language barrier. Typically, business relationships here are relationship-focused which is something to be mindful of.

Singapore: English is one of the official languages and used in both education and business. Here, the business culture is fast-paced and things like punctuality are highly valued.

Visa And Residency Requirements For Foreigners

Malaysia: Foreign entrepreneurs can apply for the Malaysia Tech Entrepreneur Programme which offers residency for 1-5 years for startup founders. Alternatively, you could also apply for the Malaysia My Second Home programme or a digital nomad visa for those who are freelancers or self-employed.

Singapore: Entrepreneurs can apply for the EntrePass and will be eligible if they have proof of recognised investors or partake in government-backed accelerators. With the country’s Golden Visa, entrepreneurs and investors are able to obtain residency through investing.

Are There Any Potential Challenges To Consider?

Malaysia: One of the biggest issues here is the infrastructure discrepancy between urban cities and outlying areas. For entrepreneurs who want to reside and work in these areas, it could be a potential challenge. Some processes, including applying for visas, can be on the slower side and policy enforcement is known to be inconsistent in some sectors.

Singapore: The biggest challenge is the costly living and working expenses as well as intense competition which has led to market saturation in some industries. For founders who want long-term residency, some immigration policies can be a hurdle to overcome.

How To Start A Business In Malaysia And Singapore

Malaysia: The first step is to choose your legal structure, this could be a sole proprietor, partnership or private limited company. You can then reserve the company name with the Companies Commission of Malaysia. After this, you can register the business through the myCoID portal and open a business bank account.

Singapore: Similarly, you will need to decide on your legal entity first. The most common one in Singapore is a private limited company. Next, you can register the company through BizFile+ and appoint a local director. After opening a corporate bank account, you can register for goods and services tax if applicable.