Requirements for a Company Incorporated in Peninsular Malaysia to Operate in Sabah or Sarawak
- Roger Pay
- 12 minutes ago
- 7 min read
Operating in East Malaysia: A Guide
Requirements for a Company Incorporated in Peninsular Malaysia to Operate in Sabah or Sarawak
If you are a business owner with a company incorporated in Peninsular Malaysia (under the Companies Act 2016), you might assume that expanding to Sabah or Sarawak is as simple as opening a new branch.
However, due to the Malaysia Agreement 1963 (MA63), both Sabah and Sarawak maintain autonomy over specific matters, including immigration and certain trade licenses. Expanding across the South China Sea requires navigating unique regional regulations.
1. Registration with the Companies Commission of Malaysia (SSM)
The good news is that your SSM registration is valid nationwide. You do not need to incorporate a brand-new company. However, you must update your corporate information:
Change of Particulars: You must notify SSM of your new branch address in Sabah or Sarawak via the MyCoID portal.
Annual Returns: Ensure your filings are up to date, as local councils may request your latest SSM profile during the licensing process.
2. Local Authority Business Licenses (Trading Licenses)
This is where the process differs significantly from Peninsular Malaysia. You cannot operate without a regional trade license.
Operating in Sabah
You must apply for a Trading License under the Sabah Trades Licensing Ordinance 1968.
Authority: The application is usually submitted to the relevant local municipal council (e.g., DBKK for Kota Kinabalu, MPS for Sandakan).
Key Requirement: You often need a physical office or shop lot with a valid tenancy agreement or land title before the license is approved.
Operating in Sarawak
You must apply for a Trading License under the Sarawak Business Names Ordinance.
Authority: Applications are processed by the Inland Revenue Board (LHDN) in Sarawak and the local council (e.g., DBKU or MBKS for Kuching).
Specifics: Sarawak is particularly strict about the "nature of business" listed in your SSM profile matching the activity you intend to conduct on the ground.
3. Immigration and Work Permits
Perhaps the biggest hurdle for Peninsular-based companies is the movement of human capital. Peninsular Malaysians are treated as "non-residents" in East Malaysia regarding employment.
Work Permits: If you intend to transfer staff from Kuala Lumpur to Sabah or Sarawak, they must apply for a work permit (even though they are Malaysian citizens).
The "7-Year" Rule (Sarawak): Sarawak has specific "S-Pass" requirements for professional workers.
Local Participation: Both states strongly encourage (and sometimes mandate) the hiring of local Sabahans or Sarawakians. For certain government contracts, a specific percentage of your workforce must be local.
4. Professional Bodies and CIDB
If your company is in a specialized sector, additional registrations are mandatory:
Sector | Requirement |
Construction | Must register the project with CIDB Sabah or CIDB Sarawak. Local levies apply. |
Legal/Accounting | Professional practices must comply with the High Court of Sabah and Sarawak; Peninsular qualifications may require additional local certification. |
Logistics | Special permits from the Commercial Vehicle Licensing Board (LPKP) of the respective state are required. |
5. Strategic Considerations: The "Bumiputera" Status
If you are aiming for state government contracts or projects involving the Sarawak State Financial Secretary or Sabah State Treasury:
A Peninsular-incorporated company is often viewed as an "outside" entity.
To be competitive, many companies form a Joint Venture (JV) with a local Sabahan or Sarawakian partner or incorporate a local subsidiary where the majority shareholding is held by residents of that state.
Summary Checklist
[ ] Update SSM: Register your new branch address.
[ ] Secure Premise: Sign a tenancy agreement in the target state.
[ ] Apply for Trade License: Via the local municipal council (DBKK/DBKU/MBKS).
[ ] Arrange Work Permits: For any Peninsular staff moving across.
[ ] Check Sector Specifics: Ensure CIDB or other industrial permits are state-specific.
Expanding to East Malaysia offers massive growth potential, particularly in green energy and infrastructure. However, respecting the local administrative nuances is the key to a smooth entry.
Specific Checklist for Particular Industries, such as Construction and Retail, to See the Exact Forms Required
Operating in Sabah and Sarawak requires industry-specific documentation that differs from Federal requirements. Below is a detailed checklist for the Construction and Retail sectors, including the exact forms you will need to file.
1. Construction Industry Checklist
If you are a Peninsular-based contractor (Grade G1–G7) moving to East Malaysia, your Federal CIDB license is not enough for state-level projects, especially for government tenders.
Requirement | Sarawak Specifics | Sabah Specifics |
CIDB Extension | Register project via CIMS Portal. Must have a Sarawak physical office. | Register project via CIMS Portal. Physical office with local staff is preferred. |
Trading License | Borang I (Section 5, 23 & 24) – Mandatory for all contractors. | Form B (Business License) under the Trades Licensing Ordinance. |
State Contractor License | UPKJ (Unit Pendaftaran Kontraktor dan Juruperunding) for State projects. | PUKONSA registration is required for state-funded tenders. |
Employment Pass | Form IT-2 (JKM) for work permits for Peninsular staff. | Form 24 (Immigration) for non-Sabahan workers. |
Exact Forms Required:
Sarawak UPKJ Form: New Application for Registration (available via the e-UPKJ portal).
Sarawak Form I: Application for Trade License (Revenue Department/LHDN).
Sabah PUKONSA Form: Application for State Contractor License (Treasury Department).
CIDB SPKK: Government Work Procurement Certificate (via CIMS).
2. Retail & F&B Industry Checklist
Retailers must comply with local council by-laws, which govern everything from signboards to health inspections.
Sarawak (Kuching/Miri)
Trading License (Form I): Obtained from the Inland Revenue Board (LHDN) Kuching.
Local Council License: Apply to DBKU (North) or MBKS (South) using the General License Application Form.
Signboard Permit: Requires a separate application to the council with a visual mock-up.
Occupational Permit (OP): Essential for retail lots. You must verify the premises has a valid Form F (Notice of Completion).
Sabah (Kota Kinabalu/Sandakan)
Trading License (Form B): Issued under the Trades Licensing Ordinance 1968 via the District Office or DBKK.
Public Health License: Mandatory for any retail selling food or beverages (F&B).
Fire Safety (Bomba): Certification of the retail layout before the council issues a business license.
Exact Forms Required:
Borang 1 (Sarawak): Business Names Ordinance Form (LHDN).
MBKS/DBKU Form: Application for Trade, Business, and Industry License.
Form K (Sabah): Application for Trading License (Municipal Council).
Food Handler’s Cert: Required for all F&B retail staff (State-recognized).
3. Human Resources & Immigration (Both Industries)
Even for a retail manager or a construction supervisor, you cannot simply "assign" them from KL.
Work Permit (S Pass/Work Pass): * Sarawak: Application for an "Employment Pass" for West Malaysians.
Sabah: Application for "Pas Kerja" (Work Pass).
Form Required: IMM.12 (Visit Pass - Professional) or IMM.38 (Visa application for non-residents).
Critical "Local" Requirements
Registered Office: You must have a physical office address in the state (not just a P.O. Box).
K-Status (Sarawak): Many state licenses require at least 30–51% Sarawakian shareholding or "K-Status" directors to qualify for preferential treatment.
Local Stamp: In Sarawak, you are often required to create a Business Rubber Stamp that includes your Sarawak registered address for all official state forms.
Specific Online Portals for UPKJ (Sarawak) or PUKONSA (Sabah) to Begin the Digital Registration
To begin your digital registration with UPKJ (Sarawak) or PUKONSA (Sabah), you can access their specific online portals via the links below.
1. UPKJ (Sarawak)
The Unit Pendaftaran Kontraktor & Juruperunding (UPKJ) handles the registration of contractors and consultants for the Sarawak State Government.
Registration Portal: Online Application Module (OLAM)
Alternative Portal (Service Sarawak): Register Contractors with UPKJ
Key Requirements: * Effective October 4, 2023, the system uses SarawakID Korporat. You must activate your corporate ID before applying.
Registration is now valid for 2 years (reduced from 3 years as of June 2024).
You must have a valid CIDB Green Card for safety criteria.
2. PUKONSA (Sabah)
The Pusat Pendaftaran Kontraktor Kerja, Bekalan & Perkhidmatan Negeri Sabah (PUKONSA) is managed under the Sabah Ministry of Finance.
Registration Portal: ePukonsa Online System
Information Site: Sabah Ministry of Finance (PUKONSA Documentation)
Key Requirements:
Citizenship: Owners and directors must be Malaysian citizens originating from Sabah.
Capital: Minimum capital requirements vary by class (e.g., Class A requires >RM 350,000, while Class F requires >RM 5,000).
Account: You will need to register a company account first using your IC No. as the Login ID.
Quick Checklist for Registration
Before logging into these portals, ensure you have digital copies of:
Identity Documents: IC and Birth Certificates of all directors/shareholders (Sabah specifically requires birth certificates to verify "origin").
Company Documents: Latest Section 68 (Annual Return), Section 58 (Directors), and Section 51/78 (Shareholders) from SSM.
Financials: Latest 3 months' bank statements and Audited Accounts (for larger classes).
Certifications: Valid CIDB license and academic/professional certificates for technical personnel.
How Bestar Asia can Help
Requirements for a Company Incorporated in Peninsular Malaysia to Operate in Sabah or Sarawak
Expanding your business from Peninsular Malaysia to Sabah or Sarawak is a high-reward move, but the regulatory differences can be a significant bottleneck. Bestar Asia acts as your strategic partner to bridge this gap, ensuring that your expansion is legally compliant and operationally ready.
Here is how Bestar simplifies the transition for your company.
1. Local Presence & Office Setup
To apply for a Trading License in East Malaysia, you must have a physical office address in that state.
Registered Address Services: Bestar assists you in establishing a valid registered office in Sabah or Sarawak to meet local council requirements.
Tenancy & Land Title Verification: We help ensure your chosen premise complies with the Form F (Sarawak) or Bomba (Sabah) certifications required for business licensing.
2. UPKJ & PUKONSA Registration
If you are in the construction or supply sector, federal CIDB registration isn't enough for state projects.
UPKJ (Sarawak): Bestar guides you through the e-UPKJ (OLAM) system, ensuring your SarawakID Korporat is activated and your technical staff meet the mandatory Sarawak work permit criteria.
PUKONSA (Sabah): We assist in verifying the "Sabahan Origin" status of directors and shareholders, a strict requirement for Sabah state tenders.
3. Human Resource & Immigration Compliance
One of the biggest mistakes companies make is assuming Peninsular staff can work in East Malaysia without permits.
Work Permit Applications: Bestar manages the application for S-Pass (Sarawak) or Work Passes (Sabah) for your key personnel.
Payroll & EPF: We ensure your payroll is compliant with regional labor laws, including the specific EPF and SOCSO filing nuances for East Malaysian branches.
4. Regional Trade Licensing
Bestar navigates the different ordinances that govern business names and trading:
Sarawak: We handle the business name search and application with LHDN Kuching under the Business Name Ordinance.
Sabah: We manage the application for Form B (Trading License) with local municipal councils like DBKK or MPS.
5. Tax & Financial Advisory
Operating across different regions in Malaysia can complicate your tax filings and audits.
Branch Accounting: Bestar provides specialized bookkeeping for your East Malaysian branches to track regional profitability and tax obligations.
SST Compliance: We assist in managing Sales and Service Tax specifically for services or goods moving between Peninsular and East Malaysia.
Why Choose Bestar Asia?
Bestar brings localized expertise to the table, meaning you don't have to fly back and forth to deal with LHDN Kuching or the Sabah Ministry of Finance. We act as your liaison, saving you time and reducing the risk of application rejections.
Would you like a free consultation or a formal quotation for Bestar to handle your License application in Sabah or Sarawak?
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