Setting Up a Business in Sarawak Malaysia
- Roger Pay
- Apr 18
- 7 min read
Updated: Oct 16
Setting Up Business in Sarawak, Malaysia
Your Ultimate Guide to Setting Up a Business in Sarawak, Malaysia
Sarawak, the largest state in Malaysia, offers a unique and vibrant environment for entrepreneurs and investors. Located on the island of Borneo, its strategic location, rich natural resources, and proactive government focus on the digital economy and sustainable development (through the SCORE initiative) make it a highly attractive destination.
However, setting up a business here involves a distinct legal framework compared to Peninsular Malaysia. This comprehensive guide breaks down the essential steps, legal requirements, and key benefits of setting up a business in Sarawak, Malaysia.
1. Why Choose Sarawak? Top Business Advantages
Beyond its natural beauty, Sarawak provides compelling commercial incentives that drive profitability and growth, positioning it as a key gateway to the ASEAN region.
A. Favourable Investment and Tax Incentives
Sarawak-based companies, particularly those involved in promoted activities or products, can leverage significant tax relief and allowances:
Pioneer Status: Offers up to 100% income tax exemption on statutory income for 5 to 10 years.
Investment Tax Allowance (ITA): Allows for an allowance of up to 100% on qualifying capital expenditure to be offset against statutory income.
Low Operating Costs: The state's strong reliance on renewable hydropower ensures that electricity tariffs are significantly lower compared to many other regions, leading to considerable cost savings, especially for manufacturing and energy-intensive industries.
B. Strategic Economic Focus
The state government's commitment to the Digital Economy and large-scale industrial development through the Sarawak Corridor of Renewable Energy (SCORE) provides targeted support, infrastructure, and grants for businesses in sectors like:
Manufacturing (especially chemicals, electrical, and electronics)
Eco-tourism and Agriculture
Digital Services and Technology
Oil & Gas (via agencies like PETROS)
C. Legal and Operational Benefits
Separate Legal Entity (Sdn. Bhd.): Incorporating a Private Limited Company (Sendirian Berhad/Sdn. Bhd.) offers protection against personal liability, as the company is a separate legal entity.
100% Foreign Ownership: Foreign investors can generally own 100% of a locally incorporated Sdn. Bhd. company.
Highly Competitive Corporate Tax: Malaysia's corporate income tax rate is competitive, with a lower tiered rate for Small and Medium Enterprises (SMEs).
2. Choosing Your Legal Structure: The Sarawak Difference
The most crucial difference for new entrepreneurs is that the registration of Sole Proprietorships and Partnerships in Sarawak does not fall under the federal Registration of Business Act 1956 (ROBA). Instead, it is governed by Sarawak-specific ordinances:
Business Structure | Governing Law in Sarawak | Key Features |
Sole Proprietorship & Partnership | Business Names Ordinance (Cap 64) & Business, Professionals and Trading Licensing Ordinance (Cap 33) | Owner/Partners face unlimited liability. Registration must be done physically at the Inland Revenue Board (LHDN) Kuching office. |
Private Limited Company (Sdn. Bhd.) | Companies Act 2016 (Federal Law, administered by SSM) | Separate legal entity; limited liability. Most common choice for investors. Requires minimum of 1 director and 1 shareholder. |
For most foreign investors and growing businesses, the Private Limited Company (Sdn. Bhd.) structure is strongly recommended for its limited liability and corporate standing.
3. Step-by-Step Guide to Sarawak Business Registration
The process differs depending on whether you are registering a sole proprietorship/partnership or a Sdn. Bhd.
Option A: Registering a Sole Proprietorship or Partnership (Local Business)
Business Name Search: Unlike the online process in Peninsular Malaysia, the name search for a sole proprietorship/partnership must be done physically at the Inland Revenue Board (LHDN) Kuching Sarawak office at the Business Name Search Counter (Kaunter Pencarian Nama Perniagaan, PNP).
Secure a Registered Address: You must secure a valid business address in Sarawak and have a stamped Tenancy Agreement or Sales and Purchase Agreement.
Prepare Required Documents: This includes a completed application form (Borang IRD No. 8 for Trade License, Borang R20 for Business Names Ordinance), owner/partner MyKads, and business address proof.
Submission: Submit all completed forms and documents physically at the LHDN Kuching office.
Obtain Trade License: A Trade License from the relevant local authority (e.g., DBKU, MBKS) is mandatory for all businesses operating in Sarawak.
Option B: Incorporating a Private Limited Company (Sdn. Bhd.)
The incorporation of a Sdn. Bhd. is generally done online via the Companies Commission of Malaysia (SSM) platform (MyCoID), though certain Sarawak-specific documents must be prepared.
Name Search and Reservation: Apply for your desired company name through the SSM portal.
Appoint Company Officers: Appoint a minimum of one director (ordinarily resident in Malaysia) and one shareholder. You must also appoint a licensed Company Secretary.
Secure Registered Address in Sarawak: Your company must maintain a registered office within the state of Sarawak.
Prepare Incorporation Documents: Submit the necessary incorporation forms and documents via the SSM platform (e.g., Declaration of Compliance, Application for Incorporation).
Pay Capital and Fees: Deposit the required minimum paid-up capital. For 100% foreign-owned companies, this can range from RM500,000 to RM1 million, depending on the nature of the business (e.g., consulting vs. trading).
Obtain Certification: Upon approval and payment of the RM1,000 registration fee, SSM will issue the Certificate of Incorporation.
Apply for Trade License: Crucially, a newly incorporated Sdn. Bhd. must still apply for a Trade License from the relevant local authority in Sarawak (e.g., Kuching North City Hall (DBKU), Kuching South City Council (MBKS)). This license is a mandatory local requirement for operation.
4. Post-Registration & Essential Compliance
Once your entity is registered, follow these key compliance steps:
Open a Corporate Bank Account: Open a business bank account with a local commercial bank in Sarawak.
Tax Registration (LHDN): Register your company with the Inland Revenue Board of Malaysia (LHDN) to obtain a Tax Identification Number (TIN).
Employees' Provident Fund (EPF) & SOCSO: Register your company as an employer with the EPF and Social Security Organization (SOCSO) if you intend to hire staff.
Sales and Services Tax (SST): Register for SST with the Royal Malaysian Customs Department if your turnover exceeds the minimum threshold.
Immigration Compliance: Non-Sarawakian employees (including those from Peninsular Malaysia) and foreign workers must comply with Sarawak's specific Labour Ordinance 1958 and state immigration requirements, which often involve obtaining an Employment Pass.
Ready to Launch Your Sarawak Venture?
Setting up a business in Sarawak is a rewarding venture supported by strong government initiatives and attractive incentives. While the dual-layer of compliance (federal SSM and state/local ordinances) requires careful navigation, securing expert local consultation ensures a smooth and compliant launch.
Contact a trusted corporate service provider today to streamline your Sarawak business registration and unlock the full potential of Borneo's business frontier.
Partner with Bestar: Your Expert Navigator for Setting Up a Business in Sarawak, Malaysia
The flourishing economy of Sarawak, Malaysia, powered by its focus on the Digital Economy and the SCORE initiative, is attracting global entrepreneurs. However, the unique dual regulatory environment—federal corporate laws alongside distinct Sarawakian ordinances (especially the mandatory Trade License and local rules for Sole Proprietorships/Partnerships)—presents a unique compliance challenge.
This is where a trusted, full-service corporate partner becomes indispensable. Bestar is your specialist guide, offering comprehensive, localized solutions to ensure your Sarawak business setup is seamless, fully compliant, and positioned for success.
1. Simplified Sarawak Business Incorporation (Sdn. Bhd.)
Setting up a Private Limited Company (Sdn. Bhd.) is the preferred structure for investors, but navigating the process under the Companies Act 2016 while adhering to Sarawak’s local nuances requires expert knowledge.
How Bestar Helps:
End-to-End Incorporation: Bestar manages the entire SSM registration process, from name reservation to final submission.2 We ensure all federal requirements are met, saving you time and preventing bureaucratic delays.
Director & Shareholder Compliance: We provide clear guidance on the requirements for appointing directors and shareholders, including the "ordinarily resident" status for directors, which is critical for smooth incorporation.
Paid-Up Capital Management: Especially for foreign-owned entities, Bestar advises on the correct minimum paid-up capital requirement (which can range from RM500,000 to RM1 million depending on your business activity), structuring your finances for regulatory approval.
2. Unlocking Local Compliance: The Sarawak Edge
The most challenging aspect for non-locals is complying with Sarawak’s state-level requirements, particularly the necessary local permits that go beyond federal registration.
How Bestar Protects You from Pitfalls:
Mandatory Trade License Application: Unlike Peninsular Malaysia, operating a company in Sarawak requires a Trade License from the relevant local authority (e.g., DBKU or MBKS in Kuching). Bestar prepares and submits all required documentation, ensuring your application meets the specific local by-laws.
Registered Office Solutions: Bestar can assist in securing and maintaining a compliant registered office address in Sarawak, which is a mandatory prerequisite for all businesses registered in the state.
Liaison with Local Agencies: We serve as your professional intermediary, managing physical submissions and liaising with the Inland Revenue Board (LHDN) Kuching for specific local business registrations (Sole Proprietorship/Partnership) and local council offices, eliminating the need for you to navigate unfamiliar procedures alone.
3. Seamless Post-Incorporation Corporate Services
Your journey doesn't end with registration. Bestar provides the full spectrum of ongoing corporate services essential for sustained compliance and growth.
Service Area | Bestar's Value Proposition |
Corporate Secretarial Services (CoSec) | Act as your certified Company Secretary in Kuching, ensuring the maintenance of statutory records, accurate filing of Annual Returns, drafting of board resolutions, and continuous compliance with the Companies Act 2016. |
Accounting & Tax Advisory | Provide comprehensive accounting and bookkeeping services. Our tax specialists advise on claiming Sarawak's lucrative tax incentives, such as Pioneer Status or Investment Tax Allowance, to maximise profitability. |
Payroll & HR Consulting | Manage your payroll and statutory contributions (EPF, SOCSO), and provide expert consulting on adhering to the Sarawak Labour Ordinance 1958 for local and non-Sarawakian employment. |
Employment Pass & Visa Assistance | Guide and process applications for Employment Passes for non-Sarawakian staff, navigating the state's distinct immigration requirements to ensure your key personnel can legally reside and work in Sarawak. |
Why Choose Bestar for Your Sarawak Expansion?
Local Expertise, Global Standards: Bestar combines deep local knowledge of Sarawak’s business laws with the high professional standards expected by international clients.
All-in-One Solution: We eliminate the complexity of dealing with multiple vendors. From initial SSM registration and local licensing to ongoing tax and CoSec requirements, Bestar is your single point of contact.
Risk Mitigation: Our specialized understanding of the state-level ordinances minimizes the risk of non-compliance, allowing you to focus on capitalizing on the promising business opportunities in Sarawak.
Ready to transform your vision into a successful, compliant business in East Malaysia?
Don't let the dual compliance system slow your entry into this vibrant market. Partner with Bestar to ensure your company setup in Sarawak is executed with precision, speed, and complete peace of mind.
Contact Bestar’s Sarawak Desk today for a consultation and take the first step toward your Borneo success story.
Keywords: Setting up a business in Sarawak, Sarawak business registration, start a company in Sarawak, business opportunities in Sarawak, Sarawak corporate tax, Company Act Sarawak, Bestar Sarawak, Company Setup Sarawak, Corporate Secretarial Services Kuching, Malaysia Business Compliance, Foreign Investment Sarawak, SSM Registration Sarawak
Comments