Malaysia Establishing Your Startup

Notable Policies

  • 13th Month Pay is not required, but is a common company perk.
  • Some companies practice small token bonus pay during Chinese New Year (for Chinese employees).
  • There are numerous paid public holidays in Malaysia (around 14) plus a minimum of 8 days of leave alloted per year: http://publicholidays.com.my/

  • Both Lunar (or Chinese) New Year and the month of Ramadan are closely observed in Malaysia. One can expect Chinese employees taking one week off during this period. Also, it is not uncommon for Chinese owned businesses to close for a week or more during Chinese New Year. Meanwhile, Muslim employees may take extra time off to be family during Ramadan.* For white-collar workers, keep in mind office location, parking cost, and food cost. Job candidates may turn down a position if the office is too far (traffic jams), office parking cost are high, or it is seen as expensive to eat nearby the office. Office perks, flexible work hours, paid parking, and office catering can widen your pool of candidates.

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Who/Where to Hire

  • Participate in local Career Fairs in Universities. They are better attended and viewed as reputable employment seeking venues in Malaysia than when compared to the US, for example.
  • Job sites like JobStreet, JenJobs and JobsDB for most entry level jobs. Career fairs also focus on entry level jobs. LinkedIn is becoming a popular choice as there are more than one million users in Malaysia, especially with the launch of the Bahasa Language version.
  • The tech community is thriving but tightly knit in Malayia, attending events like LVL.UP (formerly known as WebCampKL) and DNA Disrupt are great opportunities to find talent. LVL.UP features a free and very active job board at https://www.facebook.com/groups/wckljobs/.

Here is what you should expect to pay for salaries in Malaysia:

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As An Employer, Beware About:

New Employees Decline on Start Day

A candidate signing and accepting a job offer in writing does not necessarily mean the person is committed to joining the company. While not typical, it is not unusual to find that a candidate who has signed an acceptance letter, yet calls the company on their scheduled start day to decline the position.

Avoid Race-based Hiring

Race-based hiring is still common practice in Malaysia. When working with the startup's hiring team or recruiting firm, be sure to stress that candidates should be selected on skill not race. It is normal for a recruiter to ask if the hiring company has any racial preference and they may sometimes ask so indirectly (e.g. Chinese language requirements).

Beyond race, it is not unusual to see age and gender bias in hiring. It is important that startups explicitly state and stress to their hiring teams or recruitment firms to NOT factor in age and gender during the hiring process.

An additional note: it is common to see photos attached to resumes in Malaysia, which can lead to the HR department profiling candidates based on looks and race. Religion, weight, and height are also sometimes included in resumes and may distract from acquiring top talent.

Racial Diversity as a Requirement

Given that Ramadan and Chinese New Years are major holidays in Malaysia for Muslim, Malay (who are legally required to be Muslim), and Chinese communities, it would be beneficial to ensure that the startup’s team is kept racially diverse. Otherwise, a startup may face a situation where the majority of the team is on leave for Chinese New Year (if the team is mostly Chinese) or on leave for Ramadan (if the team is mostly Malays and Muslims). Chinese New Year is particularly difficult as it is two weeks long and it is not uncommon for employees to expect 3-5 days of leave.

“Poor Performance”-based Termination Can Be Difficult

Legally, an employer may terminate an employee for poor performance given proper documentation and an inquiry process where the employee may elect to respond to the charges. However, in practice, courts tend to rule in favor of the employee unless evidence shows multiple documented incidences of poor performance have occurred and that a management-employee plan to address it has already been carried out.

SOURCES

http://www.slideshare.net/Womenbizsense/employee-terminationlawsinmalaysia

Baskaran, R.P, 2012 Handbook for Employers and Employees in the Private Sector, 24th Edition.

Dramatically Uneven Skill & Experience Levels

Given the socio-economic inequality in Malaysian society, you will encounter job candidates with a wide spectrum of backgrounds. Be prepared to evaluate individuals with very disparate and diverse qualifications, as well as varying levels of education and work experience.

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Where to Incorporate

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Visa

Visa Difficulty and Time Depends on Government Incentives

While there is a standard work visa (Employment Visa), the requirements for qualifying are somewhat dependent on the type of government incentives the startup has. It can take as little time as 2 weeks or it can may require over 4-5 months of processing. Startups should work closely with government officials to understand what the targeted versus usual time ranges are for the visa application process.

Visa for MSC-Status Companies

Foreign startups in the high-tech sector are the most common candidates for a “MSC-status company” which is granted by the MDeC (Multimedia Development Corporation). One of the incentives provided by an MSC-status company is the ability for a startup to attain unlimited foreign visas and have them issued in 2 weeks’ time.

Because of this, it is not unusual for foreign startups to use Malaysia as a hub of operations (low operating cost, stable government, government incentives for foreign companies, and friendly visa requirements). Indeed, it is not unheard of for such companies to have the majority of their employees from foreign countries.

Visa for MIDA-status Companies

While more rare, some foreign startup companies may work closely with MIDA (Malaysian Industrial Development Authority), which typically support those companies investing in the manufacturing and services sectors of Malaysia.

Under MIDA incentives, a company may be issued work visas for the senior members of their team. There are certain requirements for this visa, including: RM 5000/month minimum salary, senior management experience or senior skill-level must be shown, minimum 2 years of experience relevant to the position, and a relevant university-level degree & certifications.

Visa Running, Malaysia is not Like Thailand

While visa running maybe a tempting option, foreign entrepreneurs should note that Malaysia’s visa regime is tighter than in Thailand. Visa running is still a possibility and your social visit visa can last anywhere between 30 to 90 days, depending on your visa. As with other countries, a holder of an EU or North American passport on a visa run is likely to raise less eyebrows than one from Indonesia or the Phillipines.

Unlike Brazil or Thailand, where visa overstaying fines are a simple matter to be paid, a visa overstay fine in Malaysia usually requires a trip to Putrajaya (1 hour outside KL) and at least a day’s worth of waiting in a queue.