Establish an e-Commerce Business in Malaysia
Updated on Wednesday 03rd November 2021
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The e-commerce industry in Malaysia is set to reach a total value of $3,751 million at the level of 2019 (the value is calculated in terms of revenues). Local and foreign entrepreneurs who want to open a company in Malaysia in the e-commerce industry must also take into consideration that this market is expected to further grow in the following years, reaching $5,776 million by 2023. The most developed sub-sector of the e-commerce industry is represented by sales of electronics and media-related devices. Our team of consultants in company registration in Malaysia can provide in-depth information on any steps related to the incorporation of an e-commerce company in Malaysia and may also assist with advice on how to register a website in this country.
Current situation of the Malaysian e-commerce market
For the current year, investors interested in the e-commerce sector in Malaysia should be aware of the fact that the user penetration is expected to reach 62.5%; this rate will slightly increase by 2023, to 64.2%. When talking about the e-commerce activities developed on a business-to-client basis, it is necessary to know that Malaysia has approximately 16 million e-commerce users.
As a general rule, the average spending per person is estimated at $79, but in the next years (up until 2022), e-commerce users will spend approximately $110. At the moment, the e-commerce market is highly sustained by young people, who are acquainted with modern devices and use the internet for making various purchases. Some of the most relevant aspects regarding the characteristics of the local consumer market are the following:
- e-commerce websites are accessed on a daily basis by persons who have an age between 16-44 years old;
- the highest rate for logging on e-commerce websites is seen in the age group 16-24 years (93%);
- the most common ways to make online purchases in Malaysia are through desktop computers, smartphones, and tablets;
- Malaysia has one of the highest internet penetration rates registered in Southeast Asia;
- the country has also the highest rate of mobile phones penetration (from its total population, there are 21.6 million persons considered unique mobile users).
How are e-commerce businesses sustained in Malaysia?
A positive aspect of investing in the e-commerce sector in Malaysia refers to the aid provided by the local government in order to regulate and assist companies operating in the online sales industry. In 2016, the Malaysian authorities created the National e-Commerce Council, which was set up with the purpose of promoting e-commerce activities, as well as providing support to the industry. The e-commerce company in Malaysia is in the attention of those who want to access this sector. They can benefit from the country’s national programs created under the National e-Commerce Strategic Roadmap. Such programs are designed to increase the potential of this sector which had a steady increase in the last years (having an average growth rate of 12.5% on a yearly basis).
The National e-Commerce Council, operating under the Ministry of International Trade and Industry, helped in registering more than 120,000 e-commerce businesses with the Companies Commission of Malaysia, since its incorporation. The sector is also sustained through the Digital Free Trade Zone (DFTZ), which was created with the purpose of aiding local businesses in exporting their products to other countries. More importantly, small and medium-sized companies in Malaysia can use the DFTZ in order to enter various digital marketplaces, which can help them in enhancing their capabilities.
What is the legislation for Malaysian e-commerce companies?
Malaysia provides a set of legal acts which regulate the activity of e-commerce operators. Our company formation agents in Malaysia may present the legal framework addressed to this sector, but it is necessary to know that the main rules of law are the following: the Electronic Commerce Act 2006 and the Electronic Government Activities Act 2007. Businessmen who want to open a company in Malaysia in this industry should also know that, besides these two main rules of law, the country also applies the Personal Data Protection Act 2010, being the first country in the ASEAN region to introduce regulations concerning the protection of the online consumers’ information. The country also applies the Digital Signature Act 1997 and the Consumer Protection Act, a document that was amended in order to include online activities as well.
Guide to starting an e-commerce company in Malaysia
If you want to discover the business advantages of Malaysia, then you can set up an e-commerce company in Malaysia, taking into account some recommendations. Below are the steps to follow to register this type of business, with the mention that you can be helped by our specialists in company formation in Malaysia.
- Choose the business structure - Limited liability company is the right option for foreign entrepreneurs in Malaysia. With at least two shareholders, USD 1 as minimum share capital, and registration with the financial authorities, your business can be quickly put into operation. You can also think of the sole proprietorship in Malaysia.
- Decide on the products you want to sell - You can think of a business with electronics, jewelry, clothing, digital products, or various services, as long as you do a market analysis beforehand.
- Develop a business plan - It must contain complete details about the business, activities, suppliers, market research, products, prices, promotion, etc.
- Prepare e-commerce company documents in Malaysia - Articles of Association are the documents for setting up a company, and therefore the most important. Our local agents can also handle such formalities.
- Register the company for the payment of taxes - Foreign investors must align with the legislation regarding the taxation of profits in Malaysia.
- Obtain a business license - an E-commerce license is required to open an online business. The authorities will check in detail the business you want to develop online, and then offer the right license.
- Develop the website - A team of specialists can tell you what kind of website is suitable for an e-commerce company in Malaysia. Domain name and hosting are other important aspects.
- Accounting services - An online business does not mean getting rid of accounting issues. You can think of the services of an accounting firm with which to collaborate in this business.
- Provide customer care services - Businesses developed on the internet must benefit from complete, customer-oriented services. It is important to consider this type of service as well.
- Consulting from the beginning - You can rely on the support provided by company formation agents if you want to open an e-commerce company in Malaysia. The formalities related to documents, licenses, and taxes come to our attention.
How important is the promotion of e-commerce company in Malaysia
Newly established companies on the market must be supported by a serious advertising and promotion plan. Thus, potential customers will discover faster the products and services you offer on the market. In addition to this aspect, considering the high number of users who prefer online shopping in Malaysia, you can also implement a mobile application in order to facilitate the shopping of this type of customer. The promotion of the site can be done together with the respective application, and the well-known channels that are accessible at any time.
Set up online payment on your site
Facilitating online payment is an important step in an e-commerce company in Malaysia. But in order to implement a merchant account for your website, you need to guarantee online security. There are companies specialized in secure online payments, as a result, you can call on the services of a specialist. This way you make sure that you offer all the facilities to your clients, cash on delivery or online payments.
Accessing dedicated marketplaces to attract customers
Opening an e-commerce company in Malaysia involves a series of investments and promotions in order to enter the list of the most accessed and appreciated online stores. Here, an important and already known listing on the marketplace can play an important role. Being accessed more often or frequently, you will be able to benefit from a better display of your products and services. This tool is often used in an e-commerce business, and the advantages are numerous, especially in terms of the type of consumer and his/her practices.
Why work with our specialists in Malaysia
Our team of company formation agents in Malaysia has experience in setting up companies and the formalities required in this case. Things can seem quite complicated for foreigners who want to establish their activities in Malaysia, so specialized help is recommended. Our clients can rely on professionalism and attention to detail when deciding on our services because we want to offer the best solutions for the situations encountered.
We invite investors to request further information on the registration of a Malaysian e-commerce company from our team of specialists. Contact us right away!