Market Entry Strategy to Sarawak - What do businesses need to know?

Sarawak is a special region in the Malaysian Federation, located in East Malaysia. Doing business in Sarawak differs culturally from the Peninsular, and there is also a different set of laws and regulations to be aware of.

For businesses with presence in West Malaysia

If your company already has a presence in West Malaysia, extending your presence in Sarawak can take the form of a branch office. There is no need to register a new corporate entity to set up in Sarawak, as the Company Act and the Companies Commission framework applies nation wide. You will need an address and a physical office is optional depending on your nature of business and licensing needs.

For businesses entering Malaysia for the first time

If your company is setting up office for the first time in Malaysia, and is choosing Sarawak as the entry point, then incorporating a company in Malaysia is highly advisable. You will need to appoint a company secretary, a tax agent and auditors. Setting up a private limited liability company (also known as "Sdn Bhd") is recommended, although other legal entities exist too. If you are in a highly regulated industry, you may want to engage in talks with facilitation agencies first prior to making a market entry. If the investment sum is significant, enquiring with Invest Sarawak or MIDA Sarawak is prudent.

Hiring and Staffing

After your office is set up, you will want to think about hiring and staffing. Some companies may choose to send representatives here, while others may choose to hire managers and leaders locally to start up. Another great strategy to think about is relocating Sarawakian team members back to Sarawak for such a set up, as Sarawakians do not face any restriction to work in Sarawak.

Hiring expatriates in Sarawak

To hire expatriates in Sarawak, the company must meet the eligibility requirements set by the state. Expatriates must demonstrate "special skills". The company also needs to have sufficient paid up capital (ranging from RM250,000 to RM1,000,000) to sponsor expatriates in Sarawak. West Malaysians and Sabahans are also considered expatriates for the purpose of obtaining the right to work in Sarawak. You can find the different types of work permits available here.

Location

Sarawak is vast and has four major cities, namely Kuching, Miri, Bintulu and Sibu. Depending on your nature of business, the choice of location should be strategic. For example, manufacturers and oil and gas players are currently choosing Bintulu as their entry point due to the industrial zones, manufacturing ecosystem, deep sea port and proximity to oil and gas reserves. That said, setting up in Kuching is also beneficial as it is the administrative center and companies here experience less bureaucracy in general.

Licensing

There are some marked differences in licensing between Peninsular Malaysia and Sarawak. For example, to obtain a trade license or business license for your premise, in Peninsular Malaysia, you will obtain this from the local council. However, in Sarawak, this is obtained from LHDN. Certain licenses in Sarawak follow Peninsular Malaysia's framework, but others have Sarawak specific regulations.

Land acquisition

If your company's commercial activities involve land acquisition, it's important to understand the different types of land categories in Sarawak to make an informed purchase. There are native land, native customary land, mixed zone land, agriculture land, to name a few, in Sarawak. Some lands designated for specific purposes can only be use for the named purpose. Others may allow application for change of use. Generally, native customary land is a nuance legal concept in Sarawak rooted in historical factors. It is advisable to seek advice from an experienced conveyancing lawyer in Sarawak before proceeding with such an investment.

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