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Regulatory Environment in Malaysia

Malaysia is a federation of 13 states operating as a parliamentary democracy with a federal constitutional monarchy. The Yang di-Pertuan Agong (YDPA) is an elected monarch and head of state, chosen for a five-year term from among the nine hereditary rulers or Sultans of Peninsular Malaysia (with the last election held in 2016). Four Malaysian states do not have monarch kings and are therefore ruled by governors appointed by the YDPA.

Malaysia has two sources of law. The National Constitution (the country's supreme law) and Syariah (Islamic) Law, which applies only to Muslims. The federal government has little input into the administration of Syariah, which is implemented by the states, whose Syariah interpretations may vary from state to state.

The federal government is based on the Westminster bicameral system, with three branches of power:

  • Executive – In Malaysia, executive power is vested in Cabinet led by the Prime Minister, who is appointed by the YDPA and must be a Member of Parliament (MP). MPs are elected by universal suffrage for a maximum term of five years (with the last election held in 2013). Cabinet members are chosen from both upper and lower houses of Parliament.

  • Legislative – Parliament consists of the lower house (House of Representatives) and the upper house (Senate).

  • Judiciary – The superior court of Malaysia consists of the High Court of Malaya, the High Court of Sabah and Sarawak, the Court of Appeal and the Federal Court. The Federal Court is the highest court of Malaysia. Outside this hierarchy are other courts including the Syariah Court.

Various government agencies are responsible for implementation and enforcement of regulations governing various aspects of doing business in Malaysia, such as registration of businesses, issue of import and export licences, as well as ensuring compliance with various government policies.


A Practical Guide to Doing Business in Malaysia

  1. Regulatory Environment
  2. Establishing a Presence
  3. Intellectual Property Protection
  4. Staff Recruitment
  5. Tax Considerations
  6. Import/Export Procedures
  7. Further Information

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