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How to Start an Online Business in Malaysia
When 400 online businesses were charged for not registering their business with the Companies Commission of Malaysia (SSM) in 2010, it stirred up the whole online business communities in Malaysia.
In fact it created more confusions and even up till now, questions such as 'Why should I register as a company to do online business, when I only do part-time or as a hobby?' and 'My income is through advertisement on my blog, do I need to register?' are still being asked.
UPDATE #2 (1st July 2013) : Effective 1st July 2013, all online businesses need to comply with the Malaysian Consumer Protection (Electronic Trade Transactions) Regulations 2012. For detail write up on this new requirement, read my article on the Regulation and Consumer Protection to eCommerce and Online Business in Malaysia
UPDATE #3 (16th Sept 2014)
As reported in all major newspapers on 16th Sept 2014, Chief Executive Officer of the Companies Commission of Malaysia (SSM), Datuk Mohd Naim Daruwish had again reminded people that do business online to register with SSM. This includes business that sells their product through social networking sites such as Facebook and Instagram.
It is an offence punishable under the Registration of Business Act, if they failed to do so. The maximum fine is RM50,000 or jailed up to two years. This is not a small matter and for people that try to supplement their existing income, it is not worth the risk.
Datuk Mohd Naim mentioned that cost of registration is only RM30 and the registration is a simple process. They will also gain from other benefits such as access to microloans and insurance coverage.
To catch these errant online shop bosses, SSM is working together with Malaysian Communications & Multimedia Commission to identify these people.
So, take note if you have not registered your online business yet.
Do I Need to Register as a Business Entity to do Online Business?
I decided to check with both Malaysian Communications and Multimedia Commission (Suruhanjaya Komunikasi dan Multimedia Malaysia, SKMM) and Companies Commission of Malaysia (Suruhnajaya Syarikat Malaysia, SSM) for the answers.
Clarification from Malaysian Communications and Multimedia Commission, MCMC
I spoke with the representative from the Licensing Department and asked him if someone, who is doing online business, need to register with MCMC. His answer is NO, if your business activity is not related to the telecommunication industry. Example of business that is related to the industry is, selling SMS services or networking services. So if you are doing these types of businesses, then you need to register.
Clarification from Companies Commission of Malaysia, CCM
I also spoke with the representative from Customer Service, CCM, to get answers to my questions: 'Do I need to register as a business entity to do online business?', 'What if my income is through Google AdSense (through my blog or articles that I write online)?', 'If I do this activity part-time, like selling on an adhoc basis, through eBay, lelong.com.my etc, or selling cookies during festive seasons, do I still need to register?' The answer is YES.
Her rationale is, as long as there is income, you need to register. Even if your income is through blogging and writing articles online. For these categories of people, her suggestion is to register as a sole proprietor, which is the cheapest form of registering a business (see incentives, below).
She further adds that; doing online business in Malaysia is relatively new, compared to other developed economies such as the UK, Australia and USA etc. Regulations and specific requirements are in place, to protect would be buyers from any possible fraud. Business people should also be aware of the code of ethics and of their responsibilities. There are some bad hats that are out to deceive consumers.
However, she did agree that even if someone were to register his business, it doesn't mean the consumer is fully protected.
Anyway, with all these explanations, I still feel that the above rationale doesn't quite apply to bloggers and writers who earn through PPC etc. And for bloggers to register as a business entity is really weird. Unfortunately, laws are laws and we have to comply, no matter how ridiculous it may sound!
In addition, and this is the best part, it is also your responsibility to register and declare your income with the Inland Revenue Board of Malaysia (Lembaga Hasil Dalam Negeri Malaysia, LHDNM)
Incentive for Registering as Sole Proprietor
The government has given incentives to those who want to register as a sole proprietor or partnership, with a reduced fee of RM50 (about US$16.50) for five years. This is a lot cheaper compared to the original fee of RM30 and RM60 per year, for proprietorship and partnership respectively.
This incentive is offered effective 1st June 2012 and will end on 31st December 2012.
This will greatly benefit bloggers or those who do online business on an ad hoc basis. So if you've not registered, don't forget to take advantage of this reduced fee and register before the end of the year.
How to Do Online Business in Malaysia
To recap, to start an online business in Malaysia, you need to:
- Register with MMC, if your business activity relates to telecommunication sector.
- Register with CCM as a business enterprise
- Get a domain name, a hosting account and a properly designed website. If you want to try out before spending additional money on these items, you can still sell through Facebook, eBay, lelong.com.my, mudah.my, your blogs and other social media sites.
- Register and declare income with the Inland Revenue Board of Malaysia
The followings are detailed write up for each of the above steps:
1. How to Register with MMC
You only need to register with MMC, if your business is related to the telecommunication industry.
It is recommended that you visit the nearest MMC's office and discuss your business idea. Check out MMC's website for the nearest office. You may want to read the guideline first, before meeting up with their representative. Here's the link to the Guideline Page.
2. How to Register a Company Name and Business with CCM
For guidelines on which business entity you want to start your business, and how to register a company name, please refer to Companies Commission of Malaysia's website. Link to the respective sites, as follows:
- Starting a Sole Proprietorship/Partnership Note: Please ignore the fee amount stated on this website page; as currently, they are offering an incentive package of RM50 for 5 years effective 1st June 2012 until 31st December 2012.
- Limited and Unlimited Companies: Application for Name Search and Incorporation of Company (Local), and Incorporation of Company (Foreign)
It is recommended that you visit their office in person to do the registration, which takes 1 hour for business registration and 1 day for company registration. You can also do on-line.
3. Get Domain Name, Hosting Account and Website
I assumed that you already know what product you will be selling online, done your research on your competitors, know what will be your unique selling proposition (USP) and ready to start an online business
Selling Online through Your Website
If you prefer your own dedicated website, to do online sales, then go through the checklists listed below. If you are unsure how to do all these checklists, you can read My Review on how to learn all these for free at http://startingnewonline.com/the-wealthy-affiliate-scam-and-complaints
- Domain Name: You can either buy an existing domain name or register a new domain name for your website. Alternatively, your web hosting service company or your website designer may also provide this service. There are several companies in Malaysia that will sell ready-made domain or register a new domain name with extension .my, .com.my, .net.my, and .org.my. An internet search will give you several companies. Made an appointment to see them and discuss your requirement. Remember to choose and work with a reliable company.
Some of Malaysia's Online Selling and Auction Sites
- Mudah : www.mudah.my
- Lelong : www.lelong.com.my
- MyBarang : www.mybarang.com
- Shoppy : www.shoppy.com.my
- Autoworld - Car Selling Site : www.autoworld.com.my
- ebay Malaysia : www.ebay.com.my
- Web Hosting Company: Your website needs to be hosted on a web server for the public to view and buy your product. You can either choose an independent company for the web hosting service, or take the package provided when you buy your domain or through your website designer. Check out for storage capacity, domain based email, server uptime percentage (i.e. how long the servers are "up" and running), server security, ability to host a blog and feedback forms. These are some of the criteria to consider when selecting a web hosting company.
- Website Design: You can buy a ready-made website or have one designed to meet your specific requirement. Your website must have at least the shopping cart, ability to do self-edit, fast in loading the page, good layout and photo placement. Most people don't have the patience to read websites, they scan them. So be brief and split your homepage in chucks for easy access. As always, ask for a demo before deciding.
- Shopping Cart Software: A good and easy online shopping experience is crucial to successful sales. Even if your product is value for money, but if the buying process is slow and difficult, you may not get repeat customers. So ensure a good website layout, good shopping elements and features, several payment options, shipping and delivery options with reasonable rates. Check the demo before buying.
- Payment Method: In Malaysia, you can sign up with companies such as PayPal Malaysia, iPay88 or MOLPay (formerly known as NBePay) as a payment gateway for your sales transaction. These are trusted and respected companies and potential buyers have no hesitation to buy from your website. iPay88 and MOLPay also accept Malaysian Online Bank transfer, to cater to customers who do not have a credit card. You may also opt for direct debit via Internet Banking such as Maybank2u but a potential buyer may be hesitant to transfer their money before receiving the goods, if they are not familiar with your company.
- Shipping: If your shipping cost is high, and delivery time is long, these will also deter your potential buyers from buying from you. If your sales volume is high, you should negotiate with Pos Malaysia and other courier companies; for a win-win situation.
Selling Online Without a Website
If you don't want the hassle of having a website to do online sales, you can do this through Amazon, eBay Malaysia, EtsyMalaysia, Facebook, lelong.com.my and even through your blog site.
If you have an interest in writing and love to share your thoughts and ideas through writing, why not join HubPages? It is free and you will earn through Google AdSense or when people buy items that you advertise on Amazon or eBay capsules.
Whether you sell through a dedicated website or otherwise, you need to get traffic. If there's no traffic, there will be no buyers. Examples of how you could get traffic to your site are:
- Register with search engines such as Google and Yahoo.
- Online advertisement on Google or Facebook ads.
- Offline marketing through flyers, billboard, media ads., direct mailing
- Publish an email based newsletter
- If you have a blog, list them in major blog directories.
4. Register and Declare Income with Inland Revenue
Lastly, you need to register and declare your income with the Inland Revenue Board of Malaysia.
This is the simplest of all the procedures and I will not be detailing the steps here; but just in case, this is their website.
UPDATE #1 (2nd Jan 2013): In January 2013, the Malaysian Inland Revenue Board issued guidelines on taxation for eCommerce in Malaysia. This document explain what are taxable for e-commerce income derived from inside and outside Malaysia and other tax treatment.
Start an Online Business Soon
We spoke earlier of CCM's requirement for everyone to be registered, to do business on-line. When we consider the huge potentials of on-line business in Malaysia, registering as a business entity is a small issue. In fact, that's one way to gain trust from your potential buyers.
Open Your Business to a Bigger Market
If you have an existing brick and mortar business, consider expanding to a much wider market, by starting an online business, as the growth potential in Malaysia is huge.
If you are doing it part-time, or just earning through Google AdSense, don't be dishearten of the need to register (especially now with the incentive fee payment). Your small venture might grow into something big, and as a registered business entity, it's easier to get additional funding, if required.
To quote a Chinese proverb “All cats love fish, but fear to wet their paws” So don't be afraid to venture into this new business environment.
Some Tips on How to do Your Marketing
To help you get started on this business, here are some tips on how you should do your marketing, i.e. know who you are selling to:
- Who are your consumers? Market your products to people who will MOST OFTEN visit your site and buy your stuff. You cannot market it to everybody because it will be expensive. To be successful, your marketing and advertising efforts must capture the attention of people that you intend to sell to e.g. students, teenagers, mothers, etc.
- To connect to your customers, your advertising and marketing style and concept must tell a story and evoke their emotions.
- When you are new to this business and with very limited funds, the above tips may be hard to figure out. Experiment with a few styles and do your initial marketing through FB, Instagram, email and forum sites (be active contributors before you start to insert your ad. Otherwise, it gets thrown out and bad for your reputation!)
These are just some examples to help you get along. Good luck!
© 2012 Mazlan