Navigating How to Start an E-Commerce Business in Malaysia Effectively

With the rapid expansion of the digital marketplace, venturing into e-commerce presents lucrative opportunities for aspiring entrepreneurs in Malaysia. As one of Southeast Asia’s burgeoning economies, Malaysia offers a dynamic environment ripe for online business growth. However, diving into the world of e-commerce requires a strategic approach and a solid understanding of the local landscape. From navigating regulatory frameworks to capitalizing on consumer behavior trends, establishing a successful e-commerce venture demands careful planning and execution. In this article, we will look into how to start an e-commerce business in Malaysia, empowering you to navigate the terrain and thrive in this competitive landscape. 

Defining an E-Commerce Business 

E-commerce, the digital marketplace for buying and selling goods and services via computer networks, has flourished with the advent of the internet. It encompasses a spectrum of technologies, including Internet marketing, electronic fund transfers, and automated data collection systems. The COVID-19 pandemic, while disruptive to traditional retail, has been a boon for online sellers due to widespread lockdowns and travel restrictions, leading to an exponential surge in e-commerce sales. This unprecedented growth shows no signs of slowing down, with global projections exceeding earlier forecasts and indicating a sustained dominance of online retail in the marketplace. 

Looking into the E-Commerce Business Industry in Malaysia

In Malaysia, the digital age has ushered in a booming e-commerce sector, offering boundless opportunities for online businesses. With a substantial 30% share of e-commerce transactions in Southeast Asia, amounting to a $4 billion industry, Malaysia demonstrates robust growth, with a Compound Annual Growth Rate (CAGR) exceeding 24% in 2021. The borderless nature of online commerce eliminates geographical constraints, allowing businesses to thrive unrestrictedly. 

Key Reasons Why Malaysia is an Ideal Place to Start an E-Commerce Business

The growing market

With a population exceeding 30 million, Malaysia presents a vast market ripe for business expansion. Rapid growth, fueled by an expanding middle class with increasing online spending habits, has propelled Malaysia’s e-commerce sector to a current value of approximately US$7 billion, expected to skyrocket to US$38 billion by 2025. Supported by a high e-commerce adoption rate, active internet users, and widespread mobile penetration, Malaysia offers an enticing landscape for businesses aiming to broaden their online presence and tap into the flourishing Southeast Asian market. 

Solid infrastructure for the present and the future 

The nation boasts a robust and resilient infrastructure, characterized by an extensive and sophisticated transport network coupled with dependable telecommunications systems. This comprehensive infrastructure framework not only facilitates seamless operations for businesses but also fosters economic growth by ensuring efficient connectivity across various regions. With well-maintained roads, railways, airways, and seaports, coupled with advanced telecommunications technology, the country establishes itself as a prime destination for investment and commerce, providing a solid foundation for sustained development and prosperity. 

Efforts backed by the government 

The Malaysian government has prioritized the promotion of eCommerce, recognizing its significance during the pandemic, where internet traffic surged by over 30%. Initiatives such as the “BuyMalaysia” and #SayaDigital campaigns actively encourage e-commerce adoption, while the National E-commerce Council oversees the implementation of the National eCommerce Strategic Roadmap 2.0. The establishment of Digital Free Trade Zones fosters cross-border e-commerce and facilitates international market access for MSMEs, complemented by strategic partnerships with the private sector to incentivize digital service adoption and provide grants and aid to smaller companies. 

Favorable tax conditions 

Moreover, Malaysia boasts an advantageous tax regime tailored to accommodate the needs of e-commerce enterprises. With a remarkably low tax rate of merely 5% levied on e-commerce turnover, businesses find themselves in a strategically advantageous position to mitigate their tax burden effectively. This enticing fiscal environment positions Malaysia as an attractive destination for enterprises seeking to optimize their financial strategies while maximizing profitability within the dynamic realm of e-commerce. 

Talent in the workforce 

Malaysia’s burgeoning e-commerce landscape is bolstered by a formidable workforce renowned for its expertise and education. With a rich pool of skilled professionals at its disposal, the nation stands to facilitate the seamless expansion of e-commerce ventures into fresh market domains. This robust workforce, equipped with cutting-edge knowledge and adeptness, ensures the smooth functioning of online businesses and a new era of innovation and growth in Malaysia’s digital economy. 

Legal Steps on How to Start an E-Commerce Business in Malaysia 

Before diving into e-commerce, you should have a clear idea of how to start an e-commerce business in Malaysia. Ensure your business is registered with Suruhanjaya Syarikat Malaysia (SSM) for legal recognition and access to government incentives. Obtain relevant licenses through the Malaysia Biz Portal, regulated by the Ministry of Entrepreneur Development and Cooperatives (MEDAC). Proficiency in IT is essential in order to stay on top of online operations, including order processing, customer service, website design, and maintenance. Consider partnering with a corporate service provider to streamline technical aspects, allowing focus on core business activities. 

5 Steps on Kickstarting an E-Commerce Business in Malaysia 

Starting an e-commerce business in Malaysia can be an exciting venture, given the country’s ever-growing online market. Here’s a quick look at what you will be looking forward to: 

1. Opting for a business model 

Choose a business model for your venture, considering options such as Business-to-Consumer (B2C), Consumer-to-Consumer (C2C), Business-to-Business (B2B), or Consumer-to-Business (C2B). 

2. Registering with Suruhanjaya Syarikat Malaysia (SSM) 

To register a business with SSM in Malaysia, first decide on your business structure, choose a unique name, and prepare necessary documents, including identification papers and a business address. Then, complete the application forms provided by SSM and submit them along with the required fees, either online through the MyCoID portal or in person at an SSM office. Afterward, wait for SSM to process your application, receive your Certificate of Registration upon approval, and comply with any post-registration requirements before commencing operations. 

3. Business bank account opening 

Opening a business bank account is recommended to maintain a clear separation between personal and business finances. This is particularly crucial for partnerships, where multiple individuals have access to the account. 

4. Selecting a platform or marketplace 

There is a distinction between an e-commerce platform and a marketplace: the former is an independent site for selling goods or services directly, while the latter, like Lazada or Shopee, serves as a channel for multiple sellers. For those with ample resources and capabilities, setting up an e-commerce website is recommended, despite the time and effort involved in managing bandwidth, integrations, SEO, cybersecurity, mobile compatibility, and analytics. 

5. Selecting a payment gateway

When selecting a payment gateway for your e-commerce business in Malaysia, consider factors like integration with your chosen platform, reliability to prevent fraud, and support for both local and foreign currencies. While globally recognized providers like PayPal may not suit all Malaysian localities, options such as senangPay and iPay are available. Stripe is a recommended choice for its reliability, but preferences vary. 

Premia TNC’s Industry-Leading Incorporation Services 

At Premia TNC, we are fully dedicated to simplifying the often complex process of business incorporation in Malaysia. Our tailored solutions, expert guidance, streamlined processes, ongoing support, value-driven services, and comprehensive resources ensure a seamless journey from initial setup to sustainable success. With our team by your side, you can confidently navigate the intricacies of Malaysian corporate law and regulations while focusing on what truly matters, which is building and growing your business. Still wondering how to start an e-commerce business in Malaysia? Contact us today to take the first step towards realizing your entrepreneurial aspirations and unlocking your company’s full potential.