5 minutes

How to Apply Malaysia Digital Status (MD Status) Company for Foreign Investors 

As one of the fastest-growing economies in Asia, Malaysia is quickly becoming one of the hottest destinations for foreign investment due to a host of favorable government policies geared at accelerating economic growth. 

Malaysia’s bid to become one of the top economies in Southeast Asia has taken on a different trajectory since the COVID-19 pandemic, with the country focused on implementing several digital-oriented programs and initiatives.  

One of these programs is the MCS Status, which empowers local and foreign investors to gain several incentives to drive business growth.  In this article, we’ll examine the now-rebranded initiative (MD Status) and how organizations can benefit from the various schemes. 

What is a Malaysia Digital status (MD Status) company in Malaysia? 

Companies with Digital/MD status in Malaysia are local or foreign organizations granted the ability to apply to get several business-growth-propelling initiatives. 

The MD Status label stems from an investment initiative of the Malaysian Government through the Malaysia Digital Economy Corporation (MDEC). The initiative aims to attract investment, talent, and companies and empower local businesses to stay competitive through digitalization. 

The Malaysian Government recognizes MD Status and ICT-facilitated organizations can leverage the MDEC’s support to use or develop digital technologies to drive their business operations. The results have been overwhelmingly positive since the initiative’s implementation in 1996. The following are some of its notable achievements: 

  • RM212B worth of export generated as of December 2020
  • 184,030 jobs created as of December 2020
  • 4,726 companies awarded the Malaysia MD Status
  • 2,708 active Malaysia MD Status companies
  • RM588B worth of revenue generated as of December 2020
  • RM384B worth of investment recorded as of December 2020

With several thousand companies involved and counting, the MD Status is highly sought after by many IT firms in the country.  

The transition from MSC (Multimedia Super Corridor) status to MD (Malaysia Digital) status 

The Multimedia Super Corridor (MSC) status was established in 1996 to enhance business growth and extend various investments and initiatives to local and foreign organizations in Malaysia.  

The MD Status officially replaced the MSC Status on the 4th of July 2022, when Prime Minister Datuk Seri Ismail Sabri Yaakob announced a transition to the new initiative. The new MD Status would focus on nice digital growth sectors, namely: 

  • Digital content
  • Digital finance
  • Digital health
  • Digital cities
  • Digital services
  • Digital agriculture
  • Digital trade
  • Digital tourism
  • Islamic digital economy

The new initiative was created to boost Malaysia’s digital economy and make substantial digital economic spillover through equitable access to income opportunities, knowledge, and digital tools. It would also accelerate Malaysia’s digital activities and economic opportunities in attracting high-value investments.  

With the former MSC Status, depending on where the offices were located, there were three categories of MD Status companies in Malaysia: 

  • Companies located in designated sectors within the MD Cybercity
  • Companies situated in other commercial sectors within the MD Cybercity
  • Startup MD Companies

The new MD Status has altered these requirements, as eligible companies don’t have to be confined to designated areas and can operate in any location that suits their operations. Additionally, the new MD Status also has a special MTEP program that includes allocations of employment passes and work permits to attract investors and experienced startup tech entrepreneurs to invest or work in vertical industries in Malaysia. The allocations include 5-year passes for established investors or entrepreneurs and their dependents and 1-year passes for startups.  

Who is eligible to apply for the Malaysia digital status in Malaysia? 

Foreign and local companies are eligible for the MD Status if they fulfill the following criteria: 

  • Incorporation under the Companies Act of 2016 and resident in Malaysia 
  • No existing tax exemptions granted by the Malaysian government 
  • Involvement in one or more Malaysia Digital activities without issuing any invoice for proposed activities in Malaysia based on the application date 

Existing companies with MSC Status are not required to reapply, as the new MD Status conditions apply to them. Some of the promoted activities include the following:

  • Big Data Analytics
  • Artificial Intelligence
  • Blockchain
  • Robotics
  • Autonomous Technology
  • Recruitment Process Outsourcing

Benefits of the MD Status in Malaysia 

Companies that carry Malaysia’s Digital Status stand to benefit from the following: 

  • Tax incentives
  • Pioneer status (PS) privilege for 5 + 5 years 100% tax exemption and renewable to 10 years
  • Flexibility to source capital & funds globally
  • Zero requirements for local entrepreneurs
  • The pre-approved quota for foreign knowledge workers
    • 50 full-time employees with a monthly base salary of RM5,000 or
    • 30 full-time employees with a monthly base salary of RM10,000

What is the Malaysia Digital Status Application Process? 

There are four stages when applying for the MD Status: 

Registration

This involves signing up on the MDEC website and submitting the online application form within 30 days of the registration date. Note that there are no extensions to this deadline. 

Application acknowledgment and registration acceptance 

Here, applicants will receive an acknowledgment receipt to registered email addresses. Then will come a review of your tax incentive eligibility.  

Assessment and evaluation 

This involves application evaluation by an MDEC business analyst, who may require payment processing fees, additional documents, and a presentation of your proposed activities. You will receive a notification email if your evaluation is successful.  

Application submission to relevant bodies for approval 

Various committees will assess the validity of your application before accepting or rejecting it. Upon acceptance, you will be issued a Malaysia Digital Certificate.

Annual Compliance for MD Status Companies 

MD Status companies are required to carry out an annual compliance activity within a year of receiving status subject to the following conditions: 

  • Commencement of operations of approved activities 
  • Hiring at least 2 full-time employees with a minimum average salary of RM5,000 monthly 
  • Paid-up capital of RM1,000 
  • Minimum annual operating expenditure of RM50,000 incurred for the approved activities. 

How We Can Help 

As a foreign investor or entrepreneur looking to do business in Malaysia, staying abreast of the regulations and corporate requirements for establishing your presence is important. Additionally, you must take advantage of the Malaysia Digital Status to help drive your business to greater heights. Nevertheless, the entire process of setting up your company can be draining due to the complexity of the various procedures involved. 

This is why you need a business consultant like Premia TNC to help incorporate your business to legal standards and attain MD Status. Our knowledge of the corporate landscape in Malaysia is thorough, and we boast the expertise and experience to help you get your new business started in the country. 

Contact us today! 

FAQs

What are some promoted activities under MD Status?

Some promoted activities under MD Status include cybersecurity, blockchain, creative media technology, sharing economy platforms, and UI/UX.

What activities are not promoted under MD Status

Trading, telecommunications services, and manufacturing provision are not promoted under MD Status.

Is MSC Status and MD Status the same?

The MD Status is a revamped version of the MSC Status, with the transition effect in mid-2022. The new MD Status introduced several digitalisation-themed initiatives to drive the Malaysian digital economy.