Singapore is regularly cited as one of the easiest places to do business. For businesses expanding into the region, you may be familiar with the culture and places, but the process of starting a business presence may be an unknown quantity.
The criteria and procedures for incorporating a company in Southeast Asia vary greatly. This guide provides you a quick overview of the essential elements of registering a company in the major Southeast Asian economies.
| Thailand | Myanmar | Vietnam | Malaysia | Indonesia | |
| Official Language | Thai | Burmese | Vietnamese | English, Malay, Chinese | Bahasa Indonesia |
| Economy Size | US$543.5 billion | US$76.1 billion | US$261.9 billion | US$364.7 billion | US$1.1 trillion |
| Foreign Ownership | 49% as the rule of thumb. | 100%, but investment in services, manufacturing and real estate needs to obtain investment permit. | 100% in most industries. Exceptions include advertising, logistics and tourism. | 100% for specific industries. Exceptions include financial services, capital markets and insurance. | 100% for foreign-owned company (PMA). Exceptions include telecoms, e-commerce, tower construction services, industrial chemical, drug industry development and media. |
| Corporate Tax Rate | 20% | 25% | 20% | 24% | 25% |
| Minimum Capital Requirement | THB 2 million (~100,000 SGD) | MMK 500 million (~410,500) | RM 2,000 (~650 SGD) | IDR 10 billion (~932,000 SGD) |
Setting Up A Business In Thailand
Thailand is quite strict when it comes to foreign investments. All projects are required to obtain a foreign business license which can take years to be approved. There are various types of business structures available in Thailand for foreign businesses such as limited partnership, representative office, branch office, or limited company.
Unless you are a US citizen, foreigners are not permitted to own 100% of any firm in Thailand. In general, foreigners are not permitted to possess more than 49% of shares in a Thai firm. However, there are special exclusions that apply to certain sectors subject to approval by the Board of Investment.
In Thailand, registering a corporation takes no more than 30 days. The registration of a company name is free of charge and takes no more than two days. Work permits cost a minimum of THB 5,000 per month. The standard corporate tax rate in Thailand is 20%.
Working or even volunteering in your own-funded business in Thailand without a work visa is prohibited. If a local immigration official discovers someone operating a business without a work visa, the business will be permanently closed.
Foreign majority-owned firms must have a minimum of THB 2 million or THB 3 million (~ S$100,000 to S$200,000) in registered capital, depending on the line of business. A public limited corporation must have at least 15 shareholders and 5 directors, with at least half of them being Thai citizens.
Here are the necessary fees to set up a company in Thailand:
– Service fee of company registration: THB 17,000 (~ S$750)
– Make company stamp: THB 500 (~ S$22)
– Filling of memorandum of association (MOA): THB 12,000 (~ S$530) for THB 2,000,000 capital (~ S$100,000)
– Registration for company name, VAT, and tax: Free
Setting Up A Business In Myanmar
In Myanmar, public firms are becoming more prevalent. The Yangon Stock Exchange was only established in 2016 and as of March 2020, foreigners can purchase shares in a business listed on the Yangon Stock Exchange, subject to the foreign ownership restriction imposed by the relevant listed company and its regulatory authorities. The primary limitation for international firms is that they cannot own immovable real estate and enter into leases that last longer than a year (unless exceptions apply).
With regards to foreign ownership, the Myanmar Investment Commission has established a limited list of economic activities in which international investors must collaborate with local partners. The local partner must have a minimum of 20% firm ownership for the specified activities. Manufacturing and distribution of different chemicals, hydrocarbon-based goods, food items, and residential projects are among the specified activities.
A public corporation must have at least three directors, one of whom must be a Myanmar national and resident. A minimum of one shareholder is required and there is no upper limit imposed.
A public business must have a minimum share capital of MMK500 million (~ S$410,500). If the business intends to list on the Yangon Stock Exchange, it must also have a minimum capital of MMK500 million (~ S$410,500). The company tax rate is 25% for Myanmar-incorporated firms.
Required costs involved in the registration process:
– Check availability of company name at Directorate of Investment and Company Administration (DICA): MMK 1,000 (~ S$1)
– Obtain company registration forms at DICA (or online) and pay stamp duty: MMK 5,100 (~ S$5)
– Submit signed company registration forms at DICA and pay registration fee: MMK 2,500,000 (~ S$2,050)
– Minimum deposit in bank account: MMK 50,000,000 (~ S$41,050)
Setting Up A Business In Vietnam
Company formation in Vietnam is relatively straightforward, however, there are special rules for foreign-owned enterprises. In most industries, Vietnam allows for 100% foreign ownership. However, some industries such as advertising, logistics, and tourism requires foreign investors to have a Vietnamese partner.
The incorporation procedure might take up to three months, depending on the line of business. Foreign investors must apply for a Foreign Investment Certificate through the Foreign Investment Agency and the Ministry of Industry and Trade, which may cause the incorporation to be delayed.
The two most common types of legal entities are limited liability companies (LLC) and joint-stock companies (JSC). An LLC can have 1 to 50 owners. It should be noted that in Vietnam, LLCs do not have stockholders. A JSC, on the other hand, is recommended for medium to large businesses and must have a minimum of three shareholders. You can engage in professional services to ease the incorporation process. You can expect to pay these professional services firms US$34,290 (~ S$46,150) and US$21,620 (~ S$29,100) for the formation of wholly foreign-owned LLC and JSC respectively.
In most business fields, there are no minimum capital requirements in Vietnam. It must, however, be sufficient to cover expenditures until the firm becomes self-sustaining.
Every company must have at least one local director with a residential address in Vietnam. Company income tax is 20% of company profits.
Setting Up A Business In Malaysia
All firms registered in Malaysia must go through the Companies Commission of Malaysia, which is a statutory organisation established by an Act of Parliament to govern corporate entities and commercial operations in Malaysia. The Companies Commission of Malaysia is known as Suruhanjaya Syarikat Malaysia, or SSM in Malay.
Among the eight forms of business entities available in Malaysia, Sdn Bhd is the most common. It takes RM 2,000 (~ S$650) to RM 5,000 (~ S$1,650) initial paid-up capital to set up the company. All Sdn Bhd companies must appoint a company secretary within 30 days of successful business establishment.
In Malaysia, company secretaries often charge a service fee ranging from RM500 (~ S$165) to RM2,000 (~ S$650) for Malaysian directors and shareholders, exclusive of the SSM’s incorporation fee. The incorporation fee charged by SSM is RM1,010 (~ S$350) inclusive of tax. On average, the incorporation procedure takes around 5 weeks and no foreign directors or shareholders are required to come to the country.
Individuals who wish to register a business under a trading name must first obtain clearance from the Registrar of Business. A reservation of business name application under Section 27 of the Act costs RM 50 (~ S$20) for every 30 days or part thereof, up to a maximum of 180 days.
A public company in Malaysia requires at least two directors who ordinarily reside in Malaysia by having a principal place of residence in Malaysia and a minimum of one promoter. The corporate tax rate is 24%.
Setting Up A Business In Indonesia
The basic criterion for establishing a PT firm (public) in Indonesia is 100% local shareholders. In other words, only local businesses may own a PT business in Indonesia.
To establish a 100% foreign-owned company (PMA), you must first seek clearance from the Capital Investment Coordinating Board and have a minimum investment of IDR 10 billion (~ S$932,000) of which 25% must be paid up. The amount of required investment excludes the value of the company’s property and buildings.
You must additionally produce a 6-month business plan known as the Report of Capital Investment Activity for the Capital Investment Coordinating Board’s assessment. Following the reservation of the company’s name with the authorities and the signing of a leasing agreement, the paid-up share capital must be placed into the capital bank account, and a certificate of deposit and a bank statement must be presented.
The incorporation procedure will begin only when these two documents are received. If approved, an in-principle business license valid for three years will be granted. Using a professional services firm, the fees related to the formation of 100% wholly foreign-owned professional services LLC and trading LLC are estimated to be USD 22,200 (~SGD 30,000) and USD 19,440 (~SGD 26,500) respectively.
Due the stringent restrictions, some foreign investors may prefer to set up a normal limited liability company and have one Indonesian shareholder.
PMA must have at least one resident director and two shareholders, as well as one CEO or COO. If the firm is 100 percent foreign-held, 5% of the shares must be sold to Indonesian residents within 15 years after commercially commencing the business. The normal corporate tax rate is 25%.
Read Also: Digital Nomads: 5 Asian Cities For Living And Working Remotely
For those who want to set up private limited companies in Southeast Asia (outside Singapore), you might want to find a local friend or business partner that you can trust and who knows the way around. Without a local “guide”, you might find yourself incurring more expenses and spending more time than necessary to get the business off the ground abroad.
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