How to enter the Malaysian market

Malaysia was Australia's 13^th largest goods and services export market in 2024, with total exports valued at AUD 13.2 billion. Natural resources, including coal, oil, gas, and wheat, along with education related travel dominate Australian exports. While natural resources and education are expected to continue to drive trade there are emerging opportunities for agriculture and food, skills development, and goods and services related to the digital economy.

Market entry models for exporting goods and services

Choosing an appropriate market entry model is essential for businesses looking to export to Malaysia. Any choice should be informed by factors such as the overarching business strategy, target sector, and business size and maturity. It is important to note that market entry models frequently evolve over time.

A. Direct exporting

In direct exporting, businesses sell directly to a Malaysian customer from Australia. Exporting directly to Malaysia requires a significant level of involvement in the export process, including market research, marketing, distribution, sales, product registration and approval, import-export licensing and receivables.

Direct exporting has some advantages, including:

• Greater control of commercial processes, including sales
• Better margins, as it avoids intermediaries
• More direct customer relationships

While there are advantages, direct exporting may involve higher establishment costs in Malaysia, as employing dedicated in-house staff and other resources may be necessary to manage the complexities of exporting and sales. Businesses using this model may need to consider ways to offset these costs, including employing an agent or distributor to handle local product registrations, while still maintaining control over other aspects such as marketing and supply chain.

A direct export approach will require businesses to engage with retailers regularly to build awareness and understanding of the products they are selling on a company’s behalf. In return, their understanding of the Malaysian market can be applied to product development, pricing and marketing. Selling directly to local retailers can generally cut commissions, reduce expensive travel and create an effective conduit to market. However, businesses will need to comply with local regulations, particularly Halal-related norms for food products, and due diligence before engaging with retailers is vital.

B. Agents and distributors

Many Australian firms doing business internationally rely on agents or distributors. The roles of agents and distributors differ, and they can vary across industry. It is therefore critical that roles and responsibilities are clearly defined early in any agreement.

Agents: Agents act as representatives of suppliers and do not take ownership of the products they sell. They are usually paid on a commission basis, which provides an incentive for them to drive sales. Being based in Malaysia, they will often represent several complementary products or services. They can be retained exclusively as the sole agent for a company’s goods or services or as one of several for the exporter.

Distributors: Unlike agents, distributors buy goods from exporters and then resell them to local retailers or direct to consumers. In some cases, a distributor may sell to other wholesalers who then on-sell to retailers or consumers. Distributors may carry complementary and competing lines and usually offer after-sales service. They earn money by adding margins to product prices. Distributor margins are generally higher than agent fees because distributors have costs associated with carrying inventory, marketing and extending credit for customers.

Choosing an agent or distributor: Whether a business decides to use an agent or distributor, it is essential to build a close working relationship. Due diligence when selecting an agent or distributor is important, and companies should ask for trade references and seek a credit check through a professional agency. It is best to meet any potential agents or distributors in Malaysia - this provides them with an opportunity to demonstrate knowledge of the market and build a business relationship.

C. Online Sales

Malaysia has a dynamic economy and well-developed infrastructure for digital technology, making it an attractive market for online transactions. In 2024, 8 out of 10 Malaysians made an online purchase in the last year. and retail e-commerce volume in 2024 stood at AUD 24 billion , with improved internet capabilities and increased availability of customised payment options helping drive growth.

The government has made a strong commitment to grow the country’s digital economy and e-commerce market. It established the Malaysia Digital Economy Corporation (MDEC) to attract overseas investment and talent and allow Malaysian companies and rakyat (people of Malaysia) to transform the sector.

In addition, Malaysia established a National Council of Digital Economy, which is tasked with implementing the National Ecommerce Strategic Roadmap. One of the key objectives of the roadmap is to increase the size of the ecommerce market to MYR 1.65 trillion (AUD 578.1 billion) by 2025. These strategies are proving successful for growth in both business to business (B2B) and business to consumer (B2C) markets.

Accessing digital consumers: Malaysia has established strong infrastructure to facilitate e-commerce. Over 97 percent of the population has access to the internet, mobile cellular penetration is 121 per cent, and over 70 per cent of the population are social media users. This has translated to rapid growth in e-commerce. By 2028, the Malaysia e-commerce market growth is expected to reach AUD 24.2 billion expanding at a compound annual growth rate (CAGR) of 8.5% from 2024 to 2028.

Malaysians do most of their online shopping through their mobile phones and other digital devices. Numerous shopping holidays like Singles’ Day, 11.11, and 12.12, have been introduced to grow digital commerce, while Ramadan also sees high online sales volumes.

Effective marketing is vital to build trust and brand loyalty among Malaysian consumers, particularly for first time users. Top product categories for online sales in Malaysia include electronics, fashion and food, as well as beverages and hardware. (Figure 2).

Search engines: Google is the dominant search engine in Malaysia, accounting for more than 96 per cent of all searches. Bing follows at just 2.3 per cent. 37.1 per cent of users in the country use search for brand discovery, lower than in Vietnam (49.7 per cent), but higher than in Thailand (35.2%) and Singapore (30.4%).

Figure 2: E-commerce spending on consumer goods (2025), AUD billion

Online sellers and marketplaces: Shopee is the leading e-commerce platform in Malaysia as measured by number of clicks. It is followed by PG Mall and Lazada. After those three, it is a mix of smaller, mainly domestic companies. Dedicated online sites for specific products may not gain traction and leveraging existing platforms can be useful to grow market share.

Social media: Social media penetration in Malaysia is 70 per cent and in January 2025, 25 million people used social media. WhatsApp is the favourite social media platform for 27 per cent of Malaysians, followed by TikTok (23.5%), Facebook (16%) and Instagram (14%). Over 85 per cent of internet users had at least one active social media account with 46 per cent being female and 54 percent male.

Investment environment

Malaysia’s geographic location, access to regional markets and large Englis h-speaking labour force have made the country a major destination for FDI in the region. FDI inflows to Malaysia in 2024 stood at AUD 17 billion, up from AUD 12.75 billion in 2023.

From a sectoral perspective, the Malaysian Government has prioritised FDI growth in aerospace, automotive, shipbuilding and repair, machinery and equipment, waste recycling and green technology.

The Malaysian Investment Development Authority (MIDA), a statutory body, is responsible for promoting the country’s investment opportunities while the Ministry of Investment, Trade and Industry (MITI) shapes strategy and policy.

The Malaysian Government offers a range of direct and indirect tax and other business incentives to promote FDI. Direct tax incentives grant a partial or total relief from income tax for a specific period while indirect incentives are in the form of exemptions from import and excise duty.

Two main incentives cover investment in the manufacturing sector:

• Pioneer status. Once production on an investment reaches 30 per cent of planned capacity, investors can apply for a 70 percent income tax exemption on its statutory income for a period of five years.
• Investment tax allowance. Applicants are entitled to an allowance of 60 per cent of its qualifying capital expenditure for a period of five years, starting from when the first qualifying expenditure is incurred.

Two main incentives cover investment in R&D:

• Pioneer status. Income tax exemption of 100 per cent of the statutory income for five years.
•  Investment tax allowance. Applicants are entitled to an allowance of 100 per cent of qualifying capital expenditure incurred within 10 years. This can be offset against 70 per cent of statutory income in each year of assessment.

A host of other investment incentives are available for investors in specific industries including aerospace, among others. More information on these can be found on the website of the Malaysian Investment Development Authority.

Investment rules and regulations

Malaysia is open to foreign investors and has few restrictions on FDI. Its approach to FDI regulation is sector-based and there is no single statute or set of governing laws.

However, there are areas where investors should be cautious. Local equity participation requirements, particularly for the ethnic Malay Bumiputera, can impact hiring. Administrative requirements may specify that an investing business has a set amount of paid capital and an established track record. Malaysia’s central bank, Bank Negara Malaysia, restricts currency movements (details can be found in Section 4.6).

Market entry models for investing

Choosing an appropriate market entry model is essential for businesses looking to invest in Malaysia. A business’ size, sector and growth strategy will help determine which market entry model fits best. Investment models frequently evolve over time as businesses enter and expand in a market. Companies incorporated in Malaysia are presently regulated by the Companies Act 2016.

A. Representative office

Opening a representative office (RO) can be a useful and economical first step to explore business opportunities in Malaysia, but it comes with restrictions. The most important is that ROs cannot conduct commercial activity and are limited to conducting market research and promoting the parent company’s business in the country. An RO cannot buy or sell products or services or enter into commercial contracts.

To establish a representative office, a company must also have an annual operating expenditure of MYR 300,000 (AUD 105,105) and the operating funds must come from outside of Malaysia.

Establishing a representative office in Malaysia

B. Branch office

Establishing a branch office (BO) in Malaysia allows a company to engage in the commercial activities that are prohibited for ROs, including to buy and sell products and services, and enter into contracts. A BO is also able to open bank accounts, raise local financing and hire employees. They are not considered separate legal entities from the parent company. Registration is through the Companies Commission of Malaysia.

Branch offices must pay corporate income tax for income earned in Malaysia. The tax rate is 24 per cent for income of MYR 600,000 (AUD 210,209) and above and at lower rates for lower levels of income. The registration fees range from MYR 5,000 (AUD 1,752) to MYR 70,000 (AUD 24,524), depending on the level of authorised share capital.

Establishing a branch office in Malaysia

C. Private limited company

Private limited companies in Malaysia are the most common form of business entity. They are generally easy to establish and can be 100 per cent foreign owned with a minimum of MYR 500,000 (AUD 175,174) paid up capital, depending on the business. The benefits over a branch office include easier access to financing and access to tax incentives, such as Pioneer Status and the Investment Tax Allowance described above.

The registration process costs a flat rate of MYR 1,000 (AUD 350), although that can vary depending on the nominal share of capital. Foreign investment is restricted in three sectors: land and real estate, distributive services like supermarkets, and oil and gas. Seek professional advice on the best structure for your business.

Establishing a private limited company in Malaysia

D. Joint venture

A joint venture (JV) is an agreement between two or more parties to work together on a specific project rather than an ongoing business. There are two types of joint ventures in Malaysia: an incorporated joint venture, which involves incorporating a new legal entity referred to as a Special Purpose Vehicle (SPV), and an unincorporated joint venture, which does not require a separate legal entity and is created through a joint venture agreement.

Joint ventures in Malaysia must have at least one director and one shareholder and the director must ordinarily reside in Malaysia, be a Malaysian permanent resident or have a Resident Talent Pass. The joint venture must have minimum paid-in capital of MYR 350,000 (AUD 122,622) and minimum authorised capital of MYR 500,000 (AUD 175,174). The companies in a joint venture involved agree on the contributions, rights, duties and responsibilities of all parties to work on a common project for a specific period.

Establishing a joint venture in Malaysia

E. Public-Private Partnership

A Public-Private Partnership (PPPs) is a contractual arrangement between the Malaysian Government and the private sector. Under a PPP, the private sector can build, operate and maintain public infrastructure facilities and provide services traditionally delivered by government. Between 1990 and January 2023, Malaysia approved 126 PPP projects, mainly in the electricity, road, water and sewerage sectors.

Malaysia’s PPP market is still developing and international PPP investors may face some challenges. There is no legislative framework for PPPs and the guidelines, requests for proposals and criteria for winning bids can often be vague. Domestic risk requirements, with the risk often over-allocated to the private sector, may also function as a deterrent for some foreign investors. There is also often a minimum investment level for local participation and foreign equity limits can be unclear. Inter-governmental coordination has also been inconsistent.

A dedicated PPP unit, called by its Malay acronym UKAS, was established within the Prime Minister’s office in 2009 to grow PPP projects. UKAS has issued several guidelines as a reference for potential investors, including the Public Private Partnership Guidelines. PPPs can be complex to structure and implement but present opportunities for established Australian businesses to enter the Malaysian market.

Establishing a Public Private Partnership in Malaysia

Success in Malaysia requires businesses to tailor their product or service to the market. This should be based on detailed analysis of consumer trends, price consciousness, branding, marketing and advertising and payment methods.

Consumer trends in 2024

Figure 3: Median disposable income per household (2016 – 2026f), current prices, AUD

Price consciousness

With an adjusted net national income per capita of AUD 12,133 Malaysia is classified by the World Bank as an upper middle-income economy. Its income levels are higher than in many other Southeast Asian nations. As household incomes grow, quality is becoming increasingly important. However, Malaysian consumers remain price conscious when making buying decisions and generally prefer functionality and purpose over excess.

Branding

Branding is an essential part of product differentiation, and companies need to research and understand the specific tastes of consumers to achieve success. Building relationships and trust through branding is particularly important in Malaysia, as consumers extensively research the products and services they consume and 57 per cent will only buy from companies they trust completely. As in much of Asia, prominent high-quality brands are in demand, especially in the major cities. However, brands new to the market can establish a reputation through targeted promotion campaigns.

Many Australian products have a strong reputation and level of trust in Malaysia. In some sectors brands can enjoy an advantage simply by virtue of their products being made in Australia. An emphasis on Australian origin can be a successful marketing tool for businesses expanding into Malaysia, particularly in the food and beverage, education and agricultural sectors. Austrade’s Nation Brand toolkit provides a range of free branding assets for businesses looking to export.

Marketing

Trade marketing to distributors and retailers is a popular and effective way for businesses to gain traction in the Malaysian market. A trade show can be a useful starting point. These are effective ways to reach new consumer bases and potential clients, while also offering insights into the operations of competitors and providing a forum for networking and relationship building.

Malaysia hosts well over 100 trade shows annually across the food and beverage, fintech, travel and innovation sectors. Many of these shows attract a regional customer base.

Sales promotions can also help establish a brand with high-impact campaigns. Providing exclusive discounts and events can be an effective way to build consumer loyalty and product awareness – particularly in sectors that are crowded with incumbents. Email, text, search engine optimisation and social media are integral parts of a comprehensive marketing campaign. Marketing and promotional efforts at trade shows and in sales promotions should be provided in Malay and English, with Malay given priority.

Advertising and media

Most Malaysians own at least one smartphone and internet penetration is near-total, making digital advertising essential. Tik Tok is the largest channel with an increased ad reach of 30.7 million – a 7.4 per cent y-o-y increase. YouTube has a potential reach of 25.1 million users in 2025, Facebook is the second most popular platform with a potential ad reach of 23.1 million users. LinkedIn presently has a smaller potential ad reach than Facebook Messenger, but it is growing faster and registered 3.5 per cent year-on-year growth in 2025.

Figure 4: Digital advertising audiences in Malaysia (2025)

Television and print advertisements also remain a trusted marketing source across Southeast Asia. Although English is widely spoken in Malaysia, it is best to have advertisements in Malay to reach the largest possible local audience, although dual language advertising can benefit products and services in business-tobusiness sectors. Advertising in Malaysia is self-regulated. Advertising Standards Malaysia, an independent body, is responsible for ensuring that ads adhere to the Malaysian Code of Advertising Practice.

Digital payments

Digital payments have been gaining ground and now comprise almost one quarter of all payment methods used for business-to-consumer e-commerce transactions. This is expected to grow into the future. However, many consumers still prefer cash, even for cash-on-delivery e-commerce purchases. As a result, bank transfers made through mobile banking platforms across almost all banks are the most common form of e-commerce payment in Malaysia.

Malaysia’s central bank, Bank Negara Malaysia, has made increased access to digital payments a core part of its strategy for improving financial inclusion by 2026. It aims to promote accessible, affordable and convenient digital payments by introducing a regulatory framework, among other measures.

Grab Pay and ShopeePay are the most popular digital payment methods, while PayPal and ApplePay are also available. GrabPay benefits from being integrated with the popular Grab ride-hailing app, which also offers a range of services, including grocery and meal delivery.

Digital Wallets that can be linked to a bank account or topped up manually are also popular in Malaysia. Leading examples include Boost, BigPay and TNG Digital, while many major Malaysia banks also offer e-wallet services.

Secure digital payment systems can make financial transactions safe, cheaper and more convenient. As digital payment options continue to expand and evolve in the Malaysian market, businesses should consider integrating them into their business model.

Figure 5: Payment methods for B2C e-commerce (2025), %

A well-considered market entry strategy should take a systematic approach that supports long-term success. This section distils the factors businesses should consider when formulating an approach to the Malaysian market into a series of key questions.

Asialink Business provides advisory services and capability training programs to help organisations understand and access opportunities in Asian markets. For any questions about any aspect of a Malaysia market entry strategy, please contact us. Austrade’s Malaysia office also provides services and support to Australian businesses with an interest in Malaysia (details can be found in Section 5.2).

Calibrating Ambition

• What is your company’s aspiration for the market?
• What are the challenges and risks you will need to mitigate?

Consumers

• What is the current or potential demand for your product or service in Malaysia?
• Who are the primary customers / consumers for your product or service in the market?
• How will you tailor your product or service to local preferences?

Competitors

• Who are your competitors in the market, and what is their offering?
• How does your product or service compare to competitors on price?

Sales, Brand and Marketing

• What is your unique value proposition for the market?
• What is the ideal mix of marketing and sales channels to reach your target customers?
• Is your marketing strategy aligned with your identified consumer base and value proposition?

Mode of Entry

• What is the right market entry model for your business?
• What are the specific geographies you should target?

Delivery Partners

• Does your team have the right mix of skills and expertise to support your market entry?
• What partnerships will contribute to your business’ success in the market?
• What external advice do you need to commission?

Operating Model

• What changes do you need to make to your business across areas such as operations, HR, finance and IT?

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