1. Business for Engineers
Introduction to the concept of doing business as legal entity

2. Introduction to Business
Planning your business
Starting your business
Managing your business
Growing your business

3. Planning your business
Before setting up your business, you need to know about Malaysia economy and basic information
Find out business registration requirement
Get loans
Find market information
Find competitor and supplier
Prepare a Business Plan
Decide of a Business Structure

4. Malaysia Economy
An overview

5. The GDP is expected to register a smaller overall decline of 3
The GDP is expected to register a smaller overall decline of 3.0% for 2009 and to grow between 2.0% - 3.0% in 2010

6. The construction sector is projected to grow by 3. 2% in 2010 (2009: 3
The services sector is anticipated to expand by 3.6% in (2009: 2.1%)
Services sector such as :communication, finance and insurance, wholesale and retail trade as well as real estate and business services sub-sectors.
Several niche growth areas in the services sector has been identified – Islamic finance, healthcare travel, education tourism and ICT

7. Business Registration Requirement

8. Suruhanjaya Syarikat Malaysia (SSM) www.ssm.com.my
It is also called as Companies Commission of Malaysia (CCM)
SSM, established on 16 April 2002, serves as an agency to incorporate companies and register businesses.
SSM also ensures compliance with business and corporate legislations through comprehensive enforcement and monitoring activities.
SSM offers efficient and fast service for the incorporation of companies, registration of businesses and lodgement of statutory documents.
SSM has nationwide presence through its headquarters located in Kuala Lumpur as well as branch offices in all the states in Malaysia.
SSM also serves as a depository and custodian of corporate and business information. Such information is vital to enable the business community to make informed business decisions and to enable members of the public to carry out verifications.

9. Registration of Businesses Act 1956 (Act 197);
SSM is responsible for the administration and enforcement of the following legislation:
Companies Act 1965 (Act 125);
Registration of Businesses Act 1956 (Act 197);
Trust Companies Act 1949 (Act 100);
Kootu Funds (Prohibition) Act 1971 (Act 28);
any subsidiary legislation made under the Acts specified above such as:
Companies Regulations 1966; and
Registration of Businesses Rules 1957.

10. Some statistics
There are more than 600,000 registered companies in Malaysia and approximately 4000 foreign companies, majority of them are companies limited by shares.
(Source: Data obtained from the Companies Commission of Malaysia)
These companies range from small family business where the directors and shareholders are family members, SMEs as well as large businesses with high business volumes and assets.
There are over 1,000 companies listed on Bursa Malaysia Securities Berhad. The companies are publicly traded and public investors can buy and sell shares on the Malaysia stock exchange.

11. Financial instituition
Loans
Financial instituition

12. Commercial banks
There are nine licensed commercial banks operating in Malaysia.
There are also thirteen foreign banks that have established representative offices in Malaysia, but they are not permitted to conduct normal banking business.
Commercial banks are also authorised to deal in foreign exchange and are the only financial institutions allowed to provide current account facilities.
In addition to offering normal banking services, commercial banks may accept deposits denominated in foreign currencies from non-residents, loan foreign currencies to residents or syndicate such loans for productive purposes or for the purchase of Malaysian assets owned by non-residents.

13. Example of Commercial banks
Local
Foreign
RHB Bank Berhad
Public Bank Berhad
Malayan Banking Berhad
Hong Leong Bank Berhad
EON Bank Berhad
CIMB Bank Berhad
AmBank (M) Berhad
Alliance Bank Malaysia Berhad
Affin Bank Berhad
United Overseas Bank (Malaysia) Bhd.
J.P. Morgan Chase Bank Berhad
The Bank of Nova Scotia Berhad
 Standard Chartered Bank Malaysia Berhad
OCBC Bank (Malaysia) Berhad
HSBC Bank Malaysia Berhad
Deutsche Bank (Malaysia) Berhad
Citibank Berhad
Bank of Tokyo-Mitsubishi UFJ (Malaysia) Berhad
Bank of China (Malaysia) Berhad
Bangkok Bank Berhad
The Royal Bank of Scotland Berhad

14. Investment Banks (Ibs)
Investment banks differ from commercial banks, which mainly take deposits and make commercial and retail loans.
Investment banks engage mainly in public and private market transactions for corporations, governments and investors.
These transactions include mergers and acquisitions (M & A), investitures and issuance of equity and debt securities.
Investment banks also advise and assist clients with specialised industry expertise (such as technology and real estate).
They also do securities businesses such as trading, securitisation, financial engineering, merchant banking, funding, investment, management and securities services.

15. Example of Investment Banks (Local)
Affin Investment Bank Berhad
Alliance Investment Bank Berhad
AmInvestment Bank Berhad
CIMB Investment Bank Berhad
ECM Libra Investment Bank Berhad
Hong Leong Investment Bank Berhad
Hwang-DBS Investment Bank Berhad
KAF Investment Bank Berhad
Kenanga Investment Bank Berhad
Maybank Investment Bank Berhad
MIDF Amanah Investment Bank Berhad
MIMB Investment Bank Berhad
OSK Investment Bank Berhad
Public Investment Bank Berhad
RHB Investment Bank Berhad

16. Development Financial Institutions
The development financial institutions are government agencies specialising in the provision of medium and long-term loans to finance capital investments of new industries as well as entrepreneurs in the industrial sector.
The six Development Financial Institutions are:
Bank Pembangunan Malaysia
Bank Perusahaan Kecil & Sederhana Malaysia (SME bank)
Export – Import Bank of Malaysia Berhad
Bank Kerjasama Rakyat Malaysia
Bank Simpanan Nasional
Agrobank (formerly known as Bank Pertanian Malaysia)

17. Development Financial Institutions (con’t)
Other Development Financial Institutions:
Malaysian Industrial Development Finance Berhad (MIDF)
Credit Guarantee Corporation Malaysia Berhad (CGC)
Lembaga Tabung Haji
Sabah Development Bank Berhad
Sabah Credit Corporation Berhad
MIDF was formed as a joint venture between the government and the private sector to provide medium and long-term finance for the manufacturing industry.
The other development banks provide loans to meet the credit needs of the industrial and the agriculture sectors respectively.

18. Market Analysis & Market Strategy

19. Market Analysis (example: Contractor company)
2004
2005
2006
2007
2008
Potential Customers
Growth
Office building construction 6%
2,517
2,668
2,828
2,998
3,178
Restaurant construction 3%
1,779
1,832
1,887
1,944
2,002
Special facilities construction
2,750
2,833
2,917
3,005
3,095
General construction 2%
3,264
3,329
3,396
3,464
3,533
Total
3.45%
10,310
10,662
11,028
11,411
11,808

20. Market Analysis (cont’)
Target Market Segment Strategy
What you plan to accommodate your clients
Example : a well established and expeditious permitting program, strict cost accounting and supply management, and intensive and comprehensive project management
Business Analysis
Business growth for the past years
The Advantage to your company
current contractor companies in your proposed area
Why the proposed area still in need of your company
Competition and Buying Patterns
Identify competitors in the proposed area
Supply and demand in the proposed area

21. Business Structure/ Company Ownership

22. Business Structure
In Malaysia, the most common types of businesses are:
Sole proprietorships
Partnerships
Companies

23. Sole proprietorships (under companies act 1965)
usually have just one business owner, and only Malaysian citizens or permanent residents can register.
Personal names or trade names can be used as business names, and the Application of Business Name form must be filled in before a business can be registered.

24. Partnerships (under companies act 1965)
comprise two or more business partners pooling their resources in a business with a view to profit.
Like sole proprietorships, only Malaysian citizens or permanent residents can register partnerships.
A partnership agreement is usually drawn up by legal counsel, which outlines the responsibilities of each partner, conditions of termination and means of resolving intra-partner disputes.

25. Companies (under companies act 1965)
The most common type of company in Malaysia is a company limited by shares (public limited and private limited companies).
Private limited companies cannot sell shares to the public, and are distinguished by the appellation "Sendirian Berhad", shortened to "Sdn Bhd" or "S/B".
Public limited companies source their capital by selling shares to the public, and are distinguished by the appellation "Berhad", shortened to "Bhd".
Most common company structure in Malaysia is (Sdn. Bhd).

26. Companies (cont’)
a private limited company is limited to 50 members (public limited companies have no member limit).
This form of company can have foreign directors but at least 2 of the directors need to be principally residing in Malaysia; and it can be 100% foreign owned for industries such as the manufacturing, trading, and information technology sector.
A minimum paid-up capital of only RM2 is needed to start a private limited company, while public limited companies need a paid-up capital of not less than RM60mil (if it seeks to be listed on the Kuala Lumpur Stock Exchange Main Board) or not less than RM40mil (if it seeks to be listed on the KLSE Second Board).

27. Government Agencies to assist Entreprenuer
Various Development programme

28. Government Agencies for Entreprenuer
To assist and guide new and existing entrepreneurs in planning their business, the following Government agencies have established various development programmes:
Malaysian Entrepreneurship Development Centre (MEDEC)
Small-and-Medium Enterprises (SME) Development Programme by SMIDEC
MSC Technopreneur Development
Bahagian Latihan Keusahawanan, Kementerian Pembangunan Usahawan dan Koperasi
MARA Entrepreneurial Development
Bahagian Pembangunan Usahawan, Kementerian Kerja Raya
Pejabat MARA Negeri
Pusat Bimbingan Usahawan

29. Business Plan

30. Introduction to Business Plan
A Business Plan is a document that underlines in details the important elements of a business that cover initial plan, market study, capital needs, marketing strategies, sales and profit projection and so on.
Apart from recording all the key information in one place for future reference, a business plan is also needed when an entrepreneur plans to obtain financial help from financial institutions when the need to expand the business arises.

31. Business Plan – the purpose
the use of a business plan, are:
To allow the entrepreneur evaluate and assess his or her business viability from various aspects, especially the technical and financial parts
To become a blueprint, or guide after the business is successfully launched
To study the market condition, trend and competition, and conclude if the business will have a good prospect to prosper, or otherwise
To be used during negotiation with financial bodies, in order to obtain loan or expansion capital

32. What you need to have in your Business Plan
1. Content page
Outline the topics and segments of your Business Plan so that you (or the reader) will have an easy access to different scopes of the Business Plan.
Each topic in the Business Plan must be written in such a way that the reader can skip any part of the earlier section and come back to it later.
2. Executive summary/synopsis & introduction
Explain, in summary, about the business you are planning to venture, and what are the important elements the reader can discover from reading your business plan.
Name the company, type of business, products/services offered concisely.

33. Content in Business Plan
3. The purpose of the business plan
State clearly the purpose of the business plan writing.
Is it a submission for financial loan from specific institution?
Is it a plan for a start up operation, or an expansion plan for an existing business?
Is it a blueprint or a plan for the entrepreneur’s future reference? Or
Is there any other objectives?
4. Company (owner) profile/background
This is where the details of the company profile and background are discussed.
Where is the business based on and operating?
Who is the contact person and where are the other contact/corresponding details?
How long has the company been operating?
Is the company a sole propriety, partnership or a limited liability (Sdn Bhd)?
Take note that there are differences in those 3 types of business/company structure.
What is the company’s registration number?
What is the total paid capital?
List down the shareholders/owners of the company, including the details covering full name, telephone number, academic qualification and experience

34. Content in Business Plan
5. Management and organizational structure
What is the company’s vision and mission?
Who are in the management team and what are the qualification and credentials?
How is the organizational structure of the company?
List down the key person who will be handling different scope of work e.g. operation, marketing, finance, sales and so on.
State the salary and remuneration package for each employee involved, if any.

35. Content in Business Plan
6. Marketing plans and strategies
A very important aspect of a Business Plan.
In fact, many loans are rejected due to lack of effective marketing plans and strategies in the Business plan.
Embark on a very detailed analysis of the market condition so that you will be able to make accurate and sensible sales projection.
A good Business Plan will take account the aspects of products/services to be offered – prospects and customers, benefits and advantages, ease of availability, location, advertising & promotion and competition.
How does your product differ from what is currently being offered in the market?
Is it the same?
Are you selling your product at a competitive price, lower price, or higher price?
What about the distribution and supply chain element?
Are you appointing authorized dealers and agents, or you will be selling directly to the customers?
What are the medium of advertising & promotion you will be using – distributing flyers, internet, newspaper, radio, television and so on (do not overlook the cost associated with each of the promotional method)?

36. Content in Business Plan
7. Operation/production plan
If your business is product-based, how many quantities you will be producing in, let’s say, 1 month? If the product will undergo a manufacturing cycle, draw a clear flow diagram or chart of the complete process for the readers to see. How does the inventory works? How is the maintenance of the machinery is carried out?
8. Financial plan
Also another critical aspect of a Business Plan, as to ensure that the figures and numbers of your cost, sales, revenue, profit and others are realistic. The financial plan consist of the following aspect:
Cost and capital expenditure
Financial sources e.g. your own contribution, bank loan, hire purchase etc
Cash flow analysis – monthly, yearly, 3 years and so on
Income statement – yearly, 3 years and so on
Break even analysis – how long your business will be operating before covering all the cost incurred during the start up
Click here for sample of business plan

37. Starting your Bussiness
Regulatory Agencies concerned with business operation
Business location and site
regulatory and record keeping requirement (taxation)
book keeping and accounting system

38. Regulatory Agencies concerned with business operation
MITI(Matrade, MIDA, smidec)
Securities Commission
Local Government Authorities
Factories and Machinery Department
Ministry of Science, Technology and Innovation

39. Ministry of International Trade and Industry (MITI)
MITI deals with foreign investments and promotion thereof and has overall responsibility for all aspects of foreign trade and industrial development.
MITI acts through MATRADE, MIDA and SMIDEC
i. Malaysian External Trade Development Corporation (MATRADE)
MATRADE was established since March 1, 1993 as the external trade promotion arm of Malaysia’s MITI.
MATRADE functions as a focal point for Malaysian exporters and foreign importers to source for trade related information.

40. MITI (continue) ii. Malaysian Industrial Development Authority (MIDA)
MIDA controls the promotion and co-ordination of all industrial activities.
It advises MITI on the formulation and implementation of various industrial development policies, strategies and incentives for industry and on other matters concerning accelerated industrial development.
MIDA issues manufacturing licences, which are required under ICA and gives approval on various incentives.
iii. Small and Medium Industries Development Corporation (SMIDEC)
SMIDEC was established on May 2, 1996.
The establishment of SMIDEC was in recognition of the need for a specialised agency to further promote the development of Small and Medium Industries (SMIs) in the manufacturing sector.

41. Securities Commission (SC)
This is a statutory body, set up under the Securities Commission Act 1993 to ensure the orderly and efficient development of the Malaysian securities market for the purpose of national economic development.
SC's primary role is to advise the Minister of Finance on all matters relating to the securities and futures contract industries.
It is also to safeguard the public's and minorities' interest, as well as to maintain market integrity and efficiency.

42. Local Government Authorities
These authorities are responsible for local by-laws that affect business operations.
Such laws relate mainly to buildings and structures (business premises), health, public safety and security, and displays (signboards, advertisement hoarding (i.e., billboards), etc.)

43. Local Government - Licenses and Permits
Business licenses and permits are issued by the relevant ministries and local authorities.
Licence and Permit By Local Authorities (Majlis Daerah, Majlis Perbandaran etc)
Komposit Perniagaan, Permohonan Lesen Anjing, Permohonan Lesen Hiburan Dan Tempat hiburan, Permohonan Lesen Hiburan Video / Snooker ,Permohonan Lesen Iklan Sementara, Permohonan Lesen Penjaja, Permohonan Lesen Perniagaan, Sementara Permohonan Tukar Milik Lesen

44. Factories and Machinery Department
Approval from this department is required before manufacturing operations may begin

45. Ministry of Science, Technology and Innovation (MOSTI)
This Ministry has responsibility for the administration of the Environmental Quality Act and ensures that factories are equipped with appropriate anti-pollution controls.

46. Other Government Agencies
Various other government agencies regulate specific industries, such as
Inland revenue malaysia (LHDN)
finance and banking,
insurance,
real estate,
petroleum, etc.

47. Malaysian Law and Legislation concerned with Business
Employment law

48. Employment Law - Rights and Liabilities
The main body of employment is Malaysia is found in three principal legislation and subsidiary legislation. They are :-
Employment Act, 1955
Industrial Relations Act, 1967
Trade Unions Act, 1959
The employers in Malaysia also need to bear in mind the relevant legislations :-
Employees Provident Fund Act, 1991
Employees Social Security Act, 1969
Worksmen’s Compensation Act, 1952
Worker’s Minimum Standards of Housing and Amenities Act, 1990
Wages Council Act, 1947
Children and Young Persons (Employment) Act, 1966
Occupational Safety and Health Act, 1994
Human Resources Development Act, 1992

49. Employment Act 1955
The Employment Act 1955 is the legislation regulating the terms and conditions of employment of any person, irrespective of his occupation, who has entered into a contract of service with an employer under which such person's wages do not exceed RM1,500 a month. Among other things it sets out the minimum conditions of employment which include:
A contract of service engaging a person may be written or oral, expressed or implied, specifying the period of notice required to terminate it;
Wages earned must be paid not later than the seventh day after the last day of any wage period;

50. Employment Act 1955
Female workers are not permitted to work in any industrial or agricultural undertakings between the hours of ten in the evening and five in the morning. An application can however be made to waive the restriction;
Ten paid gazetted public holidays in any one calendar year;
Eight days of paid annual leave for employees with less than two years of service, twelve days of paid annual leave for those employees with two or more years of service but less than five years of service, and sixteen days for those with over five years of service;

51. Employment Act 1955
Fourteen to twenty-two days sick leave in a year depending on length of service and where hospitalisation is necessary, up to an aggregate of sixty days sick leave in each year;
Normal hours of work shall not exceed eight hours a day or forty-eight hours a week;
Payment for overtime work is at a minimum of one and a half times the hourly rate of pay on normal working days, two times his hourly rate on rest days and three times his hourly rate on public holidays;
Paid maternity leave for female employees on maternity leave for sixty days.

52. Employees Provident Fund Act 1951 (EPF)
The Employees Provident Fund Act 1951 provides for a compulsory contributory provident fund which is payable to employees in full on reaching the age of 55 years.
All employers and employees are required to contribute to EPF at the rates of 12% and 11% respectively of the employees' monthly wages.
Among the categories of employees precluded from compulsory contributions are:
Expatriates employees
Domestic servants - Persons who are employed to work in or connected with work in a private dwelling house including a valet, gardener, and who are paid from the private account of the employers.
However, expatriate employees, domestic servants and self-employed persons can elect to contribute to the EPF.

53. Employees' Social Security Act 1969
The Social Security Organisation (SOCSO) administers the Employment Injury Insurance Scheme and the Invalidity Pension Scheme, as provided for under the Employees' Social Security Act 1969.
All establishments, including factories, employing workers earning wages not exceeding RM 3,000 a month, are required to insure their workers under the two social security schemes.
The Employment Injury Insurance Scheme provides employees with coverage in the event of any disablement or death due to employment injury by way of cash benefits and medical care. The contribution is borne solely by the employer and is about 1.25% of the wages of an employee.
The Invalidity Pension Scheme provides a 24-hour coverage to employees against invalidity and death due to any cause before the age of 55 years. The total contribution is about 1% of the wages and is shared by the employer and the employee equally.

54. Human Resource Development Fund Act 1992
The Human Resources Development Act, 1992 which was enforced in January 1993 led to the establishment of the Human Resources Development Fund (HRDF) and administered by the Human Resources Development Council (HRDC). In line with the corporatisation exercise via the Pembangunan Sumber Manusia Berhad Act, 2001, the HRDC is now known as Pembangunan Sumber Manusia Berhad (PSMB).
The HRDF operates on the basis of a levy/grant system. Employers who have paid the levy will qualify for training grants from the fund to defray or subsidise training costs for their Malaysian employees.

55. Workmen’s Compensation Act 1952
An Act to provide for the payment of compensation benefits to a foreign worker who
possesses valid employment document for injuries sustained due to accident which arises
out of or in the course of employment or if death results from he accident, to the
dependents.

56. Occupational Safety and Health Act 1994
An Act to make further provisions for securing the safety, health and welfare of persons at work, for protecting others against risks to safety or health in connection with the activities of persons at work, to establish the National Council for Occupational Safety and Health, and for matters connected therewith.

57. Managing Your Business
Human resource
Taxation
Accounting and auditing needs
Standards and accreditation
arbitration

58. Human Resources Management
Labour Laws and Employment Guide
As an employer, you should be aware of the rules and guidelines for hiring and recruiting an employee for your company.
Employment Act 1955: A Guide To Malaysian Labour Laws
Workmen’s Compensation
Children and Young Persons (Employment) Act 1966 (Revised 1988)
Occupational Safety and Health Act 1994
Discontinuing an Employee Services
how to discontinue your employee’s service within the boundaries of the law:
Guidelines on the Implementation of Retrenchment , Employee Service/Contract Termination
Benefits and Contributions
Maternity Leave Benefits, Rest Days and Public Holidays, Employees Provident Fund, Social Security Organisation
Employment of Foreign Workers and Expatriate Personnel
There are guidelines and procedures that you have to follow when hiring a foreign worker and expatriate personnel. The Immigration Department of Malaysia is the government agency that provides services for the application process of employment of expatriate personnel and foreign workers in Malaysia.

59. Taxation
All income of accrued in, derived from or remitted to Malaysia, are liable to tax.
However, income derived from outside Malaysia and remitted to Malaysia by resident companies (except those involved in the banking, insurance, air and sea transportation business), non-resident companies and non-resident individuals are exempted from tax
The Inland Revenue Board Malaysia (LHDN) act as an agent to provide services in assessing, administering, collecting and enforcing the payment of income tax and other taxes that are under the board's jurisdiction.

60. Taxation (cont’)
It is the duty of every person carrying on a business to keep proper books and prepare regular accounts.
It is also essential to meet the requirements of Section 82 of the Income Tax Act, 1967 and also, in the case of limited companies, to meet the requirements of the Companies Act, 1965
Malaysian laws are governed by statutes and the other principal statute that all businesses have to comply with is the Income Tax Act, 1967.

61. Growing Your Business Add a new location for your business
Hire more employees
Find market information
Register as a state vendor
Getting started in international trade
Take Over and Mergers