Foreign business operators engaged in distributive trade services in Malaysia are subject to the Guidelines on Foreign Participation in the Distributive Trade Services issued by the Ministry of Domestic Trade, Cooperatives and Consumerism (“MDTCC”).
Distributive Trade Services include the following: –
Hypermarket
Hypermarket is a standalone self-service distribution store with sales floor area of 5,000 square meters or more, selling a very wide variety of mainly consumer goods, comprising a mix of food and non-food products, in a range of transaction sizes or quantities and in different forms of packaging.
| Requirements | |
| Incorporation | Must be incorporated locally |
| Minimum Capital | Shareholders’ funds of RM50 million |
| Equity Condition | 30% equity for Bumiputera |
Departmental Store
Departmental store is a distribution store with sales floor area of varying sizes, usually engaged in retailing an extensive of consumer goods that are departmentalized by gender, age or lifestyle, through self-service or with sales assistance, generally under one common store management. A departmental store may include a supermarket of not more than 2,000 square meters.
| Requirements | |
| Incorporation | Must be incorporated locally |
| Minimum Capital | Shareholders’ funds of RM20 million |
| Equity Condition | None |
Superstores
Superstore is a self-service distribution store with a sales floor area of 3,000 square meters to less than 4,999 square meters retailing a wide variety of mainly consumer goods, comprising a mix of food and non-food products.
Only companies operating a hypermarket may apply to operate in a superstore format.
| Requirements | |
| Incorporation | Must be incorporated locally |
| Minimum Capital | Shareholders’ funds of RM25 million |
| Equity Condition | None |
Specialty Store
Store dealing with one main brand name/ product/ line of goods associated with one (1) product. They may specialize in pharmacy, furniture, sport goods, books and others *.
| Requirements | |
| Incorporation | Must be incorporated locally |
| Minimum Capital | Shareholders’ funds of RM1 million |
| Equity Condition | None |
* This list is not exhaustive. We will provide a list of specialty stores upon request.
Other Distributive Trade Activities
Other types of business not specified will be considered on the merit of each case.
| Requirements | |
| Incorporation | Must be incorporated locally |
| Minimum Capital | Shareholders’ funds of RM1 million |
| Equity Condition | None (*subject to exceptions) |
* We will provide a list of exceptions upon request.
Direct Selling Business
Direct selling is defined as sale of goods door-to-door or through mail order or through electronic transaction. Direct selling companies generally appoint dealers who undertake direct contact with consumers.
| Requirements | |
| Incorporation | Must be incorporated locally |
| Minimum Capital | *Varies according to the nature of the marketing plan and foreign participation |
| Equity Condition | None |
* We will provide a list of capital requirements upon request.
Franchise Business
Franchise business is a continuing relationship in which a franchisor provides a licensed privilege to the franchisee to do business and offers assistance in organizing, training, merchandising, marketing and managing in return for a monetary consideration.
| Requirements | |
| Incorporation | Must be incorporated locally |
| Minimum Capital | Based on the merit of each case |
| Equity Condition | None |
The franchisor and franchisee are required to be registered in Malaysia under the Franchise Act 1998. We can provide assistance on such registration.
Disclaimer
This article contains information derived by us from the Booklet on Distributive Trade Services prepared by the Malaysian Investment Development Authority (MIDA) on 8 January 2018. We take no responsibility for the accuracy, currency, reliability and correctness of any information included in this article should a user choose to use the information contained herein.
Whilst the information is considered to be true and correct as at the date of publication of this article, changes in circumstances after the time of publication may also impact the accuracy of the information. The information may change without notice and we are not in any way liable for the accuracy of any information printed or stored or in any way interpreted and used by a user.
CHEE AMIMI & ADRIAN HAN 