THE MANUFACTURING AND TRADING SECTOR

DEFINITION

1. A foreign company which intends to set up a representative office in the manufacturing and trading sector should obtain approval from the Ministry of International Trade and Industry. A Representative office of a foreign corporation in the manufacturing and trading sector is an office established in Malaysia to perform permissible activities for its head office/principal. The Representative Office should be totally funded by sources outside Malaysia. The Approved Representative Office is not required to be incorporated or registered under the Companies Act 1965.
    
2. The permissible activities are as follows:
   1. planning or coordinating of business activities;
   2. gathering and analysis of information or undertaking feasibility studies pertaining to investment and business opportunities in Malaysia and in this region;
   3. identifying sources of raw materials, components or other industrial products;
   4. research and product development;
   5. as a coordination centre for the corporation's affiliates, subsidiaries, agents in the region;and
   6. other activities which will not result directly in actual commercial transactions.
       
3. The Representative Office is not permitted to:
   1. engage in any trading (including import and export), business or any form of commercial activities;
   2. lease warehousing facilities (any shipment/transhipment or storage of goods shall be handled by a local agent or distributor);
   3. sign business contracts on behalf of the foreign corporation or provide services for a fee; or,
   4. participate in the daily management of any of its subsidiaries, affiliates or branches in Malaysia.
       
4. Companies wishing to undertake business activities may do so by locally incorporating a company under the Companies Act 1965.

EXPATRIATE POSTS

1. The number of expatriates allowed would depend on the functions and activities of the Representative Office. Expatriates would only be considered for the managerial and technical level. The duration of the work permit would be on a two year basis and it is renewable.

THE BANKING SECTOR

DEFINITION

1. A foreign institution which intends to set up a representative office in the banking sector should obtain the prior written approval of the Central Bank, Bank Negara Malaysia.
    
2. A foreign institution is defined as an institution which carries on any business outside Malaysia, which corresponds, or is similar to the banking business, finance company business, merchant banking business, discount house business, money-broking business,building credit business, credit token business, development finance business, factoring business and leasing business.
    
3. A Representative Office of a foreign institution in the banking sector is an office established in Malaysia to perform permissible activities for its head office/principal. The Representative Office should be totally funded from sources outside Malaysia.
    
4. The Permissible activities are as follows:
   1. supplying trade and other economic and financial information on Malaysia to overseas interests and vice versa;
   2. assisting Malaysian exporters in finding new markets through the services of their international offices and vice versa;
   3. assisting foreign interests in establishing joint-venture companies in Malaysia; and,
   4. seeking opportunities for their respective banks to provide and to participate in the management and syndication of foreign currency loans to the Malaysian corporation, including identifying Malaysian companies which require offshore financing.
       
5. The Representative Office is subjected to the following conditions:
   1. not permitted to conduct banking or any other form of business in Malaysia;
   2. engage in activities which are representational in nature and serve as a contact/liaison point;
   3. appointment of any expatriate Chief Representative or Assistant Representative should be in consultation with Bank Negara Malaysia. Only one expatriate would be allowed at all times, except in the initial years of operation; and
   4. submit to Bank Negara Malaysia reports of its activities on a half-yearly basis, that is, at the end of June and December each year .