BUSINESS REGULATIONS

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BUSINESS REGULATIONS SUPPORT SYSTEM
Dr. Azizan Abdullah Azlin Shafinaz Mohamad
Arshad Siti Zahrah Buyong Zarina Abdul Munir
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Introduction Business support system refers to
the assistance and services given by the
government or private agencies to help
entrepreneurs to start a new business or to
develop an existing one. There are a lot of
business support system provided to the
entrepreneur in term of monetary and non monetary
facilities.
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Approval and Licensing
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Entrepreneur are required to have approval and
licensing from relevant government agencies in
setting up manufacturing businesses.
Manufacturing Licence ?The Malaysian Government
under The Industrial Coordination Act
(ICA)1975 requires person (s) engaging in
any manufacturing activity to obtain a
licence. ?This regulation only apply to the
manufacturing companies with shareholders
fund of 2.5m
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and above or engaging 75 or more full-time
employees. ?Manufacturing activity is
defined as the making, altering, blending,
ornamenting, finishing or any other related
activities. ? Applications of manufacturing
licence should be made to Malaysian
Industrial Development Authority (MIDA).
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No-Objection Letter for the Location of
Projects ? No-objection letter from the
respective State Government is require for
approval of the project location. ? This
letter needs to be submitted to MIDA for the
issuance of the manufacturing licence. Approval
for Planning Permission ? Application for
planning permission is require under Town
and Country Planning Act, 1976 (Act 1972).
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? Planning permission need for a development and
use of all lands and building. ? Planning
permission should be made to the local
authority such as City Council of Shah Alam
(MBSA), Municipal Council of Kota Star
(MPKS) etc. Approval for Building Plan ? The
Street, Drainage and Building Act 1974 (Act 133)
require construction of buildings can only
be undertaken with the written approval
for the local authority.
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? Every plan, drawing or calculation in which
related to The building must be submitted
by qualified person such as architect,
draughtsman or engineer. Approval for
Certificate of Fitness for Occupation ? All
completed building need to be certified as being
fit for occupation by the local
authority. ? This requirement has been spell out
under the Uniform Building by Laws 1984.
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Approval for Business Related Licences ? The
licences related to factory premises,
advertising signage, storage and canteen. ? This
licences should be apply through the local
authority. Approval for Environmental Control ?
Environment Quality Act, 1974 requires the
manufacturers to control industrial activities
that may result in a new source of effluent
or discharge.
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?The installation of incinerator, fuel burning
equipment and chimney also need approval.
?The environmental control and approval are under
the responsibility of Department of
Environment.
Approval for Safety and Health ?Factories and
Machinery Act 1967 require manufacturers to
obtain design approval of certificate
machinery and certificate of fitness ?The
application of approval should be send to
Department of Occupational Safety and Health.
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Excise Licence and Sales Tax Licence ? Excise
duties are require for a factory that
manufactured goods which prescribe under Excise
Act, 1976. ? Excise licence also need for
products under this category and should be
obtained from Royal Customs Malaysia. ?
Customs Department will levied a sales tax on
imported and locally manufactured goods. ? A
sales tax licence should be apply under Sales Tax
Act, 1972

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Infrastructure Facilities
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Industrial Estates ?Industrial estates has been
developed by State Economic Development
Corporations (SEDCs), Regional Development
Authorities (RDAs), port authorities and
municipalities. ? Currently there were over 200
industrial estates were developed by those
agencies and the new ones are continuously
planned to meet the demand of industrial
land.
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Free Industrial Zones (FIZs) ?Established for
manufacturing companies that produce or
assemble products mainly for export
purposes. ?The manufacturing companies in FIZs
enjoy minimal customs formalities and duty
free import of raw materials, component
parts, machinery and equipment. ? They
also have a minimal formalities for export
their finished products.
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Licensed Manufacturing Warehouses (LMWs) ?The
purpose of LMWs is to encourage the dispersal
of industries and to enable companies to enjoy
FIZ facilities in areas where it is neither
practical nor desirable to establish FIZs.
? In order to get an approval for LMWs the
companies should have at least 80 of their
production meant for export and raw
materials or components are mainly imported.

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Electricity and Water Supply ? Electricity for
Peninsular Malaysia supply by Tenaga
Nasional Berhad (TNB) while for Sabah and
Sarawak are Sabah Electricity Sdn. Bhd.
(SESB) and Sarawak Supply Corporation
(SESCO) respectively. ? In term of water, it has
been treated according to the World Health
Organisation (WHO) standards for drinking
and supply by state water department and
water supply companies. ? Water costs are low
and vary from state to state.
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Telecommunication Services ?Provided by Telekom
Malaysia Berhad and other network service
providers. ?There are six internet service
providers which include TMNet, Jaring and
MAXIS Net whose help the government to
promote information based industry. ?
Malaysias also entry into space age
communication through the launching of MEAST-1
and 2 and Tiungsat-1 in 1996 and 2000
respectively.
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Sea Ports, Cargo Transportation, Highway and
Railway Services ?Sea ports has modern
facilities and equipment to facilitates full
range of cargo handling. ?Cargo transportation
provide comprehensive containerised cargo
transportation services. ?The Malaysian Highway
Authority provided latest design of
expressways which link to all major townships
and potential development area. ?Railway
services operates by Keretapi Tanah Melayu
(KTM) with the capacity to transport goods
ranging from grain to machinery.
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Multimedia Super Corridor (MSC) ? MSC was
established with the aims to revolutionise
how Malaysians and others in the region conduct
commerce in the digital age. ? MSC governed
by groundbreaking Cyberlaws, policies and
practices that enable operating companies
to harness the full potential of Information
Communications Technology and Multimedia. ? The
ultimate aim of MSC is to attracts multimedia
companies locally and internationally to become
world class over time.
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Financial Assistance
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Financial Assistance for Entrepreneurs
Financing is needed by entrepreneur for
sustainability and development of business.
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Purposes of Financing
1. Strengthening skills of workforce 2.
Entrepreneur development 3. Marketing
Promotion 4. Product Development Quality
accreditation 5. Technology development 6. Debt
restructuring 7. General
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Types of Financing

1. Soft loan
2. Grants
3. Equity financing
4. Venture capital
5. Guarantee scheme
6. Tax incentives

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Who Provide the Financial Assistance?

• Two main provider for financial assistance are
  ministry and agencies.
• Ministry
• Ministry of Entrepreneur and Co-operative
  Development (MECD)
• Ministry of Science, Technology and Innovation
  (MOSTI)
• Agencies
• 26 agencies

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Ministry of Entrepreneur and Co-operative
Development (MECD)
Financing scheme under MECD 1.ASEAN- Japan
Development Fund 2. Equity Financing3.
Franchise Development4. Skim Pembiayaan Pusat
Negeri (SPPN)
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Ministry of Science, Technology and Innovation
(MOSTI)
Financing scheme under MOSTI Enterprise
Innovation Fund(EIF) Objective To increase the
participation of SMEs, micro businesses and
individual/sole-proprietors in innovative
activities through the development of new or
improved products, processes or services with
element of innovation for commercialisation
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Ministry of Science, Technology and Innovation
(MOSTI)
Enterprise Innovation Fund(EIF) Eligibility
criteria Malaysian business enterprises or
individual with project or product proposal that
has elements of technological innovation for
commercialisation
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Financial Assistance from Government Agencies

• There are twenty six (26) agencies that provide
  financial assistance for entrepreneur. Examples
  are
• Banks such as Bank Kerjasama Rakyat Malaysia
  Berhad, Bank Negara Malaysia, Bank Perusahaan
  Kecil Sederhana Berhad, and Bank Pertanian
  Malaysia Berhad
• Non-banks such as Perbadanan Nasional Berhad,
  Small and Medium Industries Development
  Corporation, Multimedia Development Corporation

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Bank Kerjasama Rakyat Malaysia Berhad
Youth Business Scheme ObjectiveTo assist youth
to venture into business on full time
basis. Eligibility criteria Individual Malaysian
citizen aged between 18-40 years old Must
register online as an applicant  through the
Portal of  Majlis Penggalakan Ekonomi Belia
(MPEB) - www.mpeb.gov.my Pass the screening
test conducted by Ministry of Youth and Sport No
adverse record with financial institutions
Purpose of financing Expansion in productive
capacity Working capital
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Bank Negara Malaysia
New Entrepreneurs Fund 2 ObjectiveTo promote the
growth of small and medium-sized Bumiputera
enterprises by ensuring that they have access to
financing at reasonable cost. Eligibility
criteria Business enterprise based on the
definition of SMEs Link www.smeinfo.com.my Maxim
um shareholders' funds not exceeding RM2
million Shareholding by Public Listed Companies
or Government-Link Companies (if any) should not
exceed 20 Purpose of financing Expansion in
productive capacity
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SME Bank
Graduate Entrepreneurs Fund Objective To
encourage graduates to participate and venture
into businesses in the selected
industry. Eligibility criteria Graduate holds
majority equity in a company registered with the
Companies Commission of Malaysia under the
Companies Act 1965 Has a diploma/degree/doctorate
qualification Must be below 40 years old and has
successfully completed training programmers,
placement and practical training under the
Ministry of Entrepreneur and Co-operative
Development (MECD) or its agencies Purpose of
financing Working capital Financing fixed assets
or both
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Agro Bank Malaysia
Agriculture Entrepreneurs Scheme for
Graduates Objective To encourage graduate to
embark in the commercial agriculture sector as an
alternative career development. Eligibility
criteriaUnemployed graduates with keen interest
to develop a full time career in agriculture
sector Purpose of financingWorking capital and
expansion in productive capacity e.g. purchase of
fixed asset
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Perbadanan Nasional Berhad
Youth Franchise ObjectiveTo encourage Bumiputera
youth to venture into franchise business by
providing start-up financing Eligibility
criteria - A wholly-owned Bumiputera private
limited company - Bumiputera age between 21 to
40 years old - Contribute at least 10 of the
total project cost Application
procedureApplication to be submitted to PNS
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Perbadanan Usahawan Nasional Berhad (PUNB)
Bumiputera Entrepreneurs Retail Project Fund
(PROSPER) ObjectiveTo enhance and upgrade
Bumiputera entrepreneurs' participation in the
retail business. Eligibility criteria 1.
Entrepreneur - Bumiputera above 18 years old -
Possess the necessary entrepreneurial skills. 2.
Business - Retail business wholly owned by
Bumiputera. - Viable project costing not
exceeding RM 1 million.
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Perbadanan Usahawan Nasional Berhad (PUNB)
PROSPER Siswazah Entrepreneurial Scheme
ObjectiveTo assist Bumiputera graduates to
embark or venture into retail and distribution
business industry through the systematic and
structured PUNB's programmes Eligibility
criteria 1. Young Bumiputera Graduate - Less
than 30 years old with at least diploma
qualification from institution recognised by the
government. - Able to source own capital
amounting RM500 for each project 2. Businesses
- Wholly-owned and managed by Bumiputera - New
business or business at the stage of expansion
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Small and Medium Industries Development
Corporation
Matching Grant for Business Start-ups Objective-
To provide assistance in the form of matching
grant to start up a business in the following
sectors - Manufacturing and Manufacturing
related services and - Services (excluding
insurance and financial services) Eligibility
criteria - Business enterprise based on the
definition of SMEs. - At least 60 of equity are
held by Malaysian and - Possess valid premise
license
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Multimedia Development Corporation
MSC Malaysia Research and Development Grant
Scheme (MGS) ObjectiveTo provide reimbursable
RD grant to assist Multimedia Super Corridor
(MSC) Malaysia-Status Companies to develop
innovative multimedia technologies and
applications. Eligibility criteria Possess a
valid MSC Malaysia-status certification Malaysian
shareholding of at least 51 Past or current
recipients of any Government RD grant are NOT
eligible under the scheme Purpose of
financingTo provide financing for research and
development projects for the development of new
products and services across the multimedia value
chain and Flagship Applications
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Employment Policies Legislations
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EMPLOYMENT POLICIES LEGISLATION

1. EMPLOYMENT ACT 1955
2. EMPLOYER PROVIDENT FUND
3. SOCIAL SECURITY ORGANIZATION
4. OCCUPATIONAL SAFETY AND HEALTH

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1. EMPLOYMENT ACT 1955

• Stipulates the minimum conditions of employment
  such as Besides, the Act is to provide minimum
  standards on working hours and overtime, weekly
  rest day, public holidays, annual and sick
  leaves, maternity benefits, termination and lay
  off benefits etc
• Applies to all employees in Peninsular Malaysia
  and the Federal Territory of Labuan whose monthly
  wages do not exceed RM1,500 and all manual
  workers irrespective of their wages.
• Employees who earn between RM1,500 to RM5,000 a
  month can still seek redress from the Labor
  Department with regard to wages and any other
  payments in cash as stipulated in their contract
  of service.

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2. EMPLOYER PROVIDENT FUND

• A social security institution formed according to
  the Laws of Malaysia, Employees Provident Fund
  Act 1991 (Act 452) which provides retirement
  benefits for members through management of their
  savings in an efficient and reliable manner.
• All employers must register their employees with
  EPF immediately upon employment.
• Provides a convenient framework for employers to
  meet their statutory and moral obligations to
  their employees.

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2. EMPLOYER PROVIDENT FUND

• The Act stipulates a compulsory contribution for
  employees. A contribution constitutes the amount
  of money credited to members' individual accounts
  in the EPF. The amount is calculated based on the
  monthly wages of an employee. The current rate of
  contribution is 23 of the employee's wages of
  which 11 is from the employee's monthly wage
  while 12 is contributed by the employer.
• Under this Act, all employers and employees
  except foreign workers, expatriates and those who
  are listed under the First Schedule must
  contribute to the Employees provident Fund (EPF).
  However, they can choose to contribute at the
  rate of RM5.00 (employers share) per employee
  per month and 11 of monthly wages by the
  employee.

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3. SOCIAL SECURITY ORGANIZATION

• Administers the Employment Injury Insurance
  Scheme and Invalidity Pension Scheme provided
  under the Employees Social Security Act 1969.
• The scheme is compulsory and employer must cover
  all employees under SOCSO even if they are
  covered under other insurance policies.
• A monthly contribution must be made for each
  eligible employee according to rates specified
  under the Act (about 2.5 of basic employees
  salary).
• Covers only Malaysian workers and permanent
  residents. All establishments, including
  factories, employing workers earning wages not
  exceeding RM2,000 a month

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4. OCCUPATIONAL SAFETY AND HEALTH

• The Department of Occupational Safety and Health
  (DOSH) is a department under the Ministry of
  Human Resources. The Department of Occupational
  Safety and Health (DOSH) is responsible for
  enforcing compliance of the law with OSHA 1994.
  DOSH also enforces compliance with the Factories
  and Machinery Act 1967.
• The OSHA 1994 provides legislative framework to
  promote, stimulate and encourage high standards
  of safety and health at work. The aim is to
  promote safety and health awareness, establish
  effective safety organization and performance
  through self-regulation schemes designed to suit
  the particular industry or organization. This Act
  also defines the responsibilities of employers,
  manufacturer, employees, self-employed workers,
  designers, importers and vendors.

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4. OCCUPATIONAL SAFETY AND HEALTH

• As for Factories and Machinery Act 1967, it
  provide for the control of factories on matters
  relating to the safety, health and welfare of
  persons, and the registration and inspection of
  machinery. Some high risk machinery must be
  certified and inspected by DOSH. All factories
  and general machinery must be registered with
  DOSH for the purpose of registration before they
  can be installed and operated in Malaysia.

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Manpower Development Training Facilities
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MANPOWER DEVELOPMENT TRAINING FACILITIES

1. NATIONAL VACATIONAL TRAINING COUNCIL
2. MINISTRY OF HUMAN RESOURCE
3. HUMAN RESOURCE DEVELOPMENT FUND
4. MALAYSIA PRODUCTIVITY FUND
5. MALAYSIAN ENTREPRENEURSHIP DEVELOPMENT CENTRE
6. PERBADANAN USAHAWAN NASIONAL BERHAD
7. MAJLIS AMANAH RAKYAT

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1. NATIONAL VACATIONAL TRAINING COUNCIL

• The Department of Skills Development, formerly
  known as The National Vocational Training
  Council, is one of the agencies under the Human
  Resource Ministry, responsible for the
  co-ordination and control of skills training as
  well as career development in skills training. in
  line with the implementation of the National
  Skills Development Act, 652 (2006) on September
  1, 2006.

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1. NATIONAL VACATIONAL TRAINING COUNCIL

• The objective is to generate and coordinate the
  development of skilled workforce by
• Developing Competency Standard, of a developed
  country level, for skilled workforce,
• Recognising the competency and skills of
  workforce and industry experts, and
• Coordinating skills training systems and Malaysia
  Skills Certificate systems.
• Function of this council is to
• Assess training requirements,
• Develop, approve and revise the National Skills
  Standard,
• Implement the national training certification
  programmes,
• Promote skills training systems,
• Assist and enhance skills proficiency of
  individuals, and
• Guide learning/research programmes related to
  skills training.

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2. MINISTRY OF HUMAN RESOUCE

• Currently runs 14 industrial training institutes
  (ITIs) which offer industrial skills training
  programme at basic, intermediate and advanced
  levels for pre-employment or job entry level.
  These include apprenticeships in mechanical,
  electrical, building and printing trades as well
  as programme to upgrade skills and to train
  instructors.
• The Ministry also operates the Centre for
  Instructors and Advanced Skills Training (CIAST),
  Industrial Training Institute Japan-Malaysia
  Technical Institute (JMTI) and Advanced
  Technology Centers (ADTEC).

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3. HUMAN RESOURCE DEVELOPMENT FUND

• Aimed at encouraging direct private sector
  participation in skills development was launched
  in 1993 with a grant form government.
• Functions of HRDF are
• to assess and determine the types and extent of
  employee training and retraining in keeping with
  the human resources need of industries
• to promote and stimulate manpower training
• to determine the terms and conditions under which
  any financial assistance or other benefits are to
  be given

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Contribution Guidelines for employers
(i) Companies that employ 50 or more Malaysian workers 1 of employees monthly wages
(ii) Companies that employ less than 50 to a minimum of 10 employees, with a paid up capital of RM2.5 million or more 1 of employees monthly wages
(iii) Companies that employ less than 50 to a minimum of 10 of employees, with a paid-up capital of less than RM 2.5 million (Note For this category, the Government contributes RM2.00 for every RM1.00 spent.) Option of registering with the HRDF and paying a levy of 0.5 of the employees monthly wages
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4. MALAYSIA PRODUCTIVITY CORPORATION

• Formally known as the National Productivity
  Corporation was established in 1962 as a joint
  project between the United Nations Special Fund
  and the Federal Government, with the
  International Labor Organization acting as its
  executing agency.
• Function of PMC are
• To generate local expertise in the field of
  productivity, quality, management and
  entrepreneurship
• To enhance the development of human resource both
  at the supervisory and management levels in the
  country
• To assess and certify supervisory and management
  training programmes, entrepreneurship programmes
  and productivity and quality management
  programmes conducted by the private sector for
  the public
• To conduct training or other programmes relating
  to productivity, quality, management and
  entrepreneurship

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5. Malaysian Entrepreneurship Development Centre
(MEDEC)

• Established within MARA University of Technology
  (UiTM) in 1975.
• The mission was to facilitate the growth of
  Bumiputera entrepreneurs in Malaysia.
• Specifically, it was set up for the purpose of
  planning and implementing entrepreneurship
  development programs such as training, education,
  research and consultancy. 
• Activitie and programmes offered are
• Entrepreneur Development Program
• Entrepreneur Development Program for Civil
  Service
• Entrepreneur development program for Corporate
  and Government Agencies

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6. Perbadanan Usahawan Nasional Berhad

• Focus is on developing Bumiputera entrepreneurs 
  in strategic and high potential businesses and
  also to provide opportunities to Bumiputera
  entrepreneurs to achieve business success
  through the provision of financial and corporate
  support. 
• Business operations are focused on providing
  integrated entrepreneur development packages to
  assist Bumiputera entrepreneurs in Retail and
  Small and Medium sized Enterprise (SME) sectors.
  These development packages are designed to help
  Bumiputera entrepreneurs develop  business
  acumen, maintain a profitable venture, and shape
  their enterprise par excellence.

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7. Majis Amanah Rakyat

• Incorporated as a statutory body on March 1, 1966
  under an Act Of Parliament, No. 20, 1966.
• Entrusted with the responsibility to promote,
  stimulate, facilitate and undertake economic and
  social development of the people particularly in
  the rural areas thereof.
• It is also to encourage, guide, train and assist
  Bumiputera to enable them to participate actively
  and progressively in small and medium scale
  commercial and industrial enterprises towards
  creating a strong and viable Bumiputera
  Commercial and Industrial Community (MPPB).
• In order to create, increase and improve the
  level of Bumiputera entrepreneurship and
  business, MARA have provided activities such as
  in entrepreneurship, manufacturing incubator,
  consultancy service, marketing promotion and
  technopreneur programme.

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Other Business Support System
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Other Support Facilities in Malaysia Entrepreneu
r Technical
Marketing Advisory Assistance
Services Assistance
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Technical Assistance
Malaysian Agricultural Research and Development
Institute (MARDI)
The main objective of MARDI is to develop
indigenous science and technology capabilities in
support of the development and modernization of
the national food and agriculture sector.
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Malaysian Palm Oil Board (MPOB)
The Malaysian Palm Oil Board (MPOB) is the
premier government agency that is responsible for
promoting, developing and advancing the countrys
palm oil industry. It is also responsible for
providing scientific and technological leadership
to support the development of the palm oil
industry.
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Fisheries Research Institute (FRI)
The Fisheries Research Institute (FRI) conducts
studies in various fields of aquatic organism
such as fish, mollusk and shrimp.
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MIMOS Berhad
MIMOS Berhad is a technology RD organization
that functions as an advisor to the Malaysian
government on technologies, policies and
strategies relating technology development.
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SIRIM Berhad
SIRIM Berhad, a government-owned company, is a
leader in industrial research and development.
Its role is to spearhead industrial research and
development and to pioneer standardization
activities and the provision of technical and
consultancy services aimed at enhancing the
competitiveness of Malaysian industries.
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Marketing Assistance
The purpose of marketing assistance is to help
entrepreneurs distribute and market their
products locally and internationally. There are a
number of agencies involved such as MITI,
MATRADE, FAMA and GUTHRIE.
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Advisory Services
Advisory services are very important for
entrepreneurs in managing their business. There
are many agencies providing these services with
certain charges depending on the area and scope
of the services. However, rebate or tax reduction
is given to certain services acquired under the
training scheme recognized by the Ministry of
Human Resources.
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END OF MODULE 6