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Doing Business in Singapore vs Malaysia: A Comparative Analysis

5 minute read

Have you ever considered expanding your business into Southeast Asia? Doing business Singapore vs Malaysia, two of the region’s most prominent players, offer unique opportunities and challenges for businesses looking to enter their markets. In this blog post, we’ll dive deep into the key aspects of doing business in these two countries, from their economic landscapes and business regulations, to their workforce and government incentives. Let us help you make an informed decision on which country best suits your business needs.


Economic Landscape: Singapore and Malaysia

Both Singapore and Malaysia are located in Southeast Asia, boasting some of the world’s fastest-growing markets. Singapore, known as the “Lion City,” is a small city-state with a service-based economy focusing on banking, finance, tourism, trade, and manufacturing. This economic structure attracts foreign investments and encourages the incorporation of Singapore companies. On the other hand, Malaysia, being larger in size and endowed with abundant natural resources, primarily focuses on oil and gas industries, agriculture, mining, and manufacturing.

Both countries have promising economic potential, as recognized by the World Bank. Singapore, with its 5.5 million population, provides a wide array of career opportunities in various sectors. In contrast, Malaysia’s larger population of over 33 million offers a more significant market for businesses looking to expand their operations. The difference in size between the two countries can impact the ease of opening a Singapore bank account and conducting business operations.

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Business Formation and Regulations

Singapore emerges as a preferred destination for foreign investors due to its accommodating business formation and regulations. With a ranking of twelfth in the Ease of Doing Business index, Singapore offers a business-friendly environment and transparent regulations. The World Economic Forum places both Singapore and Malaysia high in the global competitiveness report, but Singapore consistently outperforms Malaysia in terms of economic freedom, investor protection, and trade freedom.

However, Malaysia, ranked one hundred and twelfth in the Ease of Doing Business index, presents a slower incorporation process and more bureaucracy. Additionally, foreign investors looking to hold more than 30% of a company in Malaysia must obtain approval from the Foreign Investment Committee, while this is not required in Singapore.

Singapore’s Business Environment

Singapore offers a fast and efficient process for business incorporation, with a key aspect being the ease of meeting the paid up capital requirements. Business registration is typically approved or rejected by the Inland Revenue Authority within a day. Moreover, Singapore’s English common law system allows for 100% foreign ownership in companies without seeking any approval, simplifying the process for foreign investors.

In terms of taxation, exempt private companies in Singapore enjoy tax exemptions if they create employment opportunities for local employees. Additionally, Singapore boasts a progressive tax system with lower corporate tax rates and tax exemption benefits, making it an attractive destination for business operations and optimizing chargeable income.

Malaysia’s Business Environment

While Malaysia offers a larger population and workforce, its business environment is more complex. Here are some key points to consider:

  • The company secretary must submit an incorporation application within 30 days after the name application approval.

  • It takes a minimum of 3 to 5 working days for the application to be approved or rejected.

  • Foreign investors in Malaysia must obtain approval from the Foreign Investment Committee if they intend to hold more than 30% of a company.

Malaysia’s corporate tax rates are higher than Singapore’s, which may deter some foreign investors. However, Malaysia provides various incentives and tax exemptions for specific industries, as they do not impose tax on them, such as:

  • Manufacturing

  • Agriculture

  • Hospitality

  • Tourism industries

These incentives make Malaysia attractive for businesses in these sectors.

Taxation Policies and Rates

Significant differences exist between the taxation policies and rates of Singapore and Malaysia. Here are some key points to note:

  • Singapore is known for its lower tax rates and simpler tax system.

  • The lowest tier of personal income tax rate in Singapore is activated later than in Malaysia.

  • Malaysia has a more intricate system of indirect taxation.

  • Malaysia also has higher income tax rates compared to Singapore.

The corporate tax rate in Singapore is generally more advantageous than that of Malaysia, with the rate for small and medium-sized enterprises being 17% in both countries. In contrast, the corporate tax rate in Malaysia is 24%. Singapore’s lower tax rates and simpler tax system make it a more attractive destination for business operations.

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Workforce and Talent Pool

Distinct differences are evident in the workforce and talent pool of Singapore and Malaysia. Singapore is known for its educated and diverse workforce, with the government providing free education from primary school through university level, creating a talent pool with a strong foundation in basic knowledge. In contrast, Malaysia relies more on migrant workers, due to its larger population and more substantial workforce.

The unemployment rate in Singapore is 2.1%, while Malaysia’s unemployment rate is 3.7%, showcasing the difference in job opportunities and talent pool in both countries. The unique workforce characteristics of both countries present different opportunities and challenges for businesses considering expanding or starting operations in Singapore or Malaysia.

Infrastructure and Connectivity

Despite its small size, Singapore boasts:

  • Rapid urbanization

  • Easy accessibility, spurred by government investments in sustainable infrastructure projects and carbon footprint reduction initiatives

  • Excellent connectivity within the city-state, which is an essential factor for trading operations and startups

These factors make Singapore an attractive destination for businesses and Singapore citizens alike.

On the other hand, Malaysia’s larger size provides more natural resources and diversity. However, its primary emphasis is on augmenting its road network, which may limit infrastructure development in other areas. The differences in infrastructure and connectivity between Singapore and Malaysia can impact the ease and efficiency of doing business in each country.

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Government Incentives and Support

Businesses receive more incentives and support from the Singapore government compared to Malaysia. The Singapore government provides numerous tax exemptions and startup incentives, making it a more attractive destination for business registration.

While the Malaysian government also offers tax exemptions and foreign investment incentives, they are generally more limited and focused on specific industries such as:

  • Manufacturing

  • Agriculture

  • Hospitality

  • Tourism industries

Businesses looking to expand or start operations in Singapore or Malaysia must carefully consider the government incentives and support available in each country before making a decision.

Immigration Requirements for Foreign Workers

Different immigration requirements and processes are in place for foreign workers intending to work in Singapore and Malaysia. In Singapore, foreign workers must possess a valid work permit or work visa before commencing work, with the work permit being valid for a maximum of two years and renewable. The minimum age requirement is 18 years old, and the maximum age for foreign workers is 50 years old, except for Malaysians who can work until 58 years old.

In Malaysia, foreign expats are required to possess valid work passes before starting work, with employment passes granted to foreign professionals who have earned a minimum monthly salary of MYR 10,000. Both countries have specific requirements and processes for foreign workers, which businesses must consider when hiring talent from overseas.

Rankings and Global Competitiveness

Singapore’s conducive business environment is reflected in its consistent outperformance of Malaysia in various global business indices. Singapore holds the top spot in the following indices:

  • Index of Economic Freedom

  • Corruption Perceptions Index

  • Safe Cities Index

  • Global Competitiveness Report by the World Economic Forum

Malaysia, on the other hand, lags behind Singapore in these indices, ranking lower in the following:

  • INSEAD Global Innovation Index

  • World Economic Forum’s Global Enabling Trade Report

  • Transparency International’s Corruption Perceptions Index

  • Forbes’ Best Countries for Business Index

The difference in rankings between Singapore and Malaysia, often debated in the context of “Singapore vs Malaysia,” demonstrates the varying degrees of attractiveness for businesses considering expanding or starting operations in each country.

Language and Cultural Considerations

The ease of doing business in each country can be affected by their business language and cultural differences. In Singapore, English is the primary language of communication and business, making it easier for foreign investors to navigate the business environment. Additionally, Singapore has four official languages – Mandarin, Malay, Tamil, and English – and encourages the appreciation and use of these mother tongue languages through various programs and festivals.

In Malaysia, Malay is the language of choice, and although English is commonly used in business and government, Chinese dialects are also spoken, which may present challenges for foreign investors. Understanding the language and cultural considerations in both countries is essential for businesses seeking to expand or start operations in Singapore or Malaysia.

Key Challenges and Opportunities

Assessing the key challenges and opportunities in each country is crucial for businesses considering expansion or new operations in Singapore or Malaysia. Singapore, being more conducive to business, faces challenges such as civil liberties, cost of living, poverty and economic inequality, social cohesion, and rising manpower costs. However, the country offers opportunities in its beneficial taxation system, skilled personnel, comprehensive infrastructure, and government incentives and assistance.

Malaysia, on the other hand, faces difficulties in bureaucracy, lack of innovation, inadequate skilled workforce, and insufficient infrastructure. Despite these challenges, Malaysia provides opportunities in its abundant natural resources and specific industry incentives. Businesses must weigh the challenges and opportunities in both countries before making a decision on where to expand or start operations.


In conclusion, when comparing doing business in Singapore vs Malaysia, Singapore stands out as the more attractive destination due to its conducive business environment, lower tax rates, and skilled workforce. Malaysia, while offering opportunities in specific industries and natural resources, faces challenges in bureaucracy and infrastructure development. Ultimately, businesses must carefully evaluate their specific needs and priorities before deciding on the best country for their expansion or startup operations. The choice between Singapore and Malaysia may come down to the industry, business structure, and long-term goals of the organization.

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Singapore’s economy is significantly better than Malaysia’s, with a higher per capita GDP, greater economic freedom, ease of doing business and higher quality of life. Despite Malaysia’s expected higher growth rate, Singapore remains the more desirable economy of the two.

Yes, a Singapore company can do business in Malaysia by registering with the Companies Commission of Malaysia (SSM) and setting up a 100% foreign-owned company.

Singapore is an ideal place for doing business, as evidenced by its top-notch ranking by the Economist Intelligence Unit (EIU) and TMF Group’s Global Business Complexity Index. Its impressive economic stability, abundance of skilled resources, efficient open economy, and strong intellectual property rights protection all add to why it is a premier destination for business.

Singapore’s primary industries are largely service-based, while Malaysia’s economy is heavily reliant on oil and gas, agriculture, mining, and manufacturing.


The corporate tax rate in Singapore is 17% for small and medium-sized enterprises, while Malaysia has a slightly higher rate of 24%.

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