Business Regulations & Support System

ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIP
BUSINESS REGULATIONS & SUPPORT SYSTEM
Chapter 6
BUSINESS REGULATIONS &
SUPPORT SYSTEM
Dr. Azizan Abdullah

Azlin Shafinaz Mohamad Arshad
Siti Zahrah Buyong
Zarina Abdul Munir
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.
Approval and Licensing

Entrepreneur are required to have APPROVAL and

LICENSING from relevant government agencies in
setting up manufacturing businesses.
Manufacturing License
►The Malaysian Government under The Industrial

Coordination Act (ICA)1975 requires person(s)
engaging in any manufacturing activity to obtain a
license.
►This regulation only apply to the manufacturing

companies with shareholders’ fund of 2.5m 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 license should be

made to Malaysian Industrial Development Authority
(MIDA).
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 license.
Approval for Planning Permission

► Application for planning permission is require under
Town and Country Planning Act, 1976 (Act 1972).
► 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.
► 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.
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.
►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.
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
Infrastructure Facilities
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.
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.
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.
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.

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.
► Malaysia’s also entry into space age communication

through the launching of MEASAT-1 and 2 and
Tiungsat-1 in 1996 and 2000 respectively.
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.
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 attract multimedia

companies locally and internationally to become
world class over time.
Financial Assistance
Financial Assistance for Entrepreneurs
FINANCING is needed by
entrepreneur for sustainability and
development of business.
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
Types of Financing
1. Soft Loan
2. Grants
3. Equity Financing
4. Venture Capital
5. Guarantee Scheme
6. Tax Incentives
Who Provide the Financial

Assistance?
Two main providers for financial assistance are
ministry and agencies.
Ministry
1. Ministry of Entrepreneur and Co-operative
Development (MECD)
2. Ministry of Science, Technology and
Innovation (MOSTI)
Agencies
26 agencies
Ministry of Entrepreneur and Co-

operative Development (MECD)
Financing Scheme under MECD:

1. ASEAN -Japan Development Fund
2. Equity Financing
3. Franchise Development
4. Skim Pembiayaan Pusat Negeri (SPPN)
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 .
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
Financial Assistance from

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

Youth Business Scheme
Objective
To assist youth to venture into business on full time basis.
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
Bank Negara Malaysia

New Entrepreneurs Fund 2
Objective
To promote the growth of small and medium-sized Bumiputera
enterprises by ensuring that they have access to financing at
reasonable cost.
Business enterprise based on the definition of SMEs [Link]
www.smeinfo.com.my
Maximum shareholders' funds not exceeding RM2 million;
Shareholding by Public Listed Companies or Government-Link
Companies (if any) should not exceed 20%;
Expansion in productive capacity
SME Bank
Graduate Entrepreneurs Fund
Objective
To encourage graduates to participate and venture into businesses in the
selected industry.
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
Working capital
Financing fixed assets or both
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 criteria
Unemployed graduates with keen interest to develop a full time
career in agriculture sector
Purpose of financing
Working capital and expansion in productive capacity e.g.
purchase of fixed asset
Perbadanan Nasional Berhad

Youth Franchise
Objective
To encourage Bumiputera youth to venture into franchise business by
providing start-up financing
- 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 Procedure
Application to be submitted to PNS
Perbadanan Usahawan Nasional Berhad

(PUNB)
A. Bumiputera Entrepreneurs Retail Project Fund
(PROSPER)
Objective
To enhance and upgrade Bumiputera entrepreneurs' participation in
the retail business.
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.
Perbadanan Usahawan Nasional

Berhad (PUNB)
B. PROSPER Siswazah Entrepreneurial Scheme
Objective
To assist Bumiputera graduates to embark or venture into retail and
distribution business industry through the systematic and structured
PUNB's programmes
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
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
Multimedia Development Corporation

MSC Malaysia Research and Development Grant Scheme
(MGS)
Objective
To provide reimbursable R&D grant to assist Multimedia Super Corridor
(MSC) Malaysia-Status Companies to develop innovative multimedia
technologies and applications.
Possess a valid MSC Malaysia-status certification
Malaysian shareholding of at least 51%
Past or current recipients of any Government R&D grant are NOT eligible
under the scheme
To provide financing for research and development projects for the
development of new products and services across the multimedia value
chain and Flagship Applications
Employment Policies
&
Legislations
EMPLOYMENT POLICIES
& LEGISLATION
1. EMPLOYMENT ACT 1955
2. EMPLOYER PROVIDENT FUND
3. SOCIAL SECURITY ORGANIZATION
4. OCCUPATIONAL SAFETY AND HEALTH
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.
Cont’d…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.
Cont’d.….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 (employer’s share) per employee per month and 11% of
monthly wages by the employee.
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 employee’s salary).
• Covers only Malaysian workers and permanent residents.
All establishments, including factories, employing
workers earning wages not exceeding RM2,000 a month.
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.
Cont’d… 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.
Manpower
Development &
Training Facilities
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
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.
Cont’d… National Vocational 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.
2. MINISTRY OF HUMAN RESOURCE
• 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).
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
Contribution Guidelines for Employers:

(i)
Companies that employ 50 or more Malaysian 1% of employees’
workers monthly wages
(ii)
Companies that employ less than 50 to a 1% of employees’
minimum of 10 employees, with a paid up monthly wages
capital of RM2.5 million or more
(iii)
Companies that employ less than 50 to a Option of registering
minimum of 10 of employees, with a paid-up with the HRDF and
capital of less than RM 2.5 million paying a levy of
0.5% of the
employees’ monthly
wages
(Note : For this category, the Government contributes
RM2.00 for every RM1.00 spent.)
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;
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.
• Activities and Programmes offered are :
 Entrepreneur Development Program
 Entrepreneur Development Program for Civil Service
 Entrepreneur development program for Corporate and
Government Agencies
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.
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.
Other Business
Support System
Other Support Facilities in Malaysia
Entrepreneur
Technical Marketing Advisory

Assistance Services Assistance
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.
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 country’s palm oil
industry. It is also responsible for providing scientific
and technological leadership to support the
development of the palm oil industry.
Fisheries Research Institute (FRI)
The Fisheries Research Institute (FRI)

conducts studies in various fields of aquatic
organism such as fish, mollusk and shrimp.
MIMOS Berhad
MIMOS Berhad is a technology R&D organization

that functions as an advisor to the Malaysian
government on technologies, policies and strategies
relating technology development.
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.
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.

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.
END OF MODULE 6

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ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIP

BUSINESS REGULATIONS & SUPPORT SYSTEM

Dr. Azizan Abdullah

Business support system refers to the assistance

There are a lot of business support system provided

Approval and Licensing

Entrepreneur are required to have APPROVAL and

►The Malaysian Government under The Industrial

►This regulation only apply to the manufacturing

► Manufacturing activity is defined as the making,

► Applications of manufacturing license should be

No-Objection Letter for the Location of Projects

► No-objection letter from the respective State

► This letter needs to be submitted to MIDA for the

Approval for Planning Permission

Approval for Building Plan

► Every plan, drawing or calculation in which related to

Approval for Certificate of Fitness for Occupation

► All completed building need to be certified as being fit

► This requirement has been spell out under the Uniform

Approval for Business Related Licences

► The licences related to factory premises, advertising

► This licences should be apply through the local

Approval for Environmental Control

► Environment Quality Act, 1974 requires the

►The installation of incinerator, fuel burning equipment

►The environmental control and approval are under the

►Factories and Machinery Act 1967 require

►The application of approval should be send to

Excise Licence and Sales Tax Licence

► Excise duties are require for a factory that

► Excise licence also need for products under this

► Customs Department will levied a sales tax on

► A sales tax licence should be apply under Sales Tax

► Industrial estates has been developed by State

► Currently there were over 200 industrial estates were

Free Industrial Zones (FIZs)

► Established for manufacturing companies that produce

► The manufacturing companies in FIZs enjoy minimal

► They also have a minimal formalities for export their

Licensed Manufacturing Warehouses (LMWs)

► The purpose of LMWs is to encourage the dispersal of

► In order to get an approval for LMWs the companies

Electricity and Water Supply

► Electricity for Peninsular Malaysia supply by Tenaga

► In term of water, it has been treated according to the

► Water costs are low and vary from state to state.

► Provided by Telekom Malaysia Berhad and other

► There are six internet service providers which include

► Malaysia’s also entry into space age communication

Sea Ports, Cargo Transportation, Highway

► Sea ports has modern facilities and equipment to

Multimedia Super Corridor (MSC)

► MSC was established with the aims to revolutionise

► MSC governed by groundbreaking Cyberlaws,

► The ultimate aim of MSC is to attract multimedia

Financial Assistance for Entrepreneurs

1. Strengthening skills of workforce

Who Provide the Financial

Ministry of Entrepreneur and Co-

Financing Scheme under MECD:

Ministry of Science, Technology

Ministry of Science, Technology