How To Apply for an E-commerce Business License in Malaysia?

What is an E-commerce Business?

In this digital era, e-commerce has become ubiquitous, revolutionizing how we conduct. From buying groceries to purchasing luxury goods, e-commerce has transformed traditional commerce into a seamless online experience. So, what exactly is an e-commerce business?

E-commerce, often known as electronic commerce, is primarily the exchange of products and services using electronic platforms, most notably the Internet. This virtual marketplace eliminates the need for physical stores and provides a convenient, 24/7 shopping experience accessible from anywhere with an internet connection.

The primary benefit of e-commerce is its global reach. It enables companies to increase their consumer base outside of geographical bounds. E-commerce eliminates the costs associated with physical stores, enabling businesses to offer competitive pricing. Moreover, online businesses can leverage data analytics to gain valuable insights into consumer behavior.

Furthermore, from a customer’s perspective, e-commerce provides unparalleled convenience. It eliminates the need to travel, long queues, or adherence to specific store hours. Customers can compare prices, read reviews, and access various products and services worldwide with just a few clicks. E-commerce also opens doors for niche markets, making it easier for customers to find unique and specialized items that may not be available locally.

How to Start an E-commerce Business in Malaysia

To start an e-commerce business in Malaysia, you need to learn about all the different e-commerce license requirements. Research the existing competition where you want to start your e-commerce business. 

New companies can easily find these out by conducting thorough market research, feedback from peers and acquaintances, and information from online forums. Once this is done, you must determine what product you want to sell.

Find a product to sell

To find a product to sell, you need to determine whether it will generate the necessary amount of sales. As per recent research, the top 5 selling products category in Malaysia in 2023 has been travel, consumer electronics, fashion & beauty, food and personal care, and home appliances. 

Other aspects you need to consider while finding a product to sell with an e-commerce license in Malaysia include: 

• You can turn your expertise into your online business in Malaysia
• Read customer reviews on the existing products to explore the opportunities 
• Look for product opportunities in keywords
• Research for products with higher profit margins

Evaluate your idea

If you have determined the type of product you want to sell, you must evaluate if the product will rake in suitable sales and revenue. Through different approaches, budding entrepreneurs can classify their products as consumer or industrial goods. Such classifications help evaluate the potential of the product and the market demand and supply needs of that item.

Steps to Register an Online Business in Malaysia

Here are some steps on how to get an e-commerce business license or how to register for a business license in Malaysia:

Define your product and business nature

Classifying your product and business is crucial when starting a new e-commerce venture. Through careful evaluation, you must define the type of product you are selling and the nature of your e-commerce business. Once the product has been defined, obtaining a business license in Malaysia becomes easier.

Here are some of the common categories you can define your products into:

• Digital Products – Your e-commerce website may specialize in selling digital products like e-books or case studies. 
• Physical Products – These are clothes, shoes, accessories, and tools you can sell through your ecommerce website.
• Services – Services selling websites are those websites that sell services such as IT services.
• Third-Party Services – You can also sell products from other companies as a reseller or affiliate.

Get your e-commerce business license in Malaysia at Suruhanjaya Syarikat Malaysia (SSM)

It’s crucial to keep in mind that online firms in Malaysia must be registered in the same way as conventional or physical businesses. To obtain an e-commerce or business license in Malaysia, new companies must register with the Suruhanjaya Syarikat Malaysia or the SSM. 

An integral part of the Malaysian government, the SSM functions as a business agency. Its primary duties include incorporating new businesses formed within the Malaysian borders.

Once you commence your business, you need to complete your application with the SSM within a month of the commencement date. The SSM offers provisions to fill and submit the application online or by being physically present at the SSM head office.

Here are the details of the things needed and how to register with the SSM:

1. Creating an account with EzBiz

SSM has made creating an account through the EzBiz portal mandatory for new users. EzBiz is a Malaysian registration portal by the government that is used for registering new businesses, editing existing business details, and terminating or closing down businesses. 

However, certain conditions must be met to register with the EzBiz portal:

• The applicant must be above 18 years old.
• The applicant must have a National Registration Identity Card or NRIC, now known as MyKad.
• Applicants must have MyPR card if they are permanent residents of Malaysia.
• The applicant should also have an active email and phone number.

SSM will send applicants a reference number once the new registration process is complete. To verify this newly-created EzBiz account, the following documents must be uploaded to the SSM portal.

• Scanned photos of both sides of your applicable identity card.
• The SSM also requires a photo of the applicant holding the identity card in front of them at the level of their neck.
• Another official document, like a passport or driving license, must also serve as address proof.

2. Fill in the Business Registration Form

The next step to getting an e-commerce license in Malaysia is to fill out the Business Registration Form A (Borang A). The following information must be filled out by applicants online:

• The name of the business
• The date of commencement of the business
• Classification regarding the type of business and product sold
• Details about the owners and the partners
• The address of the main branch or the head office
• Details of the other branches, if there are any
• A copy of the partnership agreement

You might need permits or licenses if your business falls under a regulated industry or involves specialized activities. These include local authority permits, health department clearances, or industry-specific licenses. Research and understand the requirements for your business type, and obtain the necessary permits and licenses before proceeding.

In some cases, the Registrar of Business may require supporting letters from relevant agencies. These letters verify or endorse your business activities, particularly in specific sectors or services. Contact the respective agencies to learn the process of obtaining these supporting letters to fulfill the Registrar of Business’s requirements.

3. Paying the Registration Fee

The last step of registering your business to get an e-commerce license in Malaysia is to pay the registration fee. These registration fees are fixed at RM30 (USD 6.52) for using a personal name, while the fees for using a trading name for your business in RM60 (USD 13). Businesses can also register their branches for an annual fee of RM5 (USD 1.1) per branch.

The SSM generally sends a notification via the registered email and mobile number of the EzBiz account holder if the payment has been completed. The authorities can provide you with the Business Registration Certificate within an hour of paying the fees. 

Open a business bank account

Another critical step in opening up your online business and getting an online business license in Malaysia is opening a bank business account. This helps keep the applicant or the business owner’s personal and business finances separate. Business accounts also come in handy when two or more people own the business, allowing multiple people to access the account.

Set up an online portal

Once the business registration process is done, setting up your online shop is the only thing remaining. Obtaining a domain name and email ID are essential parts of the online shop.

After the business registration process, applicants are given a unique business registration number. With these unique numbers’ help, businesses can buy the more localized and professional ‘.com.my’ domain. 

A company-branded email account holds more credibility than using a free email service. Establishing a business email address ending with your business’s domain name builds consumer trust, enhancing your brand’s reputation.

Once you’ve secured your professional email, it’s time to focus on website design. You have two options: utilize a pre-built web builder with hosting plans or delegate the design and development tasks to experienced web designers or freelancers. 

Regarding content, you must ensure that your website only presents pertinent information. By prioritizing user-friendliness, your website can provide visitors with a seamless experience.

Documents Every Importer and Exporter Needs in Malaysia

These are the documents that every importer and exporter needs to trade apart from the business license in Malaysia:

Commercial invoice

One of the vital documents required to trade, the commercial invoice, is considered a customs document that can be used for export and import clearances. Generally provided by the company or the person exporting the goods, the commercial invoice can also act as foreign exchange.

Bill of lading

A Bill of Lading (B/L or BOL) is a crucial document for sea shipments, serving as a contract between the shipper, carrier, and recipient. It plays a vital role in securing payment and financing.

Unlike an Air waybill or AWB, a negotiable bill of lading can be transferred to another party. This makes it valuable for ensuring payment and acts as a financial instrument as the holder of a negotiable B/L is typically the cargo owner.

On the other hand, a non-negotiable B/L is assigned to a specific party and cannot be transferred for negotiation or financing purposes. However, the shipper may issue revised or amended B/Ls before the vessel reaches its destination, subject to additional charges for revising or amending the document.

Air waybill

The Air Waybill (AWB) is a specific type of non-negotiable bill of lading (BOL or B/L) exclusively used for airport-to-airport shipments. It serves as a shipment receipt and a consignment note for air cargo.

The AWB is issued by the airline or its agent and carries multiple functions. It acts as evidence of the contract of carriage, providing proof of the acceptance of the goods by the carrier. It also serves as a receipt of goods and contains vital information about the shipment.

However, it is essential to note that the AWB does not hold the title of the shipped goods. While it is a crucial document for air shipments, it is not recognized as a document of title. 

Certificate of origin

A Certificate of Origin is a crucial document that is important in dealings involving international trade. Often known as the Declaration of Origin, it confirms that the listed product meets specific costumes criteria to be recognized as originating from a particular country. 

Conclusion

E-commerce has revolutionized buying and selling products and services. With its vast reach, convenience, and adaptability, e-commerce has emerged as a powerful force in modern business. 

Whether you’re a budding entrepreneur or a savvy shopper in Malaysia, embracing e-commerce offers limitless opportunities and unrivaled convenience in today’s interconnected world. Thus, a great way to kickstart your new business in the country is to launch your e-commerce store.

However, companies must complete specific registrations and procedures to receive their online e-commerce license in Malaysia. Once the registration process is complete and the online business license has been procured, you can start conducting business on your online shop.

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