Doing legal business in Malaysia

Malaysia is a complex, dynamic country that formed a federation in 1963. It has a Westminster-style bicameral parliamentary democracy and is the world’s only rotating constitutional monarchy.

In May 2018, Malaysia underwent its first regime change in 61 years of unbroken power after a closely fought general election. The unprecedented victory was the first time the country had seen a change of government since independence from the British in 1957.

Many felt that this was the result of the “perfect political storm” – a combination of socio-political forces including nationalism and the deterioration of political institutions, campaign dynamics such as control of political narratives and the viral use of WhatsApp, and the role of party leaders in shaping the outcome.

Malaysia’s former prime minister Mahathir Mohamad was not only the oldest serving world leader but was also formerly prime minister of Malaysia under the previous ruling party. In early March 2020, Malaysia’s new government led by prime minister Muhyiddin Yassin was sworn in.

Like its politics, the Malaysian economy has undergone a transformation in recent decades, moving away from producing raw materials towards a multi-sector approach. In 2014, Malaysia’s legal services market was officially opened to international/foreign lawyers and law firms, and two UK firms have since established in Malaysia.

Malaysia enjoyed higher-than-expected growth over 2017 and 2018 and may soon achieve high-income status. It’s getting closer to regaining its lead over Singapore’s economy, with the differences in GDP expected to continue to shrink over the coming years. According to the Doing Business 2020 (Comparing Business Regulation in 190 Economies) data published by the World Bank, Malaysia ranks 12th in its Ease of Doing Business which makes it a preferred jurisdiction in South East Asia, further enhancing its position as a land of opportunity for UK law firms.

The UK and Malaysia enjoy a strong, historic relationship. The UK has been a big investor in Malaysia for decades, and household names such as HSBC, Standard Chartered, Prudential, Tesco and Dyson all have large established operations there.

Malaysia is the UK’s second largest trading partner in ASEAN, while the UK was Malaysia’s 19th largest trading partner globally in 2017. That year, Malaysia’s total trade with the UK grew by 7.1% to US $3.8 billion. Malaysian professionals and business people tend to speak excellent English.

With the liberalisation of the legal sector, a burgeoning Islamic finance sector, growing outbound investment into the UK, and Malaysian corporations listing in ever greater numbers on the Kuala Lumpur exchange, it’s not surprising that interest in Malaysia has grown significantly in recent years.

The £1.6bn regeneration project of Battersea Power Station has brought Malaysia’s UK investments further into focus. As a result, UK-based law firms are following this new investment flow and capturing those opportunities.

Practising in Malaysia

Foreign lawyers can provide legal services on a fly-in fly-out basis as long as they:

  • do not advise on Malaysian law
  • do not exceed a maximum stay of 60 days per lawyer per year
  • obtain immigration authorisation for each period of stay

English and Welsh law firms can apply for a Qualified Foreign Law Firm (QFLF) licence to set up an office in Malaysia and advise on international law. They must have experience and proven expertise on international Islamic finance.

They can also apply for a licence to operate an international partnership (IP) with a Malaysian firm and Malaysian firms can employ English and Wales-qualified lawyers.

QFLF and IP licences are granted for periods of three years and are renewable at the Malaysian Bar Council’s discretion.

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