Expanding into Malaysia offers tremendous business opportunities, but choosing the right market entry strategy is crucial. Foreign companies typically have two options:
- Setting up a local entity (such as a subsidiary or branch office)
- Engaging an Employer of Record (EOR) to hire employees without establishing a legal entity
While setting up a local entity provides full operational control, it requires time, high costs, and ongoing regulatory compliance. On the other hand, an EOR allows businesses to hire employees quickly and legally without the administrative burden of entity registration.
At Amaze Advisory, we specialize in EOR solutions tailored for foreign businesses, helping them establish a workforce in Malaysia seamlessly and in compliance with local regulations.
Let’s dive into the key differences between an EOR and setting up a local entity so you can determine the best approach for your business.
1. Speed of Market Entry
Employer of Record (EOR): Fast & Hassle-Free Entry
- Companies can hire employees within days
- No need for legal entity registration
- Seamless onboarding through a locally compliant employment contract
Setting Up a Local Entity: Lengthy Registration Process
- Incorporation can take weeks or months, depending on complexity
- Requires extensive paperwork, business licenses, and regulatory approvals
- Delays in hiring and operational setup
Best for: Businesses that want a quick, low-risk way to test the Malaysian market before committing to a full-fledged entity.
2. Compliance & Legal Responsibilities
Employer of Record (EOR): Fully Managed Compliance
Amaze Advisory acts as the legal employer, ensuring compliance with:
- Malaysia’s Employment Act
- Statutory payroll deductions (EPF, SOCSO, EIS, PCB)
- Work permits & visas for expatriates
- No need to worry about labor laws, tax compliance, or employment contracts
Setting Up a Local Entity: Full Compliance Responsibility
- The company must ensure compliance with all corporate, tax, and labor regulations
- Requires a licensed company secretary, annual audits, and tax filings
- High risk of legal complications if regulations are not followed properly
Best for: Companies that prefer a fully managed compliance solution while focusing on core business operations.
3. Costs & Financial Commitment
Employer of Record (EOR): Cost-Effective & Scalable
- Low setup costs – pay only for EOR services
- No need to invest in office space, HR, legal teams, or accounting services
- Flexible workforce scaling – hire or downsize without financial risk
Setting Up a Local Entity: High Initial & Ongoing Costs
- Registration fees, legal costs, and paid-up capital requirements
- Hiring HR, finance, and legal teams to manage compliance
- Fixed operational costs, even if business conditions change
Best for: Companies looking for a cost-effective way to establish a presence in Malaysia without long-term financial commitments.
4. HR & Payroll Management
Employer of Record (EOR): Fully Managed Payroll & HR
- Amaze Advisory handles payroll processing, tax deductions, and employee benefits
- Manages employee contracts and termination procedures
- Ensures salary payments comply with Malaysian labor laws
Setting Up a Local Entity: In-House HR & Payroll Required
- The company must set up its own HR and payroll systems
- Requires payroll software, tax filing, and compliance audits
- Risk of miscalculations, delays, and penalties if handled incorrectly
Best for: Businesses that want to avoid payroll complexities and ensure smooth salary disbursements.
5. Business Flexibility & Risk Mitigation
Employer of Record (EOR): Flexible & Low-Risk Expansion
- Allows businesses to test the market before fully committing
- No long-term liabilities—easy to scale workforce up or down
- Reduces legal risks associated with employee termination and disputes
Setting Up a Local Entity: High Operational & Legal Risks
- Long-term financial and compliance commitments
- Complex termination procedures with potential legal consequences
- More difficult to exit the market if business conditions change
Best for: Companies that need a low-risk, flexible market entry solution.
Which Option Is Right for Your Business?
| Factor | Employer of Record (EOR) | Setting Up a Local Entity |
|---|---|---|
| Time to Hire | Days | Weeks to Months |
| Compliance & Legal Risks | Fully managed by EOR | Company is responsible |
| Cost | No setup costs, pay per employee | High initial & ongoing costs |
| Payroll & HR | Managed by EOR | Requires in-house HR team |
| Flexibility | Easy to scale up/down | Long-term commitment required |
| Exit Strategy | Simple and fast | Complex and costly |
If you’re a foreign company looking to establish a presence in Malaysia quickly, efficiently, and without legal hassles, then an Employer of Record (EOR) is the ideal solution.
Why Choose Amaze Advisory as Your EOR Partner in Malaysia?
At Amaze Advisory, we specialize in helping foreign businesses expand into Malaysia without the complexities of entity registration. Our EOR services provide a seamless hiring process, allowing you to:
- Onboard employees within days
- Ensure full compliance with Malaysian employment laws
- Avoid costly setup and administrative burdens
- Scale your workforce flexibly without long-term risks
With our deep expertise in supporting SMEs and multinational corporations, we ensure that your business enters Malaysia smoothly and operates with confidence.
Get Started with a Hassle-Free Market Entry Today!
If you’re looking for a cost-effective and compliant way to hire employees in Malaysia, let Amaze Advisory handle your EOR needs.
Contact us today to learn how we can support your expansion into Malaysia!
