Should they set up a legal entity in Malaysia or use an Employer of Record (EOR) service. Photo by Antoni Shkraba: https://www.pexels.com/photo/person-holding-black-remote-control-5816298/
Expanding into Malaysia or hiring Malaysian talent can be a strategic move for Singapore companies. However, businesses often face a key decision: Should they set up a legal entity in Malaysia or use an Employer of Record (EOR) service?
In this article, we compare the challenges of establishing a Malaysian entity versus leveraging an Employer of Record in Singapore to streamline hiring, compliance, and operations.
Setting Up a Malaysian Entity: Challenges & Costs
- High Administrative & Legal Costs
Registering a business in Malaysia requires significant financial and time investment. Companies must:
- Pay incorporation fees, legal consultation, and regulatory costs
- Secure business licenses and tax registrations
- Set up a local office and hire compliance experts
- Complex Compliance & Payroll Regulations
Operating in Malaysia means adhering to local labor laws, including:
✅ Employee Provident Fund (EPF) contributions
✅ Social Security Organization (SOCSO) & Employment Insurance System (EIS) compliance
✅ Payroll tax (PCB) deductions
✅ Strict employee contract regulations
Failure to comply can lead to heavy fines and operational risks.
- Time-Consuming Recruitment & HR Management
Hiring Malaysian employees directly involves:
- Registering with local authorities for work permits (if needed)
- Handling payroll, leave policies, and benefits administration
- Managing cross-border tax implications
This process can take months to set up and execute, delaying business operations.
Using an Employer of Record (EOR) in Malaysia
An Employer of Record Malaysia simplifies the entire hiring process by acting as the legal employer while the Singapore company manages the employee’s daily work. This eliminates the need for entity registration and ensures full compliance.
- No Need to Set Up a Legal Entity
An Employer of Record Singapore manages all employment responsibilities, including:
✅ Employment contracts in compliance with Malaysian labor laws
✅ Payroll processing, tax deductions, and benefits management
✅ Statutory contributions (EPF, SOCSO, EIS)
This removes administrative burdens and speeds up market entry.
- Lower Costs & Faster Hiring
With an EOR service, companies can hire Malaysian employees within days, bypassing expensive setup fees and reducing overhead costs such as:
- Business incorporation and licensing
- Legal and HR compliance teams
- Cross-border payroll and tax management
This translates into significant cost savings while ensuring full compliance with Malaysian labor laws.
- Flexible Workforce Expansion
An EOR solution allows Singapore businesses to:
✔️ Hire Malaysian talent for short-term or long-term projects
✔️ Scale teams up or down without financial risk
✔️ Expand into Malaysia without permanent commitments
This provides a cost-effective, low-risk hiring strategy for businesses looking to test the market before full-scale expansion.
Final Thoughts: Why EOR is the Best Option
For Singapore companies looking to hire Malaysians without the hassle of entity registration, an Employer of Record (EOR) service is the best solution.
✅ No entity setup required – EOR manages employment & compliance
✅ Cost savings – Avoid expensive legal, tax, and payroll fees
✅ Speed & flexibility – Hire within days and scale as needed
✅ Risk-free compliance – EOR ensures full regulatory adherence
By using an Employer of Record in Singapore, businesses can focus on growth while avoiding the challenges of setting up a Malaysian entity.
Looking for an easier way to employ Malaysian talent? Get in touch with us today to learn how our EOR services can help!
Partner with Elitez for Employer of Record
If you’re looking to hire top Malaysian talent with ease, our Employer of Record services can help. Contact us today to learn how we can support your hiring needs!
In addition to Employer of Record services, businesses can benefit from working with Elitez, the leading recruitment agency in Singapore. We offer the best talent sourcing and placement. For specialized or high-level positions, our executive search firm can help identify the best candidates to drive business success. Contact us for more information.
