Resturant business

Pakistani food the demand is not great...pls try something else

To set up a restaurant in Malaysia you have to set up a company and the new minimum capital you must put into the company is RM1 million. 

http://malaysiabizadvisory.com/how-to-s … -malaysia/

If you are partnering a Malaysian in the business the capital requirement is RM350,000 and it looks a little easier:

http://malaysiabizadvisory.com/malaysia … oreigners/

There are a lots of Pakistani Restaurants along Jalan Ipoh & Jalan Raja Laut in KL city currently. You should visit those set up first.

An expat friend of mine is looking for serious buyer to buy his F&B Cafe business at Penang for US 300K as he is leaving Malaysia.

PM me if you need more information.

Roy - do you know how it works? 

Would that mean a foreigner would set up a 100% Malaysian company and put RM1million into it as capital.  Then he would buy the business you mention out of that capital?  The only issue I can see would be that each year for the annual report and accounts the company balance sheet has to have RM1million capital available?

Because of the hike in the amount of capital needed (which gives work permits) I think there are going to be a lot of foreigners who don't have double the amount of capital to put into a company.  When their current work permit expires, they automatically have to increase the capital to get another work permit.

It seems that things are getting tougher for foreigners.

From 1st January 2014 the minimum property price for a foreign purchaser will be RM1million (that is DOUBLE the current RM500k).

I wonder what is going to happen to the MM2H deposit level?  As some information is not widely published, does anyone know if there have been changes or there are rumours?  The RM1million for foreign businesses was being talked about 1 year before it happened.

From 1st January 2014 all people who handle or sell food have to be registered with the Ministry of Health:

Food Manufacturers and Factories
Food Caterers
Restaurants and Food Stalls
Mobile Hawkers

Unregistered could be penalized with RM10k fine or a 2 year jail term.

www.fosimdomestic.moh.gov.my

Source: Star Newspaper - 14 October 2013

Gravitas wrote:

Roy - do you know how it works? 

Would that mean a foreigner would set up a 100% Malaysian company and put RM1million into it as capital.  Then he would buy the business you mention out of that capital?  The only issue I can see would be that each year for the annual report and accounts the company balance sheet has to have RM1million capital available?

Because of the hike in the amount of capital needed (which gives work permits) I think there are going to be a lot of foreigners who don't have double the amount of capital to put into a company.  When their current work permit expires, they automatically have to increase the capital to get another work permit.

As per my understanding, no foreigner can have a 100% stake in a Malaysian company.

IIRC he uses his lawyer as a 'silent partner' but I am uncertain of how much % goes to his silent partner.

If you or anyone who is interested, I could patch you guys up for discussion.

Roy - things have changed in the last 3-4 years.  I guess your friend selling his business in Penang is a case-in-point:

http://malaysiabizadvisory.com/malaysia … oreigners/

It does mean that foreigners who set up companies before the changes still have to meet the most recent requirements and that means they must have a work permit (employment pass), capital investment, minimum monthly salary and pay income tax.  Their company secretary should be advising them to take the necessary action.  Otherwise it will unfortunately end up with being deported and barred from entering Malaysia.

To avoid confusion, please could you read the link and either edit your post or confirm the new governmental arrangements?

I simply ask this as foreigners get hold of the wrong information and don't check it up and end up with rather nasty surprises.

Thanks

Thanks for the info, a foreigner may have the option to have the business 100%?

But this is FnB business whereby certain percentage of the profit  goes back to the founder. That will have to be discussed in detail.

Roy, I know plenty of foreigners who own restaurants in KL with no Malaysian partners. The "founder" as you call it are the foreign Directors (minimum 2) themselves. There are also some limits on what type of restaurant foreigners can open i.e. they have to be upscale. They cannot open a small café or hawker stall and always have had to put up RM1million in capital.

Of course if a foreigner partners up with a Malaysian the terms are different (capital required is RM350k). Then there would be profit sharing between all parties dependent on who invested what. This thread is an enquiry from two people from (in) Pakistan making plans. It looks as if it is far easier to partner up as some licences that only foreigners need are waived when a Malaysian is an owner (see link provided earlier).

Recently a foreign business owner was deported for not complying with all the regulations.  That is a pretty big loss to incur as getting your money out of the business partners would be difficult and not being able to contribute or earn or even return to Malaysia would mean a serious lifestyle change.

I see. IIRC he was the one who told me that as a foreigner he can't own the business without a Malaysian partner.

I guess he was short changed by his so called trusty lawyer!

It was probably before the changes took place. Lawyers used to often be (silent) partners for foreigners and act as company secretary, managing all aspects of the business incorporation, annual accounts, fees, permits, licences, etc. But your friend should check he is still "legal" here so as not to have a nasty surprise. That includes having a valid employment pass, salary, tax contributions and the correct level of paid up capital. Having just seen what happened to someone, it is not worth taking the risk.  A lawyer, if a part owner, is probably not taking any risks, as his/her reputation and ability to operate would be taken away if s/he broke the law.....  So I guess everything is probably OK.

Here are some key tips about the administration needed to run a business in Malaysia:

http://malaysiabizadvisory.com/keys-are … n-company/

If a foreign business need to employ Malaysians the owners should be aware they will be responsible for paying  EPF contributions(12% of salary)and SOCSO contributions (1.25% of wages when under RM3,000 per month).

Apart from legal risks the average survival time where I live for new restaurants seems to be 3 months. seen see plenty come and go as proud new owners spend money on a new restaurant not thinking about competition or location.

the only people making money out of this are the builders! See same firm refurbishing yet again a "new" restaurant up the road. 6th I seen in two years at that spot.

Yes, when it comes to FnB, location means everything since the food is the same in all outlets.

For traditional food however, I had seen businesses thrives even in the far hidden 'kampung' simply because it taste good and people make it a point to travel the distance just to eat it.

Agree with Nemo and Roy. People will travel miles and miles for good food and it is often found in the most unexpected places. We went to a tiny shack and had the largest, juiciest, non salty oysters. They grow at an estuary where the water is brackish. Travel to a fishing village near Taiping for wonderful fresh seafood.

In KL we tend to be a little picky about where to eat, because the quality can be a let-down. Places that cook with stale and old oil are the worst experiences and I am sure this is a key factor for success. It's obviously cheaper not to change the oil regularly, but boy oh boy it is the first thing we notice when the air is thick with the nasty odour of dirty cooking oil.

Deciding on who you are trying to attract is important and choosing the wrong location or lack of footfall (passing trade) that does not have your kind of clientele is the worst mistake.

But customers are fickle. They swarm to a place for a few months then find something new and "better" - or just different. Because of the competition I think running an average eatery or restaurant must be extremely hard work and not very rewarding.

I really like trying out new places and buy Groupons and LivingSocial vouchers for that purpose.  Have found some good places that way. But not sure if the offers ever attract increased regular trade?

By the way - like your merry "nissehue" Roy - essential headgear at this time of year - when will it stop raining....!!

roystevenung wrote:

Yes, when it comes to FnB, location means everything since the food is the same in all outlets.

For traditional food however, I had seen businesses thrives even in the far hidden 'kampung' simply because it taste good and people make it a point to travel the distance just to eat it.

Yes, but no good for an expat. Expat run restaurants have  afar higher risk than local ones as you can't open a Mamak as a foreigner. Well not legally.

Years ago I looked into buying a Mamak with a local friend. What put me off was the fact everyone apart from the chef were illegal workers! The manager was a Bangledeshi.

He said he arrived via the Thai border. Paid 100 USD and was motorbiked past the border guards into Malaysia. He then returned to Bangledesh every year using recycled passports. Seems there is *was?) a market in passports, they come in on a two week visa, resell it to someone else to go home to visit family. They then reenter on it and resell it again as  atwo week visa is useless. He said eveyone is happy as visa looks like it wasn't abused. And all "Bangledeshis look the same" (his words).

In last few years though seems a lot has been done to clean up the illegal worker scams like this. This pushed up costs of running a restaurant and I note that chains are now far bigger in Malaysia, Chain "mamaks" and prices are up, so economy of scale being used. McDonalds is now cheaper than a Mamak in KL. Also maids up. It used to cost 400 RM to have a full time Indo maid. Now 1,600 RM for a Mon-Fri Fillipino cleaner. Malaysia I guess is protecting its labour markets as unemployment went up. but bad for labour intensive businesses like restaurants.

The other day we went to a small "ethnic" restaurant where we usually spend just over RM30 for two. A new guy who did not know us tried it on and served up something that looked like leftovers or old food - white girl won't complain. Well, she did and I sent it back. You should have seen their faces when I ordered what the majority of customers have - garlic nan which comes with 3 dipping sauces (curry, dhal, etc.). It costs RM2.50 plus a drink at about RM2 just behind Havana at Changkat and is very delicious and filling.  So if you want to have a restaurant that only earns max RM5 per customer you will need some serious numbers of guests to make ends meet. Don't annoy the whites as they will go elsewhere and they spend up to 4 times per head.

Gravitas wrote:

Agree with Nemo and Roy. People will travel miles and miles for good food and it is often found in the most unexpected places. We went to a tiny shack and had the largest, juiciest, non salty oysters. They grow at an estuary where the water is brackish. Travel to a fishing village near Taiping for wonderful fresh seafood.

By the way - like your merry "nissehue" Roy - essential headgear at this time of year - when will it stop raining....!!

Do you know the name of the fishing village near Taiping Gravitas? It sounds tempting

Yes, its an essential gear this time of the year.

I think that is the reason why they have to operate 24 hours. Even McD prefers to have their business as a standalone rather than in malls so that they can earn money day or night.

But then again, one could only wonder just how many times they change the oil...

Is it just me or does everyone else feel annoyed that at times people who post questions here just dont post back after they got their answers? Kind of annoying I must say.

Roy - this is the place - its worth a visit and very reasonable and nicely cooked food.  We are in Penang about one third of our time, so we get to visit it reasonably regularly.

http://kajangfood.blogspot.com/2011/01/ … urant.html

Xin Kuala Sepetang
Lot 155B, Tepi Sungai
(look for the Carlberg sign and it is down a narrow alley headed towards the river
34650 Kuala Sepetang
Taiping, Perak
Contact : 017-5619384

I just think the prices are not accurate and possibly because it was Christmas time.  We rarely pay more than RM45 for the food (say 8 large prawns, a medium local fish and some great vegetables plus rice). Our appetites are not large though.

It is very popular and we eat at lunchtime before it gets too busy which may explain the much lower prices. Lots of groups seem to go there.  We have seen works outings and some school teachers from a school in the area. The plates of crabs are something to be believed.