Money, Banking & Insurance in Malaysia
Managing your finances is one of the practical priorities when moving to a new country. Fortunately, Malaysia has a well-developed banking system, widespread electronic payments, a competitive insurance market and an established financial services sector.
For most expatriates, everyday financial life in Malaysia is relatively straightforward once a local bank account has been opened. Debit and credit cards are widely accepted, mobile payments are commonplace, and transferring money between Malaysia and overseas has become considerably easier.
Tax, insurance, investments and longer-term financial planning can be more complicated, particularly for people with income, assets or family interests in more than one country. This guide provides an overview of the main issues expatriates should consider.
Opening a Malaysian Bank Account
Most expatriates living in Malaysia will find it useful to open a local bank account, particularly if they are receiving a salary locally, paying rent and utilities, or expect to stay for an extended period. Malaysia has a large selection of conventional and Islamic banks offering savings accounts, current accounts, fixed deposits, debit cards, credit cards and online banking.
The documentation required varies between banks and sometimes between branches, but expatriates will normally be asked to provide the usual mix of documents and information plus a Malaysian address and evidence of a visa. Requirements can vary depending on the type of visa held, so it is sensible to check with the bank before visiting a branch.
Once an account is open, most day-to-day banking can be handled through the bank’s mobile app. Eligible deposits at PIDM member banks are automatically protected by Perbadanan Insurans Deposit Malaysia (PIDM) up to RM250,000 per depositor, per member bank. This protection also applies to eligible deposits held by non-Malaysians.
Credit and Debit Cards
Debit cards are normally issued with Malaysian current or savings accounts and can be used for purchases, online payments and ATM withdrawals. Credit cards are also widely used, although obtaining one can be more difficult for a newly arrived expatriate. Banks may ask for evidence of local income, employment history or a deposit, particularly where the applicant has limited Malaysian credit history.
Malaysia has increasingly moved towards cashless payments. Contactless cards, QR payments, mobile banking and electronic wallets are used extensively, particularly in urban areas. Nevertheless, it is still worth carrying a small amount of cash. Some smaller traders, markets and businesses may prefer cash or QR payments rather than conventional card transactions.
Sending Money Overseas
Many expatriates regularly transfer money between Malaysia and their home country, whether for savings, pensions, property expenses, education costs, or to support family members. International transfers can normally be made through Malaysian banks as well as licensed money-transfer and foreign-exchange services.
When comparing methods, it is worth considering more than the advertised transfer fee. The exchange rate may have a greater impact on the final amount received and the estimated transfer time.
Banks and financial institutions may also request information about the purpose and source of funds, particularly for larger international transfers. Keeping documentation showing where money originated can therefore be useful.
Foreign Exchange
The Malaysian currency is the ringgit, usually shown as RM or MYR. Foreign currency can be exchanged at banks and licensed money changers throughout the country. In larger Malaysian cities, exchange services are easy to find and rates can be competitive.
Expatriates moving large sums for property purchases, investments or relocation expenses should compare the overall cost rather than relying solely on convenience. Exchange rates can fluctuate significantly, so people regularly transferring money between currencies may also wish to consider the timing of transfers as part of their financial planning.
Malaysian Taxes for Expatriates
Tax is one of the areas where expatriates should be particularly careful, as nationality, tax residence, where work is physically performed and where income arises can all affect the position. Simply being paid by a foreign employer does not necessarily mean that income is foreign-sourced for Malaysian tax purposes.
Expatriates working, running businesses, investing or spending substantial periods in Malaysia should therefore establish their Malaysian tax position rather than assuming the rules of their home country apply. Malaysia’s tax authority is the Inland Revenue Board of Malaysia, commonly referred to as LHDN or HASiL.
currency can be exchanged at banks and licensed money changers throughout the country. In larger Malaysian cities, exchange services are easy to find and rates can be competitive.
Expatriates moving large sums for property purchases, investments or relocation expenses should compare the overall cost rather than relying solely on convenience. Exchange rates can fluctuate significantly, so people regularly transferring money between currencies may also wish to consider the timing of transfers as part of their financial planning.
Tax Residence
Malaysian tax residence is determined under the Income Tax Act rather than simply by the type of immigration visa a person holds. One of the principal tests is whether an individual is physically present in Malaysia for 182 days or more during the relevant year, although additional rules can result in a person being considered resident in other circumstances.
This distinction is important because resident and non-resident individuals are taxed differently. A person moving into or out of Malaysia part-way through a year should pay particular attention to these rules.
Income Tax
Resident individuals are generally taxed on a progressive basis and may qualify for various personal reliefs and deductions. Non-resident individuals are generally taxed under different rules and do not receive the same range of personal reliefs. LHDN currently states that non-resident individuals are generally subject to a 30% rate, although the actual treatment can depend on the category of income and relevant exemptions or tax treaties.
Employees will commonly see Malaysian income tax deducted from their salary through the Monthly Tax Deduction system. Individuals who are required to submit a Malaysian tax return generally do so through LHDN’s MyTax system.
Anyone with business income, overseas income, investment income, or more complex cross-border arrangements may wish to seek professional advice rather than relying solely on payroll deductions.
Foreign-Sourced Income
Foreign-sourced income is especially relevant to expatriates because many retain investments, pensions, rental income or other financial interests overseas. Malaysia changed its treatment of certain foreign-sourced income from 2022, but exemptions apply in a number of circumstances.
For resident individuals, qualifying foreign-sourced income received in Malaysia can currently benefit from an exemption extending until 31 December 2036, subject to the relevant conditions. Foreign partnership income and some other situations may be treated differently.
The distinction between genuinely foreign-sourced income and Malaysian-sourced income is important. For example, an expatriate physically performing employment duties from Malaysia for an overseas company should not automatically assume that the salary is foreign-sourced merely because the employer and bank account are overseas.
People receiving significant overseas income should obtain advice based on their individual circumstances, particularly as both Malaysian tax law and the tax laws of their home country may apply. Malaysia also has double-taxation agreements with many countries which can help determine where income is taxable and provide relief where the same income might otherwise be taxed twice.
Insurance in Malaysia
Insurance is another area expatriates should review soon after relocating. The policies someone held in their home country may provide limited or no cover once they become resident overseas, while Malaysian policies may offer better local coverage.
You can obtain Insurance coverage on medical, personal accident, home contents, property, auto, life, and travel The appropriate level of cover will depend on an individual’s circumstances, assets, family situation and appetite for risk.
Medical Insurance
Malaysia has an extensive private healthcare sector and is well known for the quality and comparatively reasonable cost of private treatment. Nevertheless, major surgery, prolonged hospitalisation or treatment for serious illness can still become expensive.
Many expatriates therefore maintain private medical insurance. Expatriates who travel frequently or divide their time between several countries should also check whether a Malaysian policy provides sufficient international coverage.
Employer-provided insurance can be useful, but employees should understand what happens to that coverage if they change jobs or leave employment.
Car Insurance
Motor insurance is compulsory for vehicles used on Malaysian roads. At its most basic, insurance provides third-party protection, while comprehensive policies can also provide broader coverage for the insured vehicle. The premium will depend on factors such as the vehicle, the type of cover and the driver’s claims history.
Malaysia also operates a No Claim Discount (NCD) system, (usually up to 55%) which can reduce premiums over time for drivers who do not make claims.
When buying a vehicle, expatriates should factor insurance and annual road tax into the overall cost of ownership rather than looking only at the purchase price.
Home and Contents Insurance
People buying property in Malaysia should consider appropriate property insurance. Those renting may also wish to insure their personal possessions, as a landlord’s insurance will not necessarily cover a tenant’s belongings.
Coverage can be available for risks such as fire, theft, water damage and other events, depending on the policy. High-value jewellery, artwork, electronics or other expensive belongings may require specific declaration or additional coverage.
Pensions and Retirement Planning
Retirement planning can become considerably more complicated when someone has lived and worked in several countries.
An expatriate in Malaysia may simultaneously have, a pension in their home country, Malaysian retirement savings, private investments, rental property and investment accounts in several jurisdictions. These may all have different tax obligations when withdrawing or transferring retirement funds. Before moving pension or retirement assets between countries, it is important to understand both the Malaysian consequences and those in the country where the pension originated.
Currency risk should also be considered. Someone planning to retire in Malaysia but receiving most of their retirement income in another currency may find that changes in exchange rates materially affect their spending power.
Investment and Financial Planning
Malaysia offers access to a broad range of conventional and Islamic financial products, including fixed deposits, shares, unit trusts, bonds and professionally managed investments. International residents often have more complicated financial affairs because their income, investments, property and eventual retirement may be spread across several countries.
Financial planning should therefore consider the whole financial picture rather than investments in Malaysia alone. Be cautious about financial products sold specifically to expatriates on the basis that they are international or tax-efficient. Before committing substantial funds, make sure you understand the product, the impact if you change your residency, how easily you can withdraw your money, all charges involved and whether the adviser and product are appropriately regulated.
It is also worth remembering that investments are not the same as bank deposits. PIDM protection applies to eligible deposits at member banks, but does not generally protect products such as shares, unit trusts and investment accounts in the same way.
Wills and Estate Planning
Estate planning is particularly important for expatriates. Someone living in Malaysia may own a Malaysian home, a car, bank accounts and investments while simultaneously retaining property,
pensions and other assets overseas. A will prepared only for a person’s home country may not be the simplest way to deal with Malaysian assets after death.
Expatriates with significant assets in more than one jurisdiction should consider obtaining estate-planning advice covering all the countries involved. Where separate wills are prepared in different countries, they should be drafted carefully so that one does not accidentally revoke another.
Keep Your Financial Affairs Organised
Moving countries often means accumulating financial relationships in several jurisdictions. Keeping an organised record of your Malaysian and overseas finances can save considerable difficulty later.
Partners or close family members should also know where important financial information can be found.
The Bottom Line
Malaysia offers expatriates a modern and accessible financial environment. Local banking is well developed, electronic payments are widely used and there is a substantial insurance and financial-services sector. For routine matters such as opening a bank account or arranging car insurance, the process is generally straightforward.
More care is required once finances cross international borders. Tax residence, foreign income, pensions, investments and estate planning can involve the laws of several countries at the same time.
The best approach is to get the basics organised soon after arriving in Malaysia, keep good records, and obtain qualified professional advice where substantial sums or cross-border tax and legal issues are involved.
This guide provides general information only and should not be regarded as tax, legal, investment or financial advice. Regulations and tax rules can change, and individual circumstances vary.