Quick answer: The mistakes that most often undermine a Malaysia Digital (MD) status application are choosing a business model on MDEC's non-qualifying list, describing the activity without mapping it to a named MD area, not planning two full-time knowledge workers at RM5,000 average base salary, ignoring the RM50,000 annual spend condition, and outsourcing core work. Each is avoidable before submission by testing the plan against MDEC's guidelines.
- Do not apply with an excluded activity such as staffing, training or traditional web design.
- Map your activity to a named MD area.
- Plan two knowledge workers and RM50,000 annual spend.
- Do not outsource the core activity.
- Confirm unclear points with MDEC before applying.
Common Mistakes
| Mistake | Why it hurts | Fix |
|---|---|---|
| Excluded activity | Non-qualifying business model | Check Appendix 1B first |
| Unmapped activity | Hard to assess | Map to a named area |
| No hiring plan | Two knowledge workers required | Define roles and salaries |
| Spend not planned | RM50,000 annual minimum | Budget by category |
| Outsourced core work | Not permitted | Do it in-house |
| Wrong company type | Must be Companies Act 2016 and resident | Fix structure first |
Non-Qualifying Activities
- Trading, retailing or leasing hardware, software and accessories
- Manufacturing
- Semiconductor wafer or chip fabrication
- Telecommunication services
- Low-value global business services
- Staffing and staff augmentation
- Event management
- Advertising, marketing and promotion
- Advertorial and publication
- Training and consultancy
- Traditional web design and development
- Supply chain services to tobacco, alcohol and gambling industries
Before You Submit
- Activity matches a named MD area.
- Business model is not on the excluded list.
- Hiring plan shows two knowledge workers.
- Budget shows RM50,000 annual spend.
- Core work will be done in-house.
- Company is incorporated and resident.
- Details are consistent across documents.
If You Are Rejected
Unsuccessful applicants may reapply, and the processing fee applies again. Fix the cause first rather than resubmitting unchanged.
Not sure where you stand? WhatsApp us. We will check it before you apply.
Three Scenarios
Scenario 1. An agency applies describing its work as digital marketing. It is excluded.
Scenario 2. A SaaS company maps its product to cloud-based applications and shows a hiring plan.
Scenario 3. A company outsources development and cannot show in-house activity.
How We Help
What we handle for you
Before you apply
- Test your activity, hiring plan and cost base against MDEC's conditions.
- Advise whether MD status, a tax incentive or both make sense for your business.
- Prepare your business plan and financial plan based on your company idea or business model.
Application
- Prepare and submit the application and answer MDEC's questions.
Why companies choose us
End-to-end under one roof
- We handle company incorporation, accounting and payroll, as well as MD status and expatriate pass applications, so your structure, records and hiring plan stay aligned.
- The company is set up correctly from day one.
We check before you invest
- We confirm eligibility, including whether you can hire the expatriates you need, before a foreign investor decides to incorporate in Malaysia.
- Neutral Consulting PLT is a Kuala Lumpur firm led by a Managing Partner who is a member of the Malaysian Institute of Accountants.
Frequently Asked Questions
Quick answers.
What mistakes delay MD status approval?
Excluded activities, unmapped activities, no hiring plan, unplanned spend and outsourced core work.
Which activities are excluded?
Trading, manufacturing, chip fabrication, telecom services, low-value GBS, staffing, event management, advertising, advertorial, training and consultancy, traditional web design and supply chain services to tobacco, alcohol and gambling.
Do I need to map my activity?
Yes. Map it to a named MD area.
How many knowledge workers do I need?
At least two full-time.
What salary?
An average monthly base salary of at least RM5,000.
What annual spend?
At least RM50,000.
Can I outsource?
Not the core activities, in whole or in part.
Can I reapply after rejection?
Yes, and the processing fee applies again.
Is the company type important?
Yes. It must be incorporated under the Companies Act 2016 and resident in Malaysia.
Where can I get clarification?
MDEC's CliC at [email protected].
Is general software development eligible?
The guidelines do not name it. Map to a named area and confirm with MDEC.
Can you review before I submit?
Yes. We test your plan against the guidelines.
Sources
Official sources
This page is general information, not legal advice. Agencies change their requirements, so confirm the current rules with MDEC, or with us, before you act. Checked November 2026.
Talk To Us Now
Thinking of applying for MD status? We will assess it first. All consultations are by video call.