# What It Costs to Operate in Each Malaysian Region — the Figures That Are Actually Published

> A comparison of Malaysian operating costs by region using only officially published figures — electricity tariffs, water tariffs, council licence fees and the national statutory employer burden — and an honest account of where no official figure exists.

- Category: business
- Language: en
- Status: published
- Updated: 2026-07-20
- Canonical: https://negaraku.md/en/business/business-costs-by-region

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Most location comparisons for Malaysia are built on numbers nobody published. Industrial rent per square foot by state, "typical" utility bills, a wage differential between Penang and Kelantan — all of it circulates, almost none of it traces to a government source.

Here is what does. And, just as usefully, what does not.

## Which costs actually vary by region?

Three, and one of them barely.

**Electricity varies a lot**, because Malaysia does not have one electricity market. It has four published regimes: Peninsular Malaysia under the Energy Commission, Sabah under the Energy Commission on a separate regulatory period, Sarawak entirely outside the federal Act, and Kulim Hi-Tech Park under its own licensee.

**Water varies a lot**, and is regulated only in Peninsular Malaysia and Labuan.

**Council licence fees vary**, but so few councils publish a schedule that the variation is mostly invisible.

**Labour does not vary at all.** This is the finding that undoes most site-selection spreadsheets, and it is worth stating first.

## What does an employee cost, and does it change by state?

It does not change by state. Every figure below is federal and applies identically in Kuala Lumpur, Kuching and Kota Bharu.

| Item | Employer rate | Basis |
| --- | --- | --- |
| Minimum wage | RM1,700 per month, RM8.72 per hour | Minimum Wages Order 2024, P.U.(A) 376 |
| EPF | 13% of wages up to RM5,000; 12% above | Third Schedule Part A, from 1 Oct 2025 |
| EPF, non-citizen employees | 2% | Third Schedule Part F |
| SOCSO, employee under 60 | 1.75%, wage ceiling RM6,000 | Employees' Social Security Act 1969 |
| SOCSO, employee 60 and over | 1.25%, employer only | Category 2 |
| EIS | 0.2%, wage ceiling RM6,000 | Employment Insurance System Act 2017 |
| HRD Corp levy | 1% where 10 or more employees; 0.5% optional at 5–9 | P.U.(A) 84/2021 |

Add the published rates for a Malaysian citizen under 60 earning within the EPF's 13 per cent band and the statutory add-on is **just under 16 per cent of wages**. Two qualifications matter. EPF is contributed on published *bands*, not an exact percentage, for wages up to RM20,000 — so the ringgit figure is read off the Third Schedule, not calculated. And SOCSO and EIS stop at a RM6,000 wage ceiling, so a RM12,000 salary carries the same SOCSO ringgit as a RM6,000 one, and the effective percentage falls.

The minimum wage deserves a second line because it is the single most misunderstood point in Malaysian site selection. **There is no regional minimum wage.** The small-employer deferment to RM1,500 ran from 1 February to 31 July 2025 only; paragraph 5 of the Order brought every employer to RM1,700 from 1 August 2025. No 2026 Order has been made. Whatever wage advantage a state has, it is a market outcome, not a legal one.

## What does electricity cost in each region?

**Peninsular Malaysia.** The Energy Commission restructured the tariff from 1 July 2025 under the fourth regulatory period, RP4, running to 31 December 2027, set under s.26 of the Electricity Supply Act 1990. The average base tariff is **45.40 sen/kWh**, down from the 45.62 sen/kWh approved in December 2024. Customers are now categorised by supply voltage rather than by business activity — low voltage up to 1 kV, medium voltage 1 to 50 kV, high voltage 50 to 230 kV — and the bill is split into four itemised components: energy, capacity, network and retail. The old Imbalance Cost Pass-Through was replaced by an Automatic Fuel Adjustment recalculated **monthly** rather than half-yearly, which is a working-capital point as much as a cost one.

**Kulim Hi-Tech Park** is the anomaly worth knowing about. It is supplied by its own licensee, NUR, on its own regulatory period, with an average base tariff of **43.08 sen/kWh** and a separate ICPT of 6.52 sen/kWh for 1 July to 31 December 2025. It is the only Malaysian industrial park with a distinct published electricity schedule.

**Sarawak** is not a cheaper version of the Peninsular system. It is a different system. **The Electricity Supply Act 1990 is wholly suspended in Sarawak by P.U.(A) 272/1990**, and the Energy Commission's own description of its remit covers the electricity and piped-gas supply industries *in Peninsular Malaysia and Sabah*. Sarawak Energy publishes its own schedule:

| Sarawak tariff | Rate |
| --- | --- |
| I1 Industrial | 24.0 sen/kWh (first 100 units), 25.0 (to 3,000), 26.0 above; minimum RM10.00 |
| I2 Industrial Demand | 21.7 sen/kWh, plus RM16.00 per kW per month |
| I3 Industrial Peak/Off-Peak | 22.9 sen/kWh peak, 13.9 off-peak, plus RM20.00 per kW peak |
| C2 Commercial Demand | 24.5 sen/kWh, plus RM16.00 per kW per month |
| C3 Commercial Peak/Off-Peak | 24.5 sen/kWh peak, 13.9 off-peak, plus RM20.00 per kW peak |

An off-peak rate of 13.9 sen/kWh is genuinely low by regional standards, and it is the reason energy-intensive processing has gone to Samalaju rather than to the Peninsula. **But no SCORE bulk-power tariff is published anywhere.** What exists publicly is only the power purchase agreement structure — loads above 5 MW, a discount to the published tariff, terms up to 20 years. If a proposal quotes you a SCORE rate, ask where it is published.

**Sabah** is a third regime again, and its regulator is not the one most people assume. Supply is by Sabah Electricity Sdn Bhd, regulated by the **Energy Commission of Sabah**, not by the federal Energy Commission — whose own current statement of remit covers Peninsular Malaysia and Labuan. The federal Commission fixed Sabah's average base tariff at **34.52 sen/kWh** for the first regulatory period, 1 January 2022 to 31 December 2024, supported by federal subsidy, and described its remit in that release as Peninsular Malaysia and Sabah. **Those two statements of jurisdiction conflict**, and both sit on the Commission's own site; the transfer of Sabah regulation to the state commission is the likely explanation but it is not stated. A tariff adjustment for Sabah and Labuan has been reported for 1 February 2026 and could not be confirmed officially.

One ownership nuance worth carrying, because it cuts against the tidy version of this story: **SESB is 80 per cent owned by TNB**, with the Sabah State Government holding 20 per cent, and TNB reports SESB's reliability figures in its own annual report. Saying *Sabah is not served by TNB* is right at the licensee level and misleading at the ownership level. Sarawak is genuinely independent of TNB. Sabah is not.

## What does water cost, and why is the published table wrong?

Water in Peninsular Malaysia and Labuan is regulated by SPAN under the Water Services Industry Act 2006. Sabah and Sarawak are outside that framework entirely.

SPAN publishes a comparative national sheet. **Do not use it as current.** Its per-state effective dates run no later than 1 January 2023, and Peninsular tariffs were adjusted once from 1 February 2024 and again from 1 September 2025. This is the same failure mode that catches readers on stale statutory consolidations: an official document that looks authoritative and is simply out of date.

The one region where the current figure is confirmed is Selangor, Kuala Lumpur and Putrajaya, from **1 September 2025**:

| Selangor / KL / Putrajaya category | Rate |
| --- | --- |
| Non-domestic, 0–35 m³ | RM3.51 per m³ |
| Non-domestic, above 35 m³ | RM3.83 per m³ |
| **Data centre (new category)** | RM5.31 per m³ |
| Shipping | RM8.01 per m³ |
| House of worship, welfare institution | RM0.76 per m³ |

The **data centre category is new and it is a policy signal**, not just a rate. The state's own statement gives the reason: data centres consume water measured in millions of litres a day for cooling. Anyone modelling a Klang Valley data centre on a generic commercial water rate is under-costing by roughly half.

For contrast, SPAN's sheet records these non-domestic rates as published, with each state's own stated effective date — **all of which predate the 2024 and 2025 adjustments**:

| State | Non-domestic, 0–35 m³ | Above 35 m³ | Stated effective from |
| --- | --- | --- | --- |
| Terengganu | RM1.00 | RM1.40 | 1 Aug 2022 |
| Perak | RM1.45 | RM1.65 | 1 Nov 2022 |
| Pulau Pinang | RM1.50 | RM2.10 | 1 Jan 2023 |
| Johor | RM3.10 | RM3.50 | 1 Jan 2023 |

The spread is the point, not the precision: at the time of publication a Johor factory paid roughly three times a Terengganu factory for the same cubic metre. Whether that spread survived the two subsequent adjustments has to be checked against the gazetted state order.

## What do council licences cost?

There is no national fee. The Local Government Act 1976 s.107(1) lets each local authority make its own by-laws, and **Sabah and Sarawak sit outside Act 171 entirely** — Sarawak under the Local Authorities Ordinance and Sabah under the Ordinan Kerajaan Tempatan.

What is actually published:

- **Selangor** is the one state tier with published fees, in its 2022 state guideline as applied by MBPJ: temporary licence **RM100**, home business licence **RM200 per year**, and **RM50** to add an online activity to an existing commercial licence. No process or deposit fee.
- **Sarawak** publishes processing fees for a few councils: Kuching South **RM10 and RM30**, Padawan **RM50**, Miri **RM10**. Full schedules exist only for Kuching South and Miri; DBKU, Padawan, Bintulu and Sibu publish none.
- **DBKL is unverified.** It operates under Federal Territory law and its licensing guidelines sit behind a download button with no exposed URL.
- **MPAJ, MBSJ and MBSA publish no home-business category at all**, despite being Selangor councils nominally inside the state guideline.

Treat any council fee you have not read off that council's own document as unknown.

## What does industrial and office space cost?

**No Malaysian government body publishes a rental index by state.** This is the single largest gap in Malaysian cost data, and it is why every comparison you will read falls back on agency estimates.

NAPIC, the National Property Information Centre inside the Valuation and Property Services Department, publishes stock, supply, transaction volume and value, and occupancy rates. Its regional Property Market Reports quote rents only for individual named buildings — the H1 2025 Southern Region report, for example, gives RM14.35 per square metre per month for the ground floor of one named building in Kuala Pilah. That is a data point, not a benchmark.

What NAPIC does give you is market depth, which is a better proxy for pricing power than a made-up rent. From the Property Stock Report 2025:

| State | Industrial units, existing stock 2025 | Private purpose-built office space (m²) |
| --- | --- | --- |
| Selangor | 43,766 | 4,414,829 |
| Johor | 19,569 | 977,804 |
| Pulau Pinang | 9,974 | 758,881 |
| Melaka | 8,554 | 198,148 |
| Perak | 8,548 | 249,177 |
| Sarawak | 7,700 | 549,513 |
| Sabah | 6,517 | 522,873 |
| Negeri Sembilan | 5,899 | 135,554 |
| WP Kuala Lumpur | 5,138 | 9,662,341 |
| Kedah | 4,024 | 195,561 |
| **Malaysia** | **125,989** | **18,580,132** |

Selangor holds 35 per cent of national industrial stock and 46 per cent of incoming supply. Kuala Lumpur holds 52 per cent of national private office space in 419 buildings. Those two facts explain more about where rents sit than any range quoted at you.

The other honest proxy for local price level is GDP per capita, which DOSM publishes by state. For 2025, against a national RM59,167: Kuala Lumpur RM144,898 · Putrajaya RM126,359 · Labuan RM88,764 · Pulau Pinang RM80,584 · Sarawak RM73,757 · Selangor RM70,362 · Melaka RM55,580 · Negeri Sembilan RM55,406 · Pahang RM52,014 · Johor RM48,031 · Perak RM41,960 · Terengganu RM32,657 · Sabah RM31,125 · Kedah RM28,537 · Perlis RM25,089 · Kelantan RM18,085. Exactly six states sit above the national figure. Note where Sarawak lands — fifth nationally, above Selangor, which is resource wealth rather than services depth and does not translate into a comparable cost base for an office employer.

## Common mistakes

**Budgeting a wage arbitrage between Malaysian states.** The minimum wage is federal and every statutory contribution is federal. A cost model that shows Kelantan labour materially cheaper than Selangor labour on statutory grounds is wrong on the law.

**Quoting SPAN's water tariff sheet as current.** It is superseded in at least Selangor, Kuala Lumpur and Putrajaya, and its stated effective dates make clear it predates two national adjustments.

**Assuming TNB serves the whole country.** It is not the licensee in Sabah, Sarawak or Kulim Hi-Tech Park. Three of Malaysia's most-pitched industrial locations are on someone else's tariff.

**Quoting TNB's tariff booklet.** The rates still circulating in search results — Tariff E1 at 22.2 sen/kWh plus RM19.50/kW, E1s at 21.5 sen, Tariff D at 34.50 and 37.70 sen — come from `tnb.com.my/assets/files/Tariff_booklet.pdf`, which states on its own first page that it is **effective from 1 June 2006**. It is still live on TNB's own domain, which is exactly why it keeps getting cited. The whole category structure it describes was replaced on 1 July 2025.

**Treating Sarawak's low tariff as an incentive you can negotiate up front.** The published I2 and I3 rates are real. The bulk-power arrangements above 5 MW are individually negotiated power purchase agreements with no published rate, and treating a rumoured SCORE number as bankable is how a smelter business case goes wrong.

**Costing a data centre on a commercial water rate.** In Selangor there is now a distinct data-centre tariff at RM5.31 per cubic metre, roughly 50 per cent above the standard non-domestic first block.

## What's next

Price the three things that genuinely move — electricity, water and council fees — from the specific licensee, the specific gazetted state order and the specific council. Treat everything labour-related as a national constant. Then read [talent availability by region](/en/business/talent-availability-by-region) for where the workforce actually is, and [infrastructure and connectivity by region](/en/business/infrastructure-connectivity-by-region) for whether you can get your goods out. If an incentive is part of the case, [state investment agencies](/en/business/state-investment-agencies) explains who can and cannot grant one.

## Sources

- Jadual Elektrik Baharu — new tariff schedule effective 1 July 2025 (RP4) — https://www.st.gov.my/jadual-elektrik-baharu-lebih-236-juta-pengguna-domestik-semenanjung-nikmati-kadar-lebih-adil (Suruhanjaya Tenaga)
- Jadual Elektrik Baharu Kulim Hi-Tech Park Berkuatkuasa Mulai 1 Julai 2025 — https://www.st.gov.my/jadual-elektrik-baharu-kulim-hi-tech-park-berkuatkuasa-mulai-1-julai-2025 (Suruhanjaya Tenaga)
- Tariffs — commercial and industrial schedule — https://www.sarawakenergy.com/customers/tariffs (Sarawak Energy Berhad)
- Water Tariff — water rates for Peninsular Malaysia and F.T. Labuan — https://www.span.gov.my/document/upload/K9QURleD4haj3A2rC9yT3hIaXID1Oa1O.pdf (Suruhanjaya Perkhidmatan Air Negara)
- Pelarasan Tarif Air Semenanjung Malaysia dan Wilayah Persekutuan Labuan — https://content.airselangor.com/cmi-prod-blobstorageanon-001-sea/media/yotnscfj/mb-penyelarasan-tarif-air-202508.pdf (Kerajaan Negeri Selangor)
- Laporan Stok Harta Tanah 2025 (Property Stock Report 2025) — https://napic.jpph.gov.my/storage/app/media//3-penerbitan/Shahrul/Bahagian%20Inventori%20Harta%20Tanah/Laporan%20Jadual%20Stok%20Harta%20Tanah/Q4%202025/Laporan%20Stok%20Harta%20Tanah%202025.pdf (NAPIC, Jabatan Penilaian dan Perkhidmatan Harta)
- Gross Domestic Product (GDP) by State, 2025 — https://www.dosm.gov.my/uploads/release-content/file_20260701120804.pdf (Department of Statistics Malaysia)
- Minimum Wages Order 2024, P.U.(A) 376 — https://gajiminimum.mohr.gov.my/wp-content/uploads/PUA%20376.pdf (Ministry of Human Resources)
- EPF Third Schedule, effective from 1 October 2025 — https://www.kwsp.gov.my/documents/d/guest/third_schedule_from_-1-october-2025 (KWSP)

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Source of truth: https://github.com/negaraku-md/NegaraKu.md
License: CC BY-SA 4.0