Open a Business on Electricity, Gas, Steam, Air Conditioning

Updated on Friday 18th January 2019

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The electricity, gas, steam and air conditioning supply sector in Malaysia is a developed one, which employs a large number of individuals and includes those companies that are engaged in generating, controlling and distributing electric power or gas, along with the provision of steam or air conditioning.
According to a report issued by the Department of Statistics Malaysia, the electric power generation, transmission, and distribution remain the largest contributors to the gross output out of all of the industry groups.
Our law firm in Malaysia can help investors interested in knowing more about the specific regulations and laws in this industry sector.

Types of services provided by electricity, gas, and steam and air conditioning companies in Malaysia

According to the Standard Industrial Classification, companies that offer electricity, gas, steam, and air conditioning supply in Malaysia are included in Section D and offer the following types of services:
  • electric power generation: companies included here have the highest gross output in the sector;
  • electric power transmission and distribution: companies involved in the distribution of electricity employ a high percentage of workers in Malaysia. 
  • gas manufacturing: a lower gross output compared to the previous category and a lower market share.
  • gaseous fuels distribution through main channels: this sector employs a lower number of people compared to electric power transmission and distribution.
  • steam and air conditioning supply: lower gross output, however, this category maintains a high number of individuals engaged.
Companies in the electric power generation, transmission and distribution are those companies that offer services for the transmission of electric power from the generating facilities, to the distribution centers and then to the end users. More than one company can be involved in the distribution chain.
Companies included in the manufacturing of gas and the distribution of gaseous fuels through the main lines also include those that handle gas marketers, those who arrange for the sale of natural gas to the distribution systems run by other companies. This category does not include those companies in Malaysia that provide the operation of gas pipelines over great distances, these are a separate type of business and are classified under the pipeline transport activities. Also excluded from this category are those activities related to water and sewage utilities. 
The steam and air condition supply group includes those companies engaged in the production, collection and distribution of steam and hot water used for heating or power as well as those companies engaged in the production and distribution of cooled air and chilled water and the production of ice (food and non-food cooling purposes). 
The electricity, gas, steam and air conditioning supply sector, as defined by the standard industrial classification of economic activities is a significant one, however, its size is not decisive. The dynamics of the market are given both by large and small companies involved in the distribution chain.
Each group division in this category includes several types of activities and one of our lawyers in Malaysia can give you more information on the classification of the business activities. These types of activities will require specialized licensing and businesses will be subject to the control regulations in a selected field, such as for those manufacturing gas and in some cases environmental issues need to be addressed and the companies need to comply according to the relevant laws.

Company formation in Malaysia

When opening a company in the electricity, gas, steam and air conditioning supply sector in Malaysia, it is important to determine the class of the operations, namely to establish the types of industrial activities the business will be involved in.
A company in the electric power generation, transmission, and distribution field can operate facilities used for the production of electrical energy (thermal, nuclear, hydroelectric, gas turbine, diesel, and renewable) but cannot produce energy by incinerating waste.
A company that manufactures gaseous fuels can be involved in their production and the blending of certain gases as well as their distribution and sale through main access points but cannot operate coke ovens, manufacture industrial gases or refined petroleum products, cannot be engaged in the wholesale of gaseous fuels or the retail sale of bottled gas and neither can it sell fuel directly. 
One of our company formation lawyers in Malaysia can give you more details about the description of the services as well as the limitations that apply for each type of business.