How to start a car rental business in Malaysia
Last checked 5 October 2026
Renting out cars looks simple: buy a car, post it on WhatsApp, collect the money. To run it properly you need a licence, the right insurance and a record of every rental. This guide puts the steps in order.
Who licenses rental cars
In Peninsular Malaysia, self-drive rental cars (kereta sewa pandu) are licensed by the Ministry of Tourism, Arts and Culture (MOTAC). In Sabah and Labuan, the licence comes from the Sabah Commercial Vehicle Licensing Board (LPKP Sabah). In Sarawak, ask the state licensing authority before you start.
Renting out a private car without a licence puts you outside the law, and your insurer may refuse a claim.
The steps with MOTAC
- Register a private limited company (Sdn Bhd) with SSM. MOTAC licenses companies, not individuals.
- Get a domestic tourism business licence through MOTAC's online licensing system, SPIP (spip.gov.my). There are paid-up capital and office premises requirements; check the current figures with MOTAC.
- Apply for the self-drive rental car (KSP) licence with Form 2 at your MOTAC regional licensing office. MOTAC's guideline lists a RM50 processing fee per application and about 35 days when the application is complete.
- Prepare what MOTAC asks for, such as your latest audited accounts, 3 months of bank statements or a financing letter, and your current rental agreement.
- Once approved, license each car and insure it for rental use before the first customer drives it.
Insurance
A normal private car policy usually does not cover renting the car out. Tell your insurer the car is for self-drive rental and get cover that allows it. Note the excess you pay on each claim, and write that amount into your rental agreement so the renter knows what they owe after an accident.
The paperwork for every rental
- A signed rental agreement.
- A copy of the renter's IC or passport and driving licence.
- Photos of the car, mileage and fuel at pickup and at return.
- A receipt for the rental and the deposit, and a record of when the deposit went back.
Once the cars are moving
With more cars, staff and agents, the hard part is knowing which car is free before someone says yes to a customer, and adding up each agent's commission at month end. Keep one shared booking calendar from day one, so nobody double-books a car.
Official sources
This guide is general information, not legal advice. Rules and fees change; confirm with MOTAC or your state licensing board before you apply.