Foreign investment in local construction contractors is limited to 30%. Foreign contractors, i.e. companies incorporated outside of Malaysia or where FDI exceeds 30%, are allowed to participate in the construction market subject to meeting a minimum capital requirement (RM750K) equivalent to that of grade-7 'local contractors'. Grade-7 is the highest possible grade. Grade-7 contractors are allowed to carry out all types of construction works irrespective of their size in monetary terms. Grade-6 contractors, for instance, cannot carry out works exceeding RM10 million. A foreign contractor is required to obtain two different types of registrations: (1) a provisional foreign contractor registration for participating in tenders; and (2) a foreign contractor registration, which is issued on project-to-project basis after the foreign contractor is awarded the particular project, to be able to execute and undertake the specific construction project in Malaysia.  In addition, foreign participation in construction companies undertaking government works is limited as follows: (i) foreign shareholding is not permitted in companies carrying out public construction work tenders up to RM30 million; (ii) for tenders between RM30-50 million, foreign shareholding cannot exceed 30% and the Board and management of the company must be composed 100% by Malaysian citizens; (iii) for tenders above RM50 million, foreign sahreholding cannot exceed 49% and the majority of Board members, management and employees must be Malaysian citizens.

For the purposes of the OECD FDIRRI, it is assumed that the restrictions on foreign participation in government works affects solely the market for 'civil engineering' works,  which is typically government-driven. In respect to the market for ''buildings and other specialised activities', which is largely driven by the private sector, it is considered that the existing separate registration rules (local vs. foreign contractors) leads to a de facto market segmentation, limiting the share of the market that 'foreign contractors' are entitled to participate  - i.e. in practice, foreign contractors are constricted to participating only in the market for tendered projects.
"PART VI - REGISTRATION AND ACCREDITATION OF CONTRACTORS  
Registration of contractors  
25. (1) No person shall carry out or complete, undertake to carry out or complete any construction work or hold himself out as a contractor, unless he is registered with the Lembaga and holds a valid certificate of registration issued by the Lembaga under this Act.
(2) Every certificate of registration shall be in the prescribed manner and form. 
(3)  The Lembaga may, for the purpose of the registration of contractors, impose such conditions as it thinks fit. [...]" (MALAYSIA CONSTRUCTION INDUSTRY DEVELOPMENT BOARD ACT No. 520 of 1994, as amended)
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"[...] 5.4 Listed local construction companies having foreign equity/participation – refusal on renewal registration application
5.4.1 The issue
Under the CIDB's Registration Requirements and Procedure, local contractor means a company incorporated in Malaysia which has a local equity holding of not less than seventy per cent (70%). Foreign equity from citizens of ASEAN countries are permitted but shall not exceed fifty-one per cent (51%) of the total paid up capital or accumulated capital. Because of the above ruling, CIDB declined renewal registration application made by locally incorporated listed construction company whose foreign equity holding exceeds 30 percent (30%) at the point of applying for renewal registration [...]."(Malaysia Productivity Commission (2016), Reducing Unnecessary Regulatory Burdens on Business: Construction (May 2016), p. 76). 
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"B - Definition
Local contractor - Companies incorporated in Malaysia and having seventy percent (70%) local equity holdings and above, unless the equity holdings are set out in Appendix 8.
Foreign contractor - Companies incorporated in Malaysia or abroad and hold foreign equity holdings or foreign companies more than thirty percent (30%) and above unless the equity holdings are stated in Appendix 8.
[...]
D – PERAKUAN PENDAFTARAN KONTRAKTOR TEMPATAN (PPK) 
[...] Financial Eligibility [for local contractor]
The applicant shall possess and maintain a financial source sufficient during the duration of their registration. Minimum financial limit (Paid capital / accumulated capital) that the applicant must possess is as in Table E. [Maximum RM750,000.00 for Grade 7 contractors, i.e. those licensed to participate in ternders or undertake construction works without any size limitations. For information, Grade 6 contractors are limited to projects under RM10,000,000.00]
[...]
E - GOVERNMENT WORK CERTIFICATE (SPKK)
[...] 7.0 Terms of Use for Government Procurement Certificates (SPKK)
7.4 Government Procurement Value Limit for Local Equity / Local & Foreign Equity Contractors:
(a) Construction contractor companies with 100% local equity can participate in tenders according to the limit of the working value in the grades and categories registered;
(b) Local G7 grade companies with local equity of at least 70% can participate in tenders exceeding 30 million;
(c) Malaysian companies listed on Bursa Malaysia, those companies incorporated and incorporated in Malaysia by a Malaysian citizen on condition that the holding of foreign individual shares does not exceed thirty percent (30%) and the Board, management and employees comprise one hundred percent (100% by Malaysian citizens. The company can participate in tender between RM30 million and RM50 million;
(d) A joint venture company incorporated in Malaysia (whether or not listed on Bursa Malaysia or not) provided that foreign equity holdings are not more than forty-nine percent (49%) and the majority of Board members, management and employees are Malaysian citizens. The company can participate in tenders above RM50 million.[...]
[...]
H - REGISTRATION AS A FOREIGN CONTRACTOR
"[...] Foreign contractors must apply for Temporary Registration Certificate before joining any tender in Malaysia
Conditions of Registration [...]
c) Have a minimum financial source of RM750,000.00 / equivalent with the value of the home country.
[...]
Appendix 8
Foreign Equity
1. Permissible foreign equity is not more than thirty percent (30%) of total paid-up capital or cumulative capital
2. Foreign equity among ASEAN countries is permissible but not exceeding fifty one per cent (51%) of the total paid - up capital or accumulated capital." (CIDB's Registration Requirements and Procedure, July 2018 [google translation])
MALAYSIA CONSTRUCTION INDUSTRY DEVELOPMENT BOARD ACT No. 520 of 1994, as amended
Malaysia Productivity Commission (2016), Reducing Unnecessary Regulatory Burdens on Business: Construction (May 2016), p. 76.
Construction Industry Development Board's Registration Requirements and Procedures, July 2018 [google translation]
[<a href="https://lom.agc.gov.my/ilims/upload/portal/akta/LOM/EN/Act%20520%2024.5.2017.pdf">Act</a>],[<a href="http://www.mpc.gov.my/wp-content/uploads/2016/04/Final-Draft-Report-Construction-23_2_16.pdf">Report</a>],[<a href="https://www.cidb.gov.my/wp-content/uploads/2022/10/Keperluan-dan-Prosedur-Pendaftaran.pdf">Procedures</a>]