Please follow the steps below to create a new pay element Compensation:
Go to the Payroll module.
Click Setup, Pay Element Setup, New.
Type the Pay Element ID.
Select Allowance, and click Next.
Select None of the above and click Next.
Select Standard Allowance, and click Next.
Select Free and click Finish.
Move over the Compensation Code to the right panel and Save.
Also see compensation for Malaysia.