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Reform trends and
options for Malaysia
Sylvia Solf
Justin YapOctober 31st, 2007
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Global re form t rends: East ern European andCent ra l As ian count r ies re fo rmed t he m ost
Countries with at least one positive reform in 2006-7 (%)
E. Europe+ Central
Asia
78.6%
62.5%
South Asia
OECD
62.5%
Middle East+ N. Africa
Sub-Saharan Africa
East Asia+ Pacific
Latin America+ Caribbean
35.5%
58.8%
52.2%
45.8%
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East ern Europe surpassed East As iaon t he ease of do ing bus iness
Average rank, ease of doing business
22
76 77
96
107
136
87
High income:OECD Europe &CentralAsia Ea stAsia&Pacific La tinAmerica &Caribb e an Middle East&NorthAfrica So uth Asia Su b-Saharan Africa
High incomeOECD
Latin America&
Caribbean
East Asia &Pacific
MiddleEast &
North Africa
EasternEurope
& Central Asia
South Asia Sub SaharanAfrica
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Where does Malays ia st and in eac h t op ic ?
Topic Malaysias Rank Worlds best
Starting a business 74 Australia
Dealing with licenses 105St. Vincent & the
Grenadines
Employing workers 43 United States
Registering property 67 New Zealand
Getting credit 3 United Kingdom
Protecting investors 4 New ZealandPaying taxes 56 Maldives
Trading across borders 21 Singapore
Enforcing contracts 63 Hong Kong, China
Closing a business 54 Japan
http://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPG8/14/2019 Azuddin Jud Ismail - Doing Business in Malaysia
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Inves t o rs benef it f rom s t rong prot ec t ion
Disclosure requirements for related party transactions are among theworlds strictest
Disclosure Index
Director Liability IndexShareholder Suits Index
Total Investor Protection Index
Malaysia
Hong Kong, China
Singapore
109
7
8.7
http://upload.wikimedia.org/wikipedia/commons/0/01/NYSE-floor.jpghttp://upload.wikimedia.org/wikipedia/commons/0/01/NYSE-floor.jpghttp://upload.wikimedia.org/wikipedia/commons/0/01/NYSE-floor.jpghttp://upload.wikimedia.org/wikipedia/commons/0/01/NYSE-floor.jpghttp://upload.wikimedia.org/wikipedia/commons/0/01/NYSE-floor.jpghttp://upload.wikimedia.org/wikipedia/commons/0/01/NYSE-floor.jpghttp://upload.wikimedia.org/wikipedia/commons/0/01/NYSE-floor.jpghttp://upload.wikimedia.org/wikipedia/commons/0/01/NYSE-floor.jpghttp://upload.wikimedia.org/wikipedia/commons/0/01/NYSE-floor.jpghttp://upload.wikimedia.org/wikipedia/commons/0/01/NYSE-floor.jpghttp://upload.wikimedia.org/wikipedia/commons/0/01/NYSE-floor.jpghttp://upload.wikimedia.org/wikipedia/commons/0/01/NYSE-floor.jpghttp://upload.wikimedia.org/wikipedia/commons/0/01/NYSE-floor.jpghttp://upload.wikimedia.org/wikipedia/commons/0/01/NYSE-floor.jpg8/14/2019 Azuddin Jud Ismail - Doing Business in Malaysia
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Col lat e ra l and bank rup tc y law s suppor t
acc ess t o c red it
1 0 1 0
9 9 9
8 8 8
7 7 7
Hon
gKo
ng,China
Unite
dKin
gdom
Sing
apore
New
Ze
alan
d
Australia
Malays
ia
Denm
ark
Ir
elan
d
United
Stat
es
Can
ada
Ic
elan
d
Malaysia compared to global top 10 in ease of Doing Business
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Malays ia s re form s im proved ease of do ingbusiness in 2 areas
1.China2.Fiji
3.Indonesia
4.Lao PDR
5.Malaysia
6.Micronesi
a
7.Mongolia
8.Thailand
9.TimorLeste
10.Tonga
11.Vanuatu
12.Vietnam
Starting a
business x Dealing with
licenses
Employing
workers
Registering
property x
Getting credit Protecting
investors Paying taxes
Trading
across
borders
Enforcingcontracts Closing a
business
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Reform s sped bus iness s t ar t -up
Time decreased by 6 days dueto greater efficiency inprocessing name search
applications and companyregistration certificates at CCM
Singapore, 5
Hong Kong, China, 11
Mongolia, 20
Malaysia, 24
Thailand, 33
China , 35
Taiwan, China, 48
Vietnam, 50
Singapore HongKong,China Mongolia Malaysia Thailand China Taiwan,China Vietnam
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and reduc ed t im e t o pay tax es
DB 2007 DB 2008
T
ime(hours
peryear)
190 hours
166 hours
Less administrativeburden thanks toautomated tax filing andpayment system.
Finance Act of 2006 willfurther improve Malaysiasranking in paying taxes.
The Act decreases theincome tax rate forbusinesses in two stages.Effects will be seen in next
years report.
What nex t ? Adm in is t ra t ive re forms popular and
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31
39
27
8
10
10
14
15
22
24
Starting a business
Paying taxes
Registering property
Trading across borders
Getting credit
Getting licenses
Enforcing contracts
Closing a business
Protecting investors
Employing Workers
Number of positive reforms
Easier entry regulations, simpler taxsystems, faster property transfers
among the most popular reforms in
the world (2006/2007)
What nex t ? Adm in is t ra t ive re forms popu lar and
e f fec t i ve
O t i t i f f i M l i
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Oppor t un i t ies fo r re form in Malays ia:Reduc ing s t ar t -up c ost
18.1
3.1
2.7
0.9
0.8
0.8
0.8
0.7
0.3
0.1
0
0 2 4 6 8 10 12 14 16 18 20
Malaysia
HongKong,China
Iceland
Canada
Singapore
UnitedKingdom
Australia
UnitedStates
Ireland
NewZealand
Den markDenmark
New Zealand
Ireland
United States
Singapore
United Kingdom
Australia
Canada
Iceland
Hong Kong, China
Malaysia
Cost to start a business (% income per capita)
Sim pl i fy ing l ic ens ing procedures for bu i ld ing a
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67
1 1 1 1
1 4
1 6
1 81 9 1 9
2 3
2 5
Denm
ark
NewZ
ealand
Sing
apore
Ireland
Canad
a
Australia
Ic
elan
d
United
Stat
es
Unite
dKin
gdom
Hong
Kong,
China
Ma
laysia
Sim pl i fy ing l ic ens ing procedures for bu i ld ing a
w arehouse (ongo ing re form)
Number of procedures to build a warehousein top 10 economies and Malaysia
Deal ing w i t h l ic enses in Singapore:
http://upload.wikimedia.org/wikipedia/commons/6/64/BuildingSite.jpg8/14/2019 Azuddin Jud Ismail - Doing Business in Malaysia
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Deal ing w i t h l i c enses in Singapore:
Rank ed 5 t h i n t he w or ld
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2
4 59
1217
21
3842
54
144
New
Zealand
Icelan
d
Australia
Singap
ore
U
nite
dStat
es
Cana
da
Unite
dKing
dom
Irelan
d
Denm
ark
HongKong,
China
Malay
sia
Speeding up proper t y t i t le t ransfer
Number of days to register propertyin top 10 economies and Malaysia
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Regis t er ing proper t y in 2 proc edures, 2 days
1. Obtain certified copies of companies documents from Ministry of Commerce2. Parties submit application for registration at the Land Office
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How t o jump 14 p lac es by re form ing 4 a reas
Starting a business : from rank 74 to 16
Introduce electronic name search/reservationIntroduce single company ID for commercial,tax, and social security registration and mergeregistrations
Implement lower flat registration fees
Dealing with licenses : from rank 105 to 4Consolidate planning and building permitsImplement one stop shop for approvals
Conduct joint inspections/delegate inspectionsto private professionals (architect/engineer)
Registering property : from rank 67 to 14
Simplify formalities at the stamp officeIntroduce flat fee and eliminate valuation visitsImprove efficiency of land registry
Paying taxes: from rank 56 to 16Allow for online filing of social security andlabor contributions
Malaysias newglobal rank: 10
Why does i t m at t er? Bus iness f r iend ly regu la t ion
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Why does i t m at t er? Bus iness f r iend ly regu la t ionleads t om ore reg is tered bus inesses and s tar t -ups
Countries ranked by ease of doing business, quintiles
Business Density(registered firms per capita)
Business Entry(new firms in % of registered firms)
Source: Doing Businessdatabase
Easiest Most difficult Most difficultEasiest
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Whic h m eans more form al em ployment
Source: Doing Businessdatabase, WDI
Informal Sector(% of GDP)
Unemployment(% of labor force)
Easiest Most difficult Most difficultEasiest
Countries ranked by ease of doing business, quintiles
Thank you
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