Malaysia Takes Further Steps to Improve Business Climate, Says Latest Doing Business Report

Stocks and Financial Services Press Releases Wednesday November 1, 2017 09:57
KUALA LUMPUR--1 Nov--World Bank

KUALA LUMPUR, October 31, 2017 — Malaysia continued to improve its business climate for local entrepreneurs, enacting three business reforms during the past year, says the World Bank Group's latest Doing Business report.

Released today, Doing Business 2018: Reforming to Create Jobs, finds that reforms of the past year were adopted in the areas of Getting Credit, Trading Across Borders and Protecting Minority Investors. In this year's ease of doing business global rankings, Malaysia is ranked 24, maintaining its fourth place in Asia after Singapore, Hong Kong SAR, China and Taiwan, China.

To improve access to credit, Malaysia has established a modern collateral registry. In addition, Malaysia made importing and exporting easier by improving the infrastructure, equipment and facilities at Port Klang, which triggered a reduction on the border compliance time for both export and import.

A further reform strengthened minority investor protections by requiring greater corporate transparency. This reform, on the information that companies must share in order to enter into transactions with interested parties, places Malaysia in 4th place globally in the area of Protecting Minority Investors.

Malaysia continues to maintain its strong performance in other Doing Business areas. For example, in the area of Getting Electricity, Malaysia is ranked 8th globally. This success is underpinned by the reliability of supply and the transparency of the tariff, the affordable cost to obtain an electricity connection and the streamlined process to obtain an electricity connection. It takes 31 days to get connected to the electrical grid in Malaysia, less than half of the average of 78 days across OECD high-income economies.

"Malaysia retains its spot among the world's top 25 economies on the Doing Business measures. As the government continues to strengthen the business regulatory framework, it is important to focus on the areas where small and medium firms face difficulties, such as starting a business," said Faris Hadad-Zervos, World Bank's Country Manager in Malaysia.

Over the past 15 years, the country has implemented 23 reforms improving business regulations, much higher than the per country average of 15 reforms in the East Asia and the Pacific region.

Malaysia performs well in the area of Dealing with Construction Permits, with a global ranking of 11 on this indicator. The time to complete all requirements to obtain a construction permit stands at 78 days now, from 285 days in 2006, and compares very favorably with the global average of 158 days.

Malaysia has an opportunity for further improvements in the area of Starting a Business, despite six reforms carried out in this area over the last 15 years. On the plus side, the country has eased new business registration by establishing a one-stop shop service and streamlining the registration process through the introduction of E-lodgment. In so doing, the time needed to register a new business has more than halved from 37 days 15 years ago to 18 days now, while the cost has been reduced from 33 percent of income per capita to 5 percent today.

Paying Taxes is another area where there is room for improvement. Over the years, reforms in this area have included making paying taxes easier by allowing electronic filing and payment system for corporate income tax and introducing a single-tier corporate income tax system. As a result, the number of payments required to comply with tax requirements has been significantly reduced from 35 in 2006 to eight at the present. However, at 188 hours, the time taken on average to prepare, file and pay taxes is still significant and the country could continue to make improvements in this area in order to cut time. Malaysia ranks 73rd globally in the Paying Taxes area.

The full report and its datasets are available at www.doingbusiness.org/data/exploreeconomies/malaysia.

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