azuddin jud ismail - doing business in malaysia

8/14/2019 Azuddin Jud Ismail - Doing Business in Malaysia

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Reform trends and

options for Malaysia

Sylvia Solf

Justin YapOctober 31st, 2007


2/19

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


4/19

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
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5/19

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
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6/19

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


7/19

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


8/19

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


9/19

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


10/19

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


11/19

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


12/19

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.jpg


13/19

Deal ing w i t h l i c enses in Singapore:

Rank ed 5 t h i n t he w or ld


14/19

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


15/19

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


16/19

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


17/19

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


18/19

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


19/19

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azuddin jud ismail - doing business in malaysia

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