Malaysia in Top 20 Most Business-Friendly Economies

By Ali Zara

Putrajaya. Photo credit: Raffaell / / CC BY-NC-ND

Small and medium enterprises as well as entrepreneurs can take heart in the fact that Malaysia has made it even simpler and less costly to do business locally. The World Bank has acknowledged the country’s significant improvements in regulatory processes, putting it among the top 20 economies in the world with the most business-friendly regulations.

With that, Malaysia retains its position among the top 20 economies worldwide and the first among emerging economies in East Asia on ease of doing business.

Ranked 18th out of 189 economies surveyed, the World Bank Group’s latest “Doing Business 2016: Measuring Regulatory Quality and Efficiency” report (DB 2016) places Malaysia ahead of Switzerland (26th), France (27th), the Netherlands (28th), Japan (34th), United Arab Emirates (31st), Thailand (49th), China (84th) and India (130th).

Within Asean, Malaysia is second, behind Singapore, which remains the easiest place in the world to do business for the 10th consecutive year. Malaysia is also among the top five Asian economies ranked in the top 20 of DB 2016 after Singapore (1st), South Korea (4th), Hong Kong (5th) and Taiwan (11th).

Malaysia scored high in several indicators based on the “distance to frontier” or DTF measurement in which the score captures the gap between an economy’s performance and a measure of best practice across the entire sample of 36 indicators for Doing Business topics.

DB 2016 has identified Malaysia as one of the economies that “set the frontier” for the Getting Electricity indicator, scoring the maximum eight on the zero-to-eight scale.

DB 2016 has recognized utility company Tenaga Nasional Bhd’s initiative to set up a web page with a bill calculator, making it easier for customers to estimate their future electricity costs based on the voltage level and subscribed capacity of their connection, as well as their estimated monthly consumption during peak and off-peak periods.

Malaysia was also credited for making tax payment easier and less costly for companies by making e-filing mandatory as well as enhancing its electronic services by making it compulsory for employers with 50 or more employees to contribute to the Employees Provident Fund using e-filing system.


International Trade and Industry Minister Datuk Seri Mustapa Mohamed attributed the high ranking accorded by the World Bank to the work of Pemudah, the joint public-private sector Special Task Force to Facilitate Business, as well as government efforts to resolve operational inefficiencies and review procedures and regulations via the Government Transformation Programme and the Economic Transformation Programme.

Driven by Pemudah, the close collaboration at the most senior level of the government and the private sector enables both sides to highlight blockages in the system and align policies and procedures accordingly.

To make Malaysia a preferred investment destination, Pemudah will continue to work with International Finance Corporation of the World Bank to examine the target areas for improvement and to collaborate with the government and private sector to improve regulatory quality and efficiency to enhance ease of doing business in the country.

Others Stepping Up Reforms, Too

Mustapa added that as Malaysia competes for a larger slice of investments in the highly complex global economy, it has to keep upping its game.

World Bank country manager for Malaysia, Faris Hadad-Zervos, said there were many improvements in DB 2016 which would benefit investors and entrepreneurs who now have fewer hurdles to comply with and more resources to focus on their business. Even so, Malaysia could further improve its consistently strong business environment by reducing the procedures for getting construction permits and time taken to pay taxes.

Meanwhile, a look through DB 2016 shows other emerging economies are also stepping up their pace of business-friendly reforms.

Another Asean member state Vietnam, for instance, has achieved commendable improvements in ease of doing business. In the past, investors used to be afraid to put their money in the country because of fear that company management would misuse funds for personal benefit. The previous laws lacked clear rules for transparency and directors’ obligations, and the regulatory system governing companies was fragmented and opaque.

The country also lacked legislation regulating the securities market. These shortcomings spurred reform, namely a new law on securities and an updated law on enterprises, which together contribute to Vietnam’s overall ease of doing business ranking from 104 to 91.

Similarly, Myanmar has made starting a business easier by eliminating the minimum capital requirement for local companies and strengthening incorporation procedures. It has also facilitated the process to obtain a new electricity connection by reducing delays via few approvals, made trading across borders easier by reducing the number of documents required for exports and imports, and made paying taxes less costly for companies by reducing the corporate income tax rate.

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Layla Ebrahim

Must be easy just for locals only. I tried to start a business there recently. I had to close it down due to the regulations and scams. I am wondering how they changed the regulations exactly.

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