Counting Blessings

Malaysia

Economic News

22 Jul 2010
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New initiatives were introduced last week as part of a government programme to improve the ease of doing business and shorten what has been considered a lengthy process for obtaining permits and business registration.



The initiatives are the products of a task force called Pemudah. The organisation, established last February, is made up of senior civil servants and members of private sector boards. It was given the mandate to propose measures to improve procedures, regulations and existing laws, and its first task was to cut red tape to make licensing "painless and seamless" for investors and foreign and local businesses.



The World Bank's recent Doing Business 2008 report ranked Malaysia 24th in the world in the ease of doing business. By the turn of the decade, through the implementation of improved application procedures, the task force hopes to move the country to a top 10 ranking.



There are currently 40,000 skilled expatriate workers in the country. It used to take between four and five months for an employer to get through the process to hire an expatriate as it involved the filling out of multiple forms and waiting for approval from various government departments and agencies. A new system that will feature the establishment of one-stop application centres according to the type of employment being covered was also introduced. The target set for an expatriate posting application to be processed will now be no more than 10 working days.



In addition to speeding up the processing time for expatriate work posts, the length of the permits themselves, which in the past were capped at a maximum of three years, have been extended to five- or ten-year periods. In addition, business travel visas, which in the past were limited to three months, have been extended to six months.



The second main initiative introduced by Pemudah is the establishment of a 'Business Licensing Electronic Support Services" (BLESS) system, which serves as a single online channel aimed at streamlining the process of business licence applications. The aim of the system is to dramatically reduce the average approval time for the issuance of business licences. The time for new licences is expected to be shortened from three days to one hour; renewal of license registration from one day to fifteen minutes; and approval of company name and incorporation from five days to one.



BLESS will be rolled out in stages according to the needs of the sector being addressed. The first will be manufacturing, with a new application system to be fully implemented in November. Under the new regime, the entire approval process for a manufacturing licence should drop from 59 days to a maximum of 23. In mid-December, the programme will be ready to support the hotel industry. In place of the 15 permits that were required in the past to get a licence for a new hotel, only a single permit will be required.



Prime Minister Abdullah Ahmad Badawi, last week applauded the results of the task force, saying an improved public delivery system was essential for Malaysia's success. Badawi said, "All of this will reduce corruption and the tendency to ask for bribes to speed up processes. At the same time, there will be less cost in doing business, less frustration and less backlog, so there are good effects for all those concerned."



While Malaysia still has a long way to go before reaching its goal of being number 10 in the World Bank's Doing Business ranking, the new initiatives are a step in the right direction. Many were sceptical that a task force established to improve the public delivery system would be able to come up with tangible improvements in just eight months. Regardless of whether the ranking goal is reached, should the task force continue to simplify and speed up application procedures in a number of pivotal areas, its efforts should go a long way to attracting greater foreign and local investment.

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