Malaysia has been one of the big movers in the latest World Bank
survey on the ease of doing business, moving up six rungs on the
international ladder to be ranked 12th overall. However, making it
easier to obtain construction permits and start a business, two areas
signalled out for improvement, will help the country achieve its goal of
breaking into the top 10.
The annual study aims to provide an objective measure of business
regulations for local firms and give an indication of the progress in
facilitating private sector development. In the 2013 edition, released
on October 23, Malaysia further consolidated its reputation for economic
reform, building on its performance in 2011 when it moved from 23rd to
18th place. The improvement in the rankings puts Malaysia behind only
Singapore, Hong Kong and South Korea in Asia, and ahead of regional
heavyweights Japan and China.
The survey, titled “Doing Business 2013”, saw Malaysia improve its
competitiveness in a number of areas, including registering property and
trading across borders. The country continues to be ranked first
globally in terms of gaining access to credit, and it also won accolades
for the judicial network protecting investors, where it came in fourth
among the 185 countries surveyed.
Recognition of the strong performance will help to further promote
development and investment, said Annette Dixon, the country director for
Malaysia at the World Bank. “This will help the private sector drive
growth, particularly if Malaysia can build on its success by continuing
to tackle long-term challenges, such as improving the quality of
education,” Dixon said in a statement accompanying the release of the
report.
According to Yeah Kim Leng, the group chief economist at RAM
Holdings, a financial research firm, the improved business environment
will help maintain Malaysia’s high profile as a prime investment
destination. “It enhances business sentiment and confidence,” he said on
October 24. “If the improvement is sustained, what we will likely see
is an increase in business dynamism and a higher level of business
activity.”
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Mustapa Mohamed, the minister of international trade and industry,
said that the findings of the study confirmed Malaysia’s competitiveness
as an economy, and reflected the successful implementation by the
government to improve the business environment, making it conducive for
sustained economic growth. The next step, according to the minister, is
putting in place further reforms that should move Malaysia even higher
up the rankings. He did acknowledge, however, that the task would be a
difficult one, given the competitive nature of the global economy.
“Our objective is to achieve a top-10 position in the World Bank’s
rankings. Getting there will strengthen our position as a destination of
choice for local and foreign investors,” Mustapa said. “This is with
new competitors constantly emerging and economic uncertainties globally.
It is apparent that more needs to be done in the shortest time possible
if we are to stay ahead.”
While the study very much stressed the positives, it also detailed a
few areas of improvement that will have to be dealt with before Malaysia
can break into the higher rankings. Despite the government making it
easier to obtain construction permits, it still placed only 96th overall
in this category. There is also room for improvement in the ease of
starting a business, in which was Malaysia ranked 54th this year.
Two state agencies, the Special Taskforce to Facilitate Business
(Pemudah) and the Performance Management Delivery Unit (Pemandu), have
been tasked with addressing these issues, as well as developing
strategies to promote best bureaucratic and administrative practices,
with Pemudah in particular working closely with the private sector to
cut red tape.
In an opinion piece carried by The Malay Mail on October 26, Ramon
Navaratnam, the chairman of the Centre of Public Policy Studies, an
independent think tank within the Asian Strategy and Leadership
Institute, said the World Bank study did not cover issues such as public
services or the non-business sectors of society. Improvements in the
provision of services in areas such as health, education and social
welfare also need to be addressed when considering the state of the
economy.
“The best way forward is for the public sector to adopt further best
practices, forced by global competition to perform more competitively
all the time or face the prospects of losing its profits and business
opportunities for growth,” he said.
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