Malaysia further improves the ease of doing business
Published on: Thursday, October 30, 2014
KUALA LUMPUR: A new World Bank's report shows that Malaysia has improved significantly over the years in the ease of doing business and is now ranked first among emerging economies in East Asia. In the new methodology for Doing Business (DB) 2015 adopted by the World Bank, Malaysia is ranked 18 out of 189 economies, up two notches from the 20th position last year. In a video conference between the World Bank's head office in Washington DC and Asean countries on the DB launch today, the bank's official explained that starting this year, the ease of doing business ranking would be based on the 'distance to frontier' (DTF) score rather than percentile rank.
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Augusto Lopez-Claros, World Bank Global Indicators and Analysis Director, said DB 2015 changes comprised the revision of the ranking calculation, expansion of the city sample in large economies and broadening of the scope of indicator sets of getting credit, protecting minority investors, and resolving insolvency. "This year's report expands the data collected in three of the ten topics covered and rankings are now based on the DTF score. "The new methodology provides clarity on the improvements that countries need to make as they improve their competitiveness," Augusto said. The "frontier" represents the best theoretical score (i.e., 100) observed on each of the DB indicators. The DTF score shows the gap between an economic performance and the best performance on each indicator.
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Augusto said based on the new methodology, 80 per cent of the countries surveyed made improvement, 15 per cent deteriorated while five per cent unchanged. "For Malaysia, using this new methodology, the country's standing on the ease of doing business ranking improved from the 20th place in last year's DB report to the 18th place in this year's report," Augusto said.
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Comparing DB 2014 and 2015, Malaysia's DTF score improved from 76.84 to 78.83. Based on the report, at 18th position, Malaysia is ahead of countries such as Taiwan (19th), Switzerland (20th), Thailand (26th), Netherlands (27th) and Japan (29th). Malaysia ranked first among emerging East Asian economies and second in Asean after Singapore. At the Asian level, Malaysia was ranked fourth after Singapore, Hong Kong and South Korea. In Kuala Lumpur, the video conference, held at the Ministry of International Trade and Industry, was moderated by World Bank Senior Economist Frederico Gil Sander and chaired by Malaysia Productivity Corporation Director-General Datuk Mohd Razali Hussain. Bank Negara Malaysia representatives and senior government officials were present. The DB 2015 presents quantitative indicators on 10 areas of business regulations, namely starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, and resolving insolvency. Malaysia has made improvements in five of the DB 2015 indicators. Under the new methodology, Malaysia recorded the closest distance to the frontier for starting a business indicator, with the score of 94.90, against New Zealand which sets the frontier at 99.96. On starting a business in Malaysia, time required has been reduced to 5.5 days from six days previously, while on cost, which refers to percentage of income per capita, it reduced to 7.2 per cent from 7.6 previously. On dealing with construction permits, the number of procedures was reduced to 13 from 15, while the number of days reduced to 74 days from 130 days. On getting electricity, cost (percentage of income per capita) in Malaysia reduced from 49.1 per cent to 46.3 per cent. On registering property, the number of days reduced to 13.5 days from 14 days, and on resolving insolvency, the time taken reduced to one year from 1.5 previously, while recovery rate (cents on the dollar) improved to 81.3 from 48.9. Moving forward, the World Bank representative said in DB 2016, there will be further broadening of the scope of the five indicator sets, namely registering property, dealing with construction permits, getting electricity, paying taxes and enforcing contracts. Asked on areas of focus in going forward, Mohd Razali said all areas were equally important in order for Malaysia to improve further the ranking. "In the next meeting with Pemudah in November, matters pertaining registering property and getting credit could be among the areas of focus," he said. Pemudah, a high-powered task force to address bureaucracy in business-government dealings set up by the government in 2007, is co-chaired by the Chief Secretary to the Government Tan Sri Dr. Ali Hamsa and Federation of Malaysian Manufacturers President Datuk Saw Choo Boon. Stay up-to-date by following Daily Express’s Telegram channel.
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