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Malaysia continued its efforts to improve the business climate for local entrepreneurs, enacting two business reforms during the past year, says the World Bank Group’s latest Doing Business report.
Malaysia is one of 17 economies that implemented reforms in the East Asia and the Pacific region in the past year; the two reforms being strengthening of credit reporting, and making it easier to pay taxes.
Credit scores’ reporting was strengthened by providing consumer credit scores, which earned Malaysia a perfect score on the depth of credit information index.
Tax payments were made easier by introducing an online system for filing and paying goods and services tax, which means it takes a medium-sized company only nine payments to comply with taxes, versus 13 payments in the previous year.
Malaysia continued to maintain its strong performance in several Doing Business areas:
- Among the top 15 performers in Dealing with Construction Permits – It takes only 79 days to complete requirements to obtain a construction permit, compared to 156 days globally.
- Third best economy in the world in terms of protecting minority investors.
- One of the top 10 economies in the world in terms of Getting Electricity – It takes 31 days to get connected to the electrical grid, compared to an average 76 days in the OECD high-income region.
- Performs well in the Paying Taxes indicator – It takes about 5 hours to comply with a corporate income tax audit – compared to the regional average of 18 hours.
Faris H. Hadad-Zervos, country manager, World Bank Group Global Knowledge and Research Hub in Malaysia, noted the government is working towards improving the business regulatory environment.
Neighbour Singapore moved up to second globally, while Hong Kong took the fourth spot.
Countries with most improvement in labour legislation
The most HR-relevant aspect of the report are the trends in labour legislation, where there wasn’t much Asia representation, with the most standout change being Myanmar introducing a national minimum wage.
The following were the major development in labour legislation:
- Alteration of hiring rules: Norway amended the legislation to allow the use of fixed-term contracts for permanent tasks. Myanmar introduced a national minimum wage and São Tomé and Príncipe introduced a minimum wage for the private sector.
- Amendment in regulation of working hours: Cyprus and Hungary changed the legislation to allow stores to be open on Sundays. Kazakhstan reduced the premium for work on weekly holidays.
- Change in redundancy rules and cost: Kazakhstan eliminated the requirement to reassign an employee to a different position before making the employee redundant. The Netherlands introduced severance pay for redundancy dismissals for employees with at least two years of continuous employment. Zimbabwe significantly reduced the severance package for redundancy dismissals.
- Reform in legislation regulating worker protection and social benefits: The Democratic Republic of Congo enacted a law that prohibits gender discrimination in hiring. Liberia established equal remuneration for work of equal value. Cabo Verde introduced an unemployment insurance scheme.
Ease of doing business in Singapore (ranked second globally)
- Singapore made dealing with construction permits easier by streamlining procedures and improving the online one-stop shop.
- The nation made it easier to transfer a property by introducing an independent mechanism for reporting errors on titles and maps.
- Singapore made paying taxes easier by introducing improvements to the online system for filing corporate income tax returns and VAT returns.
- The social security contribution rate paid by employers increased and the rebate of 30% on vehicle tax expired.
Ease of doing business in Hong Kong (ranked fourth globally)
- Hong Kong SAR made starting a business less costly by reducing the business registration fee.
- The state also streamlined the processes of reviewing applications for new electrical connections and also reduced the time needed to issue an excavation permit.
Lead photo / 123RF