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Doing Business in Malaysia

Malaysia is ranked as the 23rd best place in the world by the World Bank according to its ease of doing business, and this ranking was listed in the latest Doing Business Report 2017 which was recently released. According to the International Trade and Industry Ministry in Malaysia, better known as MiTi, Malaysia was ranked 18th in the 2016 report but the ranking had to be revised to 22nd position because some changes in methodology had to be taken into account that year. This year, Malaysia ranked 23rd.

Within the ASEAN region however, Malaysia was ranked second to Singapore and ahead of other economies such as Thailand, Indonesia, Japan, China, France, Switzerland and India according to MiTi. Coming in second to Singapore shows that Malaysia is one of the top two countries in the world for doing business, as evident by the many international corporations that have already made a base of operations in this country.


The Decline in the Ranking

The reason for the decline in Malaysia’s ranking can be attributed to its drop in performance in the Starting a Business and Paying Taxes indicators, with the number of procedures required by investors who want to start for legally operate a company in Malaysia seeing an increase from six procedures to 8.5 procedures. The number of days it takes to start a business in Malaysia has also increased from seven days to a staggering 18.5 days.

The World Bank noted that starting a business in Malaysia has become slightly more difficult since companies are required to have an annual revenue of more than RM500,000 to register as a GST payer. However, on a more positive note, paying taxes in Malaysia has never been easier with the introduction of an online system for filing and paying GST taxes.


Doing Business in Malaysia Moving Forward

Moving forward, Malaysia is committed to addressing its weaknesses and making the country a much friendlier business environment to encourage more business growth within the country. Pemudah, a public-private sector special task force that facilitates businesses, is dedicated to identifying the areas that need improvement and to address those areas.

Malaysia also introduced its Companies Act 2016, whose purpose was to bring improvements in regard to the business registration process. The act is meant to simplify the incorporation process by dispensing multiple forms, common seals, memorandum and articles of association and making the appointment of a company secretary at the time of incorporation an optional choice. This move reduces the time and the cost involve in starting a business in Malaysia.

Nevertheless, despite the challenges, Malaysia is still recognized and continues to be recognized as a company with a business-friendly policy and a competitive economic environment and will continue to be among the top choices for investors who are looking to expand their growth into the ASEAN region. Malaysia has always been welcoming towards foreign investment and actively invites more investments into the country by offering a combination of incentives for foreign investments and it will continue to do so moving forward.