Malaysia slips one spot in World Bank ease of doing business ranking despite higher score

KUALA LUMPUR: Malaysia slipped to 24th position this year from 23rd position last year in the World Bank Group’s ease of doing business ranking despite an improvement in its score.
In the World Bank’s Doing Business Report 2018 (DB 2018) released today, Malaysia’s Distance to Frontier (DTF) score improved by 0.96 to 78.43 this year from 77.47 last year. It is one of the 11 economies out of the top 25, to record an improvement.

The DTF score shows the distance of each economy to the “frontier,” which represents the best performance observed on each of the indicators across all economies in the Doing Business sample since 2005.

Minister of International Trade and Industry Datuk Seri Mustapa Mohamed said the slight drop in ranking despite the improved DTF score indicates that other countries have been successful in implementing deeper reforms at a much faster pace.

“We need to do more and move faster in pushing through further reforms to improve our business regulatory environment,” he said in a statement today.

The report highlighted three business reforms enacted by Malaysia over the past year in strengthening access to credit through the new Companies Act 2016 that establishes a modern collateral registry; strengthened minority investor protection by requiring greater corporate transparency; and improved infrastructure facilities at Port Klang, easing handling processes at the terminal and facilitated import and export processes.

Malaysia’s highest DTF score was for the “Getting Electricity” indicator with a score of 94.33 and ranked 8th. For the other nine indicators included in the ranking, Malaysia achieved DTF scores of at least 80 in five of them. This was for starting a business; trading across borders; dealing with construction permits; getting credit and protecting minority interests.

The World Bank also noted that Malaysia achieved the maximum score of eight for the “depth of credit information” index (under the “getting credit” indicator) for the second consecutive year and maximum score of 10 for the “extent of disclosure” index (under the “protecting minority investors” indicator).

“Malaysia retains its spot among the world’s top 25 economies on the Doing Business measures. As the government continues to strengthen the business regulatory framework, it is important to focus on the areas where small and medium firms face difficulties, such as starting a business,” World Bank country manager in Malaysia Faris Hadad-Zervos said.

Its operations analyst Dorina P. Georgieva said in the area of “Starting a Business”, Malaysia’s DTF score of 83.78 is already quite high but there is room for improvement in reducing the number of procedures and number of days required to incorporate a business.

“Paying Taxes is another area where there is room for improvement. At 188 hours, the time taken on average to prepare, file and pay taxes is still significant and Malaysia could continue to make improvements to reduce time. Malaysia ranks 73rd in this indicator.

Overall, DB 2018 ranked New Zealand as the most business friendly globally, ahead of Singapore, Denmark, South Korea and Hong Kong.

Within Asean, Malaysia was ranked second after Singapore and ahead of Thailand, Brunei and Vietnam. In the Asian region, Malaysia maintained its fourth position, behind Singapore, Hong Kong and Taiwan.

The three economies that improved the most across three or more areas measured during the data collection period (June 2, 2016 till June 1, 2017) are Brunei (ranked 56th), Thailand (26th) and Malawi (110th).

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