Ease of Doing Business in Malaysia in 2019

In the past few years, Malaysia has proved itself to be a welcoming economy which has turned itself into a sort of a powerhouse in Southeast Asia due to its strategic location as an economic corridor, abundance of natural resources, cost-competitive locale, and an educated workforce.

Being a powerhouse, it`s quite understandable that this nation in the heart of the south-east Asian nations is amongst the top 20 economies in the World Bank`s Report of Doing Business 2019, to be precise it is on the 15th position among 190 economies. The Doing Business Report takes into account several factors to analyze and measure the regulations that apply to domestic small and medium-sized companies through their life-cycle.

If you are looking to invest in Malaysia in 2019, there are many options that you might want to consider. Before, you commit yourself to setting-up a company in Malaysia, let`s dive into what makes Malaysia rank 15th on the Doing Business Report 2019.

Starting a Business

This indicator measures preregistration, registration, and post-registration formalities. So, for company formation in Malaysia, the most common type of entity is a private limited company. Even if you are not a resident of Malaysia, you can still incorporate and own 100% of a private limited company.This indicator also comprises of the time and the cost required to complete each procedure as well as the minimum paid-in capital. On this index, Malaysia scores 82.78 out of 100. This must boost your confidence in Malaysia.

Construction Permits

This indicator takes into account the time and cost required to obtain licenses and permits, utility connections, building quality, building regulations, safety mechanism in place, and insurance. Malaysia ranks 3 on this indicator out of 190 countries. Most of the parameters under this indicator do not take more than a few days (which must be such a relief for you if you are starting to venture in the business environment of Malaysia) such as submission of pre-construction notification only takes a day, inspection of final utilities also takes a day and obtaining a water connection only takes 3 days.

Getting Electricity

According to this indicator, which takes into account time and cost to obtain a permanent electricity connection for a newly built warehouse, reliability, price, and transparency of tariffs of electricity connection, Malaysia ranks 4 with a highly competitive score of 99.27 as the price of electricity per kilowatt per hour is just a meagre 11.6 US cents and on a scale of 0 to 8 in terms of reliability of supply and transparency of tariff index, Malaysia scores 8.

Malaysia is proving itself to be a prime example of one of the best places to conduct business.

Registration of Property

This includes time and cost involved in registering property and standard of land administration system which further includes the reliability of infrastructure, transparency of information available, resolution system in place in case of land disputes, geographic coverage, and access to property rights. Malaysia`s score is 27.5 out of 30 in terms of the quality of land administration. On the whole, Malaysia`s score is 80.38 out of 100 for this indicator.

Access to Credit

This indicator takes into account two very important factors-

  • Strength of the credit reporting system and
  • Efficacy of collateral and bankruptcy laws to facilitate lending.

It assesses these two on the basis of coverage, scope and accessibility of credit information available along with the degree to which borrowers and lenders are protected by laws and how such laws facilitate the lending process.

On this index, Malaysia has a score of 75 out of 100indicating that it has a strong enough credit system to ensure credit accessibility.

Protection of Minority Investors

This index considers the degree of protection that minority shareholders enjoy against the misuse of corporate assets by directors, governance safeguards in place for shareholder rights and corporate transparency.

On this index, Malaysia`s rank is a whopping second with a score of 81.67 out of 100. So, no more worries about being a minority shareholder in business investment as the Malaysian legislature is in place to provide you protection.

Tax Payments

Tax payments are important as these contribute to the government revenues that help in the development of a nation. The Doing Business report takes into consideration tax contributions, the administrative burden of these contributions and post-tax compliance (audit and refunds). For this indicator, the score of Malaysia is 76.06 out of 100.

Trade across Borders

This indicator takes into consideration the time and cost involved in the export and import of goods along with border compliance and document compliance. Malaysia`s score on this index is 88.47 out of 100.

If you are interested to reach corners of the vibrant Southeast Asian market then setting up a company in Malaysia would be an excellent start as it is located at the heart of Southeast Asia. It is at the crossroads of major sea routes that connect Asia to the rest of the world.

Contracts Administration

This indicator assesses the legal framework in place that helps resolve commercial disputes and evaluates whether an economy has adopted a set of good enough practices to promote efficiency of the legal system. Malaysia ranks higher than any of the economies of East Asia and the Pacific.

Dealing with Insolvency

This indicator evaluates the insolvency proceedings which lead to reorganization, liquidation or debt enforcement. It also determines the amount recovered by creditors as the result of an insolvency proceeding by making use of the lending rates from the International Monetary Fund and other relevant data from central banks and the Economist Intelligence Unit.

In Malaysia, the time and costs involved in such proceedings are much lower than other nations of East Asia.

Labour Market

This takes into account hiring contracts, working hours, lay-off rules, and quality of work. On these parameters Malaysia provides-

  • Minimum wage applicable to a worker- USD 231.7
  • Standard workday is of 8 hours
  • 6 is the maximum number of working days
  • 100% premium for work on weekly rest days
  • 50% premium for overtime work
  • Maternity leave is mandated by law
  • Minimum length of maternity leave is 60 days

According to the Doing Business Report 2019, Malaysia has implemented several business reforms to improve the business environment and make it more efficient and attractive.

Now your confidence level in Malaysia must be around 100, so start by selecting your Malaysia company name. Once you are done with selecting an appropriate name for your business, if you feel a need to have assistance for company registration in Malaysia then you may contact us. The experts at Business Setup Worldwide are always happy to help you out in your business ventures.

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About the Author

Nidhi.Dumian@bsworldwide.com's picture

Nidhi Dumian is a blogger by day and a cinephile by night. She also does digital marketing on the side. She is on a mission to make everyone realize that everyone is created equal albeit unique. She calls herself loony loopy loon on her official blog.