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Malaysia October 27, 2016 Jean Arlet Dorina Peteva Georgieva Co-authors Global Indicators Group, Development Economics

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Page 1: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

Malaysia

October 27, 2016

Jean Arlet

Dorina Peteva GeorgievaCo-authors

Global Indicators Group, Development Economics

Page 2: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

I. Doing Business in Malaysia at a glance

II. Overview of indicator results

III. Looking ahead: best practices on selected indicators

Page 3: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

Doing Business in Malaysia is based on the feedback of about 200

professionals in Kuala Lumpur (city covered)

2

Number of contributors rose by +50% in past five years

Contributors include:- Private law firms and notaries

- Accounting firms

- Freight forwards and customs brokers

- Contractors and architects

- Utilities

- Government agencies

Examples of contributors- Ernst and Young

- Credit Bureau Malaysia

- Tenaga Nasional Berhad

- Energy Commission

- Freight forwards and customs brokers

- Customs Westport

Page 4: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

Malaysia performs better than its neighbors…

3

Rank by country

Page 5: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

…and better on average than OECD high-income economies

4

2

23

46

78

26

94 94

0

10

20

30

40

50

60

70

80

90

100

Singapore Malaysia Thailand China OECD high-income

Upper middle-income

East Asia andthe Pacific

Average DTF Score Rank

Page 6: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

0

10

20

30

40

50

60

70

80

90

100

Dis

tance

to

fro

ntie

r sco

re (

0-1

00)

Malaysia performs well thanks to a good performance across topics

Source: Doing Business database.

Note: The distance to frontier scores reflected are those for the 10 Doing Business topics included in this year’s aggregate distance to frontier score.

Average of highest 3 topic scoresAverage of all topic scoresAverage of lowest 3 topic scores

5

Page 7: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

Starting a business (112)

Dealing with construction permits (13)

Getting electricity (8)

Registering property (40)

Getting credit (20)

Protecting minority investors (3)

Paying taxes (61)

Trading across borders (60)

Enforcing contracts (42)

Resolving insolvency (46)

81

94

Malaysia’s rankings across topics can be misleading

6

Rankings and DTF scores across topics (Scale: Rank 190 center, Rank 1 outer edge)

Source: Doing Business 2017

84

76

75

80

79

82

67

62

Page 8: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

Regulatory improvements in Malaysia in the past decade have

resulted in tangible improvements

7

Dealing with the construction permitting

process now takes 28% of the time it did a

decade ago

Number of payments to comply with tax

obligations has been reduced threefold

0

5

10

15

20

25

30

35

40

2006 2016

Number of payments

0

50

100

150

200

250

300

2006 2016

Days to build a warehouse

Page 9: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

I. Doing Business in Malaysia at a glance

II. Overview of indicator results

III. Looking ahead: best practices on selected indicators

Page 10: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

Jan1 2 3 4 5 6 7

8 9 10 11 12 13 14

15 16 17 18 19 20 21

22 23 24 25 26 27 28

29 30 31

Starting a Business in Malaysia

Cost: 6.2% of

income per capita

Time: 18.5 days Procedures: 8.5

8.5

9

Paid-in minimum

capital: NONE

East Asia & Pacific average

0

2

4

6

8

10

12

Hong KongSAR, China

Singapore Malaysia China Indonesia

Procedures

East Asia & Pacific average

0

5

10

15

20

25

30

35

40

Hong KongSAR, China

Singapore Malaysia Indonesia China

Time, days

East Asia & Pacific average

0

5

10

15

20

25

Singapore Hong KongSAR,China

China Malaysia Indonesia

Cost (% of income per capita)

Page 11: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

In the past year, Malaysia made starting a business more difficult by requiring that

companies with an annual revenue of more than MYR 500,000 register as a GST payer.

Starting a Business: incorporation was made more difficult in terms

of steps and time required

10

0

2

4

6

8

10

12

14

16

18

20

Time (days) Procedures

DB2016 DB2017

Procedures added

Procedure 5: Open a Bank account in order to

register for GST

Agency: Local Bank

Net impact: no time added and free of charge

Procedure 6: Register for GST

Agency: Royal Malaysian Customs

Net impact: +11 days; free of charge

Page 12: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

Gender component: is the process of starting a business different for woman entrepreneurs?

- Approval from spouse required to own a business or leave the house?

- Documents or permission required by only one gender for company registration and operation, opening

a bank account or obtaining a national ID (since showing proof of ID is a normal requirement in

business registration).

Starting a Business: a gender component was added, resulting in

+0.5 procedure

11

No. Procedure Time to

complete

Cost

♀1

Net impact:

+0.5

procedure

Obtain husband's permission to leave the home

According to Islamic Family Law, Art. 59(2)(b), the woman must obtain

permission from her husband to leave her home.

[According to Islamic Family Law, Art. 59: (1) The Court may, subject to Hukum Syara',

order a man to pay maintenance to his wife or former wife. (2) Subject to Hukum Syara'

and confirmation by the Court, a wife shall not be entitled to maintenance when she is

nusyuz, or unreasonably refuses to obey the lawful wishes or commands of her

husband, that is to say, inter alia - (a) when she withholds her association with her

husband; (b) when she leaves her husband's home against his will; or (c) when she

refuses to move with him to another home or place, without any valid reason according

to Hukum Syara'. (3) As soon as the wife repents and obeys the lawful wishes and

commands of her husband, she ceases to be nusyuz.]. Source:

http://www2.esyariah.gov.my/esyariah/mal/portalv1/enakmen2011/Eng_act_lib.nsf/b3ac9

c218c8efdc4482568310022d8b3/8c3ddf4fb0c41c4d482569810025f17d?OpenDocument

Agency: Domicile

1 day

Net impact:

+0.5 day

N/A

Page 13: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

Dealing with Construction Permits in Malaysia

Building quality control index:

13 out of 15

Jan1 2 3 4 5 6 7

8 9 10 11 12 13 14

15 16 17 18 19 20 21

22 23 24 25 26 27 28

29 30 31

Feb1 2 3 4 5 6 7

8 9 10 11 12 13 14

15 16 17 18 19 20 21

22 23 24 25 26 27 28

29

Mar1 2 3 4 5 6 7

8 9 10 11 12 13 14

15 16 17 18 19 20 21

22 23 24 25 26 27 28

29 30 31

Cost: 1.4% of

warehouse value

Time: 79 days

Procedures: 15

15

12

East Asia & Pacific average

0

5

10

15

20

25

Singapore Hong KongSAR, China

Malaysia Indonesia China

Procedures

East Asia & Pacific average

0

50

100

150

200

250

300

Singapore Hong KongSAR, China

Malaysia Indonesia China

Time, days

East Asia & Pacific average

0

2

4

6

8

10

12

14

Malaysia Indonesia Singapore Hong KongSAR,China

China

Building quality control index (0-15)

Page 14: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

Jan1 2 3 4 5 6 7

8 9 10 11 12 13 14

15 16 17 18 19 20 21

22 23 24 25 26 27 28

29 30 31

Getting Electricity in Malaysia

Cost: 26.6% of GNI

per capita

Time: 31 days Procedures: 4

4

Reliability of supply

and transparency of

tariffs index: 8 out of 8

13

East Asia & Pacific average

0

1

2

3

4

5

6

Hong KongSAR, China

Malaysia Singapore Indonesia China

Procedures

East Asia & Pacific average

0

50

100

150

200

Hong KongSAR, China

Singapore Malaysia Indonesia China

Time, days

East Asia & Pacific average

0

2

4

6

8

Hong KongSAR, China

Malaysia Singapore China Indonesia

Reliability of supply and transparency of tariffs index (0-8)

Page 15: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

14

Registering Property in Malaysia

East Asia & Pacific average

0

10

20

30

40

50

60

70

80

Singapore Malaysia China Indonesia Hong KongSAR, China

Time, days

East Asia & Pacific average

0

10

20

30

Singapore Malaysia Hong KongSAR,China

China Indonesia

Quality of land administration index (0-30)

Jan1 2 3 4 5 6 7

8 9 10 11 12 13 14

15 16 17 18 19 20 21

22 23 24 25 26 27 28

29 30 31

Cost: 3.4% of property

value

Time: 13 days Procedures: 8

8

Quality of land

administration

index: 28 out of 30

East Asia & Pacific average

0

2

4

6

8

10

China Hong KongSAR, China

Indonesia Singapore Malaysia

Procedures

Page 16: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

Getting Credit in Malaysia

Depth of credit information index: 8 out of 8Credit

bureau

Credit

registry

Are data on both firms and individuals distributed? Yes Yes

Are both positive and negative credit data distributed? Yes Yes

Are data from retailers or utility companies reported and distributed? Yes No

Are at least 2 years of historical data reported? Yes No

Are data on loan amounts below 1% of income per capita reported? Yes Yes

By law, do borrowers have the right to access their data ? Yes Yes

Can financial institutions access borrowers’ credit information online? Yes Yes

Are credit scores offered to help banks and financial institutions? Yes No

Coverage (% of adult population) 62 76

15

Strength of legal rights: 7 out of 12Measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and

lenders

The law allows a business to grant a nonpossessory security right in a single category of movable assets

(such as machinery or inventory), without requiring a specific description of the collateral.

The collateral registry has modern features such as those that allow secured creditors (or their

representatives) to register, search, amend or cancel security interests online

Page 17: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

Getting Credit: Malaysia strengthened credit reporting, now among

30 economies that score 8 out of 8 on the index

16

How did Malaysia make getting

credit easier in 2015/2016?

7

8

Depth of credit information index (0-8)

DB16

DB17

57

62

Credit registry coverage (% of adults)

• CTOS Data Systems Sdn Bhd (CTOS), the

largest credit bureau in Malaysia, partnered with

FICO and started offering CTOS-FICO

Consumer Credit Scores to banks and other

financial institutions to facilitate their predictive

analytics and decision management in October

2015.

• The credit score is a numerical value that

indicates the credit risk associated with an

individual’s credit profile and ranges between

300 (riskiest) and 850.

Region

Number of

top

performers

Number of

economies in

the region

% economies

that are top

performers

Top performing

economies

East Asia &

Pacific3 25 12%

China; Malaysia;

Taiwan, China

Page 18: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

Jan

1 2 3 4 5 6 7

8 9 10 11 12 13 14

15 16 17 18 19 20 21

22 23 24 25 26 27 28

29 30 31

Paying Taxes in Malaysia

Total tax rate:

40% of commercial profit

Time: 26 hours (profit taxes)

50 hours (labor taxes)

88 hours (consumption taxes)

Payments: 9

9

17

East Asia & Pacific average

0

10

20

30

40

50

HongKongSAR,China

Singapore Malaysia China Indonesia

Payments, number

East Asia & Pacific average

0

100

200

300

Singapore Hong KongSAR,China

Malaysia Indonesia China

Time, hours

Page 19: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

Paying Taxes: Malaysia made paying taxes easier but also more

complex in the past year

18

0.92 correlation

Comply with CIT audit: 5.25 h

Complete CIT audit: 20.6 weeks

Comply with VAT refund: N/A

Obtain VAT refund: N/A

In Doing Business 2017: Malaysia made paying

taxes easier by introducing an online system for

filing and paying goods and services tax (GST)

while also making it more complex by replacing

sales tax with GST.

Page 20: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

Paying Taxes: economies that have efficient tax filing and payment

procedures also tend to have efficient postfiling processes

19

Main findings on CIT Audits

• Correcting the corporate income tax (CIT) return

complying with an audit when applicable is most

simple in OECD high-income economies and

Europe and Central Asia.

• In 74 economies, correcting a minor error in the

CIT return is likely to trigger an audit.

Audit time resulting from a simple mistake in a CIT return

Source: Doing Business database.

Main findings on VAT Refunds

• In only 93 economies case study company can

refund VAT.

• VAT refunds are processed most efficiently in

OECD high-income (refund in 14.4 weeks on

average) and Europe and Central Asia (refund in

16 weeks on average).

Pre- and postfiling compliance time

0

10

20

30

40

0

100

200

300

400

Most difficult Easiest

Pre-filing compliance time Postfiling compliance time

Economies sorted by time for filing and paying VAT (quintiles)

0

3

6

9

12

LAC EAP SA SSA MENA ECA OECD

Waiting time (weeks)

Page 21: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

Protecting Minority Investors: Malaysia among the best economies

in the world

20

9.39

8.7

5.7

5

0

1

2

3

4

5

6

7

8

9

10

Extent of conflict of interest regulation index (0-10)

Singapore Hong Kong SAR, China

Malaysia Indonesia

China

7.3 7.37

5.7

4

0

1

2

3

4

5

6

7

8

Extent to shareholder governance index (0-10)

Malaysia Singapore

Hong Kong SAR, China Indonesia

China

Page 22: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

Jan

1 2 3 4 5 6 7

8 9 10 11 12 13 14

15 16 17 18 19 20 21

22 23 24 25 26 27 28

29 30 31

Trading across Borders in Malaysia

EXPORT IMPORT

Cost: US$ 45.0 (documentary compliance) +

US$ 321.2 (border compliance)

Time: 10 hours (documentary compliance) +

48 hours (border compliance)

Jan

1 2 3 4 5 6 7

8 9 10 11 12 13 14

15 16 17 18 19 20 21

22 23 24 25 26 27 28

29 30 31

Cost: US$ 60.0 (documentary compliance) +

US$ 321.2 (border compliance)

Time: 10 hours (documentary compliance) +

72 hours (border compliance)

21

0

250

500

750

1,000

Hong KongSAR,China

Malaysia Singapore Indonesia China

Export cost, US$

Border compliance

Documentary compliance

0

250

500

750

1,000

Singapore Hong KongSAR,China

Malaysia Indonesia China

Import cost, US$

Border compliance

Documentary compliance

Page 23: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

Enforcing Contracts in Malaysia

22

East Asia & Pacific average

0

100

200

300

400

500

600

Singapore Hong KongSAR, China

Malaysia China Indonesia

Time, days

East Asia & Pacific average

0

3

6

9

12

15

18

Singapore China Malaysia Hong KongSAR, China

Indonesia

Quality of judicial processes index (0-18)

Page 24: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

Resolving Insolvency in Malaysia

Recovery rate:

81.3 cents on the dollar

Time: 1 year

Strength of insolvency

framework index (0-16): 6

23

Month1 2 3 4 5 6 7

8 9 10 11 12 13 14

15 16 17 18 19 20 21

22 23 24 25 26 27 28

29 30 31

12

Cost: 10% of estate

Outcome:

Going concern

East Asia & Pacific average

0

1

2

3

Singapore Hong KongSAR, China

Malaysia China Indonesia

Time, years

East Asia & Pacific average

0

25

50

75

100

Singapore Hong KongSAR,China

Malaysia China Indonesia

Recovery rate, cents on the dollar

Page 25: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

I. Doing Business in Malaysia at a glance

II. Indicator results

III. Looking ahead: best practices on selected indicators

Page 26: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

Where is Starting a Business easy and what do these economies

have in common?

Global good practices

Putting procedures online

No paid-in minimum capital requirement

Creation and improvement of one-stop shops

Streamline and merge registration and post-registration procedures

Standardized forms (no need of third party to draft incorporation documents)

Fixed registration fee

No requirement to publish in legal journal

New Zealand

Canada

Hong Kong SAR, China

The Republic of Macedonia

Azerbaijan

Singapore

Australia

Georgia

Armenia

Ireland

Top Ten Economies

Page 27: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

Good Practices on Paying Taxes

Self-assessment systems make it

possible to collect taxes earlier and reduce the

likelihood of disputes over tax assessments. They

also reduce opportunities for corruption.

E-system for filing and paying taxeslightens the workload, reduces operational costs

and time for tax administrations and increases tax

compliance. For taxpayers, it saves time by

avoiding errors and making it easier to prepare,

file and pay taxes.

The same tax treatment for taxes

with the same tax base makes tax

compliance convenient and easier.

Practice Economies* Examples

Allowing self-

assessment161

Argentina,

Canada, China,

Rwanda, Turkey

Allowing

electronic filing

and payment

90

Australia,

Colombia, India,

Mauritius, Tunisia

Having one tax

per tax base49

Angola, Morocco,

Namibia,

Norway,

Paraguay

Page 28: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

Trading across Borders: implementation of electronic systems has the most

significant impact on time among all the trade reforms in 2015/16

-516

-288

-234

-31

-600

-500

-400

-300

-200

-100

0Electronic systems

Customsadministration Inspection Infrastructure

Total time reduction in time (hours)

Page 29: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

Average export border compliance time (hours) Average import border compliance time (hours)

Trade digitalization leads to efficiency gains for both exporters and

importers

111

86

34

0

20

40

60

80

100

120

Paper only Paper andelectronic

Electronically

82

65

26

0

10

20

30

40

50

60

70

80

90

Paper only Paper andelectronic

Electronically

Note: The relationship is significant at the 1% level after controlling for income per capita. The three categories are: only paper

submission of customs declaration is possible; both paper and electronic submissions are in use; only electronic submission is

possible.

Page 30: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

DB 2015: Slovenia made resolving insolvency easier by introducing:

• simplified reorganization procedure for small companies

• preventive restructuring procedure for medium-size and large ones, by allowing creditors

greater participation in the management of the debtor and by establishing provisions for

an increase in share capital through debt-equity swaps.

DB 2013: Slovenia strengthened its insolvency process by requiring that the debtor offer

creditors payment of at least 50% of the claims within 4 years:

• This gave greater power to the creditors’ committee in a bankruptcy proceeding;

prohibiting insolvency administrators from allowing relatives to render services

associated with the bankruptcy proceeding; and establishing fines for members of

management that violate certain obligations or prohibitions.

DB 2012: Slovenia simplified and streamlined the insolvency process and strengthened

professional requirements for insolvency administrators.

Good practices in Resolving Insolvency: Slovenia

29

Page 31: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

Doing Business

THANK YOU!

Questions www.doingbusiness.org

?! ?!

Page 32: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

Annex 1. Findings of Doing Business 2017

Page 33: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

62

67

75

76

79

80

81

82

84

94

0 20 40 60 80 100

Resolving insolvency

Enforcing contracts

Getting credit

Registering property

Paying taxes

Protecting minority investors

Dealing with construction permits

Trading across borders

Starting a business

Getting electricity

DTF score

Results on individual indicators

32

0

10

20

30

40

50

60

70

80

90

100

Malaysia scored

78 points in DTF

in Doing Business

2017, giving it a

ranking of 23rd

overall.

Source: Doing Business 2017

Malaysia performs well thanks to a good performance across topics (2/2)

Page 34: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

Distance to frontier scores remain similar under the new

methodology

Source: Doing Business database.

Note: The figure compares distance to frontier scores based on this year’s data computed using the old (Doing Business 2016) methodology

with scores based on the same data computed using the new methodology. The differences between the two series are in starting a business,

registering property, protecting minority investors, paying taxes and enforcing contracts. The 45-degree line shows where the scores under

the old and new methodologies are equal. The correlation between the two scores is 0.99.

30

40

50

60

70

80

90

100

30 40 50 60 70 80 90 100

Dis

tance t

o f

rontier

score

under

old

meth

odolo

gy

(0–100)

Distance to frontier score under new methodology (0–100)

33

Page 35: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

Following Doing Business best practices would significantly

decrease the time to start a business

34

Sources: Doing Business database; World Bank’s Entrepreneurship Database; http://www.dailymail.co.uk/.

Not following best

practices:

32.9 million days

1.3 million days

• In the 85 economies covered by both

Doing Business and the World Bank’s

Entrepreneurship Database, an

estimated 2.7 million LLCs were newly

registered in 2015 alone.

• Assuming that these 2.7 million firms

followed the rules and regulations for

company incorporation in their home

economy as measured by Doing

Business 2016, together they spent

32.9 million days to get incorporated.

• Because not all economies followed

best practice, entrepreneurs spent an

extra 31.6 million days satisfying

bureaucratic requirements.

Companies that do not follow good

practices spend 25 times more time to start

a business on average than those that do.

Potential time savings is

almost 850 centuries

In this time, a person can

walk 7,721 times around

the Earth

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49 reforms were recorded in starting a business in 2015/16

35

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18 reforms were recorded in dealing with construction permits in

2015/16

36

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22 reforms were recorded in registering property in 2015/16

37

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34 reforms were recorded in getting credit in 2015/16

38

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The majority of reforms in getting electricity focused on reducing the

time for new electricity connections

39

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19 reforms were recorded in protecting minority investors in 2015/16

40

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46 reforms were recorded in paying taxes in 2015/16

41

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32 reforms were recorded in trading across borders in 2015/16

42

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18 reforms were recorded in enforcing contracts in 2015/16

43

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24 reforms were recorded in resolving insolvency in 2015/16

44

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0

25

50

75

0 10 20 30

Number of gender differences as recorded by Women, Business and the Law

Less equal business regulation is associated with fewer women

running firms

Sources: Women, Business and the Law database; Enterprise Surveys database,

World Bank; World Development Indicators database, World Bank.

Note: A sample of 122 and 158 economies was used for comparison of number of

gender differences against percentage of firms with female top managers and female

employment to population ration, respectively. The relationship between the

percentage of firms with female top managers and the number of gender differences

is significant at the 1% level after controlling for income per capita. The same applies

when the analysis is done using the female employment ratio.

45

Firm

s w

ith

fe

ma

le

top m

ana

ge

rs, %

0

25

50

75

100

0 10 20 30

Fem

ale

em

plo

ym

ent

to p

op

ula

tion

ra

tio, %

Page 47: Malaysia - World Bankpubdocs.worldbank.org/en/715161478513828554/DB2017-Malaysia-10-26-16... · Malaysia performs well thanks to a good performance across topics Source : Doing Business

Strong convergence across economies since Doing Business 2006

46

113

53

0

50

100

150

Time to start a business (days)

Best 3 Quartiles Worst Quartile

Source: Doing Business database.

Note: These numbers use a consistent sample of 174 economies as measured in Doing Business 2007,

for which data are available starting from 2005.

678

480

0

300

600

900

Time to prepare, file and pay taxes (hours)

Best 3 Quartiles Worst Quartile

228

113

0

100

200

300

Time to register property (days)

Best 3 Quartiles Worst Quartile

340

260

0

150

300

450

Time to deal with construction permits (days)

Best 3 Quartiles Worst Quartile

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0

25

50

75

100

0 25 50 75 100

Corr

up

tio

n p

erc

ep

tio

ns ind

ex (

0-1

00

)

Distance to frontier score (0-100)

High income

Upper middle income

Lower middle income

Low income

Higher levels of regulatory efficiency and quality are associated with

lower levels of corruption

Sources: Doing Business database, Corruption Perception Index 2015.

Note: The sample includes 165 economies covered by both Doing Business and the Corruption Perception Index. Both

relationships are significant at the 1% level after controlling for income per capita.

Very

cle

an

Hig

hly

corr

upt

47

Easy to do businessDifficult to do business

Linear trend line

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0

2,500

5,000

7,500

10,000

0

25

50

75

100

High income Upper middle income Lower middle income Low income

The cost of doing business remains much higher in low income

economies in 2015/16

48

Source: Doing Business database.

Cost of getting electricity

(% of income per capita)Cost of starting a business (% of income per capita)

Cost of dealing with construction permits (% of warehouse value)

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Who improved the most across 3 or more areas measured by Doing

Business in 2015/16?

49

Source: Doing Business database.

Note: Economies are selected on the basis of the number of reforms and ranked on how much their distance to frontier score improved. First, Doing

Business selects the economies that implemented reforms making it easier to do business in 3 or more of the 10 areas included in this year’s

aggregate distance to frontier score. Regulatory changes making it more difficult to do business are subtracted from the number of those making it

easier. Second, Doing Business ranks these economies on the increase in their distance to frontier score from the previous year. The improvement in

their score is calculated not by using the data published in 2015 but by using comparable data that capture data revisions and methodology changes.

The choice of the most improved economies is determined by the largest improvements in the distance to frontier score among those with at least

three reforms.

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Worldwide, 137 economies implemented 283 reforms in 2015/16

More than 75% of regulatory reforms in 2015/16 were implemented by developing countries.

East Asia and Pacific implemented 45 regulatory reforms in the past year, with 7 reforms implemented

in Indonesia and 6 – in Brunei Darussalam only.

Doing Business has recorded more than 2,900 regulatory reforms making it easier to do business

since 2004.

Source: Doing Business database.50

OECD high-

income

Europe &

Central Asia

South

Asia

East Asia

& Pacific

Sub-Saharan

Africa

Latin America &

Caribbean

Middle East &

North Africa

96%

2.3

77%

1.7

75%

1.8

69%

1.0

68%

1.863%

1.4

53%

0.7

%Share of economies

that reformed in a

region

Average numbers

of reforms per

economy

1.0

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Europe and Central Asia has made a substantially bigger

improvement in business regulation over time than any other region

0

5

10

15

20

25

Europe &Central Asia

Sub-SaharanAfrica

Middle East &North Africa

South Asia East Asia &Pacific

Latin America& Caribbean

OECD highincome

DB2017

DB2016

DB2015

DB2014

DB2013

DB2012

DB2011

DB2010

DB2009

DB2008

DB2007

DB2006

DB2005

Average year-on-year improvement

in distance to frontier score

51

Average global improvement since 2003/04: 11.8

Source: Doing Business database.

Note: The measure is normalized to range from 0 to 100, with 100 representing the frontier. Because of changes over the years in methodology and

in the economies and indicators included, the improvements are measured year on year using pairs of consecutive years with comparable data.

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Reforms making it easier to start a business show results over time

in reduced delays

It was possible to start a business in less than 20

days in only 41 economies*, mostly in North

America and Northern and Central Europe.

In Sub-Saharan Africa, entrepreneurs in only 3 out

of 45 countries—Burundi, Ghana and Rwanda—

could incorporate a company in under 20 days.

Now, the time to start a business is less than 20

days for entrepreneurs in 130 economies*

worldwide.

In Sub-Saharan Africa, more than half of economies

allow to start a business in less than 20 days.

2005

2016

Development impact:

Countries that regulate entry more heavily have

greater corruption and larger unofficial economies, but

not better quality of public or private goods.(Djankov, La Porta, Lopez de Silanes, Shleifer, February 2002, Quarterly

Journal of Economics.)

* Based on samples of 174 economies in Doing Business 2006 and 190

economies in Doing Business 2017.

52

Source: Doing Business database.

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6 of the 7 regions have an average DTF score above 50

53

0

25

50

75

100

OECD high-income

Europe & CentralAsia

East Asia &Pacific

Latin America &Caribbean

Middle East &North Africa

South Asia Sub-SaharanAfrica

Dis

tan

ce

to

fro

ntie

r sco

re

(0–

10

0)

Worst score Best score Average score

• Worldwide, the difference between the best and worst DTF scores is 67 points.

• Sub-Saharan Africa has the biggest difference of 52 points between the best and worst scores.

• East Asia & Pacific also shows significant variation in the best and worst scores with a difference of 44

points.

• OECD high-income has the smallest difference of 18 points between the best and worst scores.

Source: Doing Business database.

52

44

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-400

-300

-200

-100

0

100

200

300

400

-4

-3

-2

-1

0

1

2

3

4

High income Upper middle income Lower middle income Low income

Ave

rage

ch

an

ge

in

co

st fr

om

DB

16

to

DB

17

Ave

rage

ch

an

ge

in c

ost

from

DB

16

to

DB

17

Low income economies are lowering costs to do business at faster

rates than their higher income counterparts

54

Source: Doing Business database.

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Selling to the government:

what is measured in the Doing Business 2017 annex?

78 economies covered by the data

measure aspects that are relevant to

improving the ease with which companies can

do business with governments across

economies

97% of the economies analyzed have one or

more online portals dedicated to public

procurement

close to 90% of economies in the sample

impose a bid security deposit requirement for

the bid to be accepted

In 37% of the economies payment occurs

within 30 days on average while in 47% of

economies suppliers can expect to receive

payments between 31 and 90 days following

completion of the contract.

Case study: road maintenance contract valued at

91 times income per capita or 2 million USD,

which ever is higher.

55

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56

Good practices in enforcing contracts: Brunei Darussalam

Brunei Darussalam made

enforcing contracts easier by

introducing an electronic filing

system for commercial court cases

at the competent court.

Brunei Darussalam introduced a

system allowing court users to pay

court fees electronically.

Impact: + 2 points in the Quality of

Judicial Processes Index

In Doing Business 2017, Brunei Darussalam ranks

93rd globally on the ease of Enforcing Contracts.

Resolving a standardized commercial dispute

before the Intermediate Court of Bandar Seri

Begawan takes an average of 540 days and costs

36.6% of the value of the claim.

Brunei Darussalam obtains 8.5 out of 18 points in

the quality of judicial processes index.

Brunei Darussalam’s performance is below the East

Asia & Pacific regional average on the time and cost

sub-indicators and slightly above the average on the

quality index.

DTF improvement from 53.54 in DB2016 to 57.25 in

DB2017.