M’sia slips one spot in do­ing busi­ness rank­ing

> Hic­cups in GST led to drop, more time needed for the sys­tem to smooth out

The Sun (Malaysia) - - SPEAK UP - BY LEE WENG KHUEN

KUALA LUMPUR: Malaysia dropped to the 23rd spot in World Bank’s ease of do­ing busi­ness rank­ing among 190 economies from 22nd last year, partly due to is­sues re­lated to the im­ple­men­ta­tion of the Goods and Ser­vices Tax (GST).

This had led to Malaysia re­port­ing a weaker scor­ing in start­ing a busi­ness seg­ment, with a rank­ing of 112, as com­pa­nies with an an­nual rev­enue of more than RM500,000 have to be reg­is­tered as a GST payer.

The scor­ing and rank­ing are based on 10 dif­fer­ent in­di­ca­tors in­clud­ing get­ting credit, trad­ing across borders and en­forc­ing con­tracts, to name a few. It was also based on feed­back from ac­coun­tants, en­gi­neers and lawyers.

De­spite the drop in rank­ing, World Bank Group Global Knowl­edge and Re­search Hub in Malaysia coun­try man­ager Faris H. Hadad-Zer­vos said more time is needed for the GST sys­tem to run smooth and reach its ma­tu­rity.

“Given that this has been the first year of in­tro­duc­tion of GST, nat­u­rally it will cre­ate an ad­di­tional few steps that were re­flected in DB (do­ing busi­ness) that we hope over time will smooth out,” he told a press con­fer­ence on the re­lease of Do­ing Busi­ness Re­port here yes­ter­day.

Malaysia’s dis­tance to fron­tier score was down from 78.18 to 78.11, ac­cord­ing to the “Do­ing Busi­ness 2017: Equal Op­por­tu­nity for All” re­port.

Faris high­lighted that Malaysia con­tin­ues to main­tain its strong per­for­mance in sev­eral ar­eas of do­ing busi­ness. It was one of the top 15 per­form­ers glob­ally in deal­ing with con­struc­tion per­mits.

Be­sides that, Malaysia re­tains its spot as the third best econ­omy in terms of pro­tect­ing mi­nor­ity in­vestors.

“For ex­am­ple, Malaysia sets the best prac­tice in terms of in­for­ma­tion that com­pa­nies must share in order to en­ter into trans­ac­tions with re­lated par­ties,” he said.

Faris also ap­plauded Malaysia’s ef­fort to im­ple­ment two re­forms in the past year, namely the strength­en­ing of credit re­port­ing by pro­vid­ing con­sumer credit scores and the in­tro­duc­tion of an online sys­tem for fil­ing and pay­ing GST.

Malaysia was the sec­ond best per­former among Asean economies’ rank­ings, just af­ter Sin­ga­pore, which ranked as the sec­ond best coun­try to do busi­ness in.

The other top-ranked economies glob­ally are New Zealand (1), Den­mark (3), Hong Kong (4) and South Korea (5).

Faris said Malaysia per­formed par­tic­u­larly well in the pay­ing taxes in­di­ca­tor seg­ment, which was ex­panded to in­clude mea­sures of post­fil­ing pro­cesses re­lat­ing to tax au­dits and tax re­funds.

“Malaysia per­forms well on this mea­sure. For ex­am­ple, it takes about five hours to com­ply with a cor­po­rate in­come tax au­dit, com­pared with the re­gional av­er­age of 18 hours,” he added.

This time around the Do­ing Busi­ness re­port also con­sid­ered gen­der equal­ity as­pects for three sets of in­di­ca­tors, namely start­ing a busi­ness, reg­is­ter­ing prop­erty and en­forc­ing con­tracts.

On a sep­a­rate note, Pe­mu­dah (The Spe­cial Task Force to Fa­cil­i­tate Busi­ness) which was set up in 2007 to im­prove the ease of do­ing busi­ness in the coun­try, said it will fo­cus on ac­cel­er­at­ing the im­ple­men­ta­tion of iden­ti­fied ini­tia­tives and ac­com­mo­date the changes in the method­ol­ogy to im­prove the coun­try’s rank­ing and re­alise the am­bi­tion of be­ing one of the top 10 economies.

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