The key to attracting fresh investments is clearly the ease of doing business itself. One of the major considerations when companies select the location of their investments is the level of red tape and the associated compliance costs.
It is almost inevitable that the number of rules, regulations and procedures drawn up by bureaucracy increases over time — unless there is a conscious effort on maintenance, such as discarding those that become irrelevant due to technology or process changes. And when you add the multiple layers of authorities, from federal to state governments to local district councils, the totality of red tape can be so daunting that it deters new investments altogether.
The solution is to cut through the bureaucracy. Obviously, there are a lot of vested economic interests at stake. Therefore, to instil confidence, the framework and execution must be clear and transparent.
For starters, most existing requirements and processes can be migrated online and consolidated into a single one-stop platform. This will not only make submissions more convenient for businesses, it will improve timeliness and eliminate duplication.
More critically, by publicly disclosing all the regulations, requirements and criteria, there is transparency, consistency and certainty. Businesses know exactly what the qualifications needed are and can self-assess their eligibility.
1. Since there is already a set of subsidiary legislation — rules and regulations that do not require parliamentary approvals — in existence, for the first cut, allow a two- to three-month timeline for every agency and authority to confirm their relevance. Those not reconfirmed will be deemed to have lapsed and are no longer applicable. . This is necessary as red tape almost always grows over time. Think of your house and why clutter accumulates. It is easier to find new places to store stuff than to painstakingly go through old stuff and decide if they will ever be used again. We bet the only time this happens is when you move house!
2. To ensure regular maintenance and relevance, every new rule, regulation and guideline should have an expiry date, up to a maximum of, say, three years. Unless it is renewed, with justifiable reasons, it lapses. And as a guide, only 70% of existing regulations can be renewed.
3. In areas where it is highly technical, such as meeting fire requirements for buildings, environmental requirements or water quality, professional firms can take on the responsibility of assessment. The authority need only perform random checks for compliance.
4. Set a maximum timeline for a decision on each application. For instance, any application not rejected within six months will be deemed approved.
5. When an application is rejected, the relevant authorities are required to state the reasons.
We suspect that by clearly listing out all the requirements of each district and state on a common platform, the spirit of competition will lead to self-induced streamlining and simplifying of the processes.
India’s move towards a digitally-enabled policy initiative is an excellent example of how getting permits and approvals can be transformed by digitisation and associated structural reforms. It contributed to a significant shift in the country’s ranking in the World Bank’s Ease of Doing Business index. In the latest 2020 report, India is ranked 63rd among 190 nations, up from 77th in 2019 and 142 in 2015.
Chart 1 ranks the perception of the Malaysian government’s ability to formulate and implement policies and regulations that are conducive to private-sector investments. We are ranked well below Singapore, South Korea, Japan, Taiwan and Hong Kong. In fact, our regulatory quality as defined by the World Bank has deteriorated since 2014.
Tables 1 to 3 compare the time and documentation required for cross-border trading for Malaysia, Singapore and South Korea. Undertaking an import-export business in Malaysia clearly requires more documentation and a longer timeline for compliance.
Chart 2 outlines the myriad submissions and approvals — from the district council, state and federal governments — required for a typical housing development project. It takes more than 18 months, on average, from land conversion to project launch, before actual construction can even begin.
