Upload
ziafly
View
217
Download
0
Embed Size (px)
Citation preview
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
1/72
Methodology and Best
Practices
Sylvia Solf
Justin YapKuala Lumpur, MalaysiaOctober 31, 2007
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
2/72
Doing Busi ness:
10 indic a t ors in 178 economies
2007 2008 2009
Starting a business
Dealing with licenses
Employing workers
Registering property
Getting credit
Protecting investors
Paying taxes
Trading across borders
Enforcing contracts
Closing a business
Update of 2007
Add 3 countries
Reformers Club:
11 case studies
Add Not paying bribes
Add Using
infrastructure
Research program on
regulation and
business opportunities
for women
http://upload.wikimedia.org/wikipedia/commons/c/c3/BlankMap-World.pnghttp://upload.wikimedia.org/wikipedia/commons/c/c3/BlankMap-World.pnghttp://upload.wikimedia.org/wikipedia/commons/c/c3/BlankMap-World.pnghttp://upload.wikimedia.org/wikipedia/commons/c/c3/BlankMap-World.pnghttp://upload.wikimedia.org/wikipedia/commons/c/c3/BlankMap-World.pnghttp://upload.wikimedia.org/wikipedia/commons/c/c3/BlankMap-World.pnghttp://upload.wikimedia.org/wikipedia/commons/c/c3/BlankMap-World.pnghttp://upload.wikimedia.org/wikipedia/commons/c/c3/BlankMap-World.pnghttp://upload.wikimedia.org/wikipedia/commons/c/c3/BlankMap-World.pnghttp://upload.wikimedia.org/wikipedia/commons/c/c3/BlankMap-World.pnghttp://upload.wikimedia.org/wikipedia/commons/c/c3/BlankMap-World.pnghttp://upload.wikimedia.org/wikipedia/commons/c/c3/BlankMap-World.pnghttp://upload.wikimedia.org/wikipedia/commons/c/c3/BlankMap-World.pnghttp://upload.wikimedia.org/wikipedia/commons/c/c3/BlankMap-World.pnghttp://upload.wikimedia.org/wikipedia/commons/c/c3/BlankMap-World.pnghttp://upload.wikimedia.org/wikipedia/commons/c/c3/BlankMap-World.pnghttp://upload.wikimedia.org/wikipedia/commons/c/c3/BlankMap-World.pnghttp://upload.wikimedia.org/wikipedia/commons/c/c3/BlankMap-World.pnghttp://upload.wikimedia.org/wikipedia/commons/c/c3/BlankMap-World.pnghttp://upload.wikimedia.org/wikipedia/commons/c/c3/BlankMap-World.pnghttp://upload.wikimedia.org/wikipedia/commons/c/c3/BlankMap-World.pnghttp://upload.wikimedia.org/wikipedia/commons/c/c3/BlankMap-World.pnghttp://upload.wikimedia.org/wikipedia/commons/c/c3/BlankMap-World.pnghttp://upload.wikimedia.org/wikipedia/commons/c/c3/BlankMap-World.pnghttp://upload.wikimedia.org/wikipedia/commons/c/c3/BlankMap-World.png8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
3/72
Top 30 on t he Ease of Doing Business 2007
1. Singapore 16. Switzerland
2. New Zealand 17. Estonia
3. United States 18. Georgia
4. Hong Kong, China 19. Belgium
5. Denmark 20. Germany
6. United Kingdom 21. Netherlands
7. Canada 22. Latvia
8. Ireland 23. Saudi Arabia
9. Australia 24. Malaysia
10. Iceland 25. Austria
11. Norway 26. Lithuania
12. Japan 27. Mauritius
13. Finland 28. Puerto Rico
14. Sweden 29. Israel
15. Thailand 30. Korea
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
4/72
Malays ia in the reg ion
Singapore 1Hong Kong, China 4
Japan
12
Thailand 15Malaysia 24
Korea
30
Brunei 78China 83
Vietnam
91
India 120Indonesia 123
Philippines
133
Cambodia 145Lao PDR 164
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
5/72
Time and Mot ion Ind ica t ors :
How t o lay a be t t e r b r i ck
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
6/72
Foc us on St eps, T im e and Cost isDoing Bus iness Bas ic Met hodo logy
Cost(%o
fGNIpercapita)
Time(numberofdays)
Starting a business in Madagascar
0
1
2
3
4
5
6
7
8
Register at the GUIDE Apply for license, tax and
statistical IDs
Publish a notice in a daily
newspaper
File forms with the National
Social Security Fund
File for health insurance0%
5%
10%
15%
20%
25%
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
7/72
A t im e and mot ion s tudy
1.
Follow the entrepreneur from the beginning to the
end of a basic transaction;
2. Record every step of the process, and theassociated time and cost;3. Gather all the relevant laws, regulations, decrees,fee schedules.
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
8/72
How Malays ia ranks in eac h ind ica t o r
Topic Malaysias Rank Worlds best
Starting a business 74 Australia
Dealing with licenses 105 St. Vincent & the Grenadines
Employing workers 43 United States
Registering property 67 New Zealand
Getting credit 3 United Kingdom
Protecting investors 4 New Zealand
Paying taxes 56 Maldives
Trading across borders 21 Singapore
Enforcing contracts 63 Hong Kong, China
Closing a business 54 Japan
1 St ar t ing a Business
http://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPGhttp://upload.wikimedia.org/wikipedia/commons/0/0a/Malaysia.JPG8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
9/72
1. St ar t ing a Business
Malays ia s rank : 74
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
10/72
All procedures that are required in law or in
practice for an entrepreneur to start up and
formally operate an industrial or
commercial business, including:
Preregistration (name verification, notarization) Registration of the company
Postregistration (social security, tax, company seal)
St ar t ing a bus iness m easures:
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
11/72
St ar t ing a bus iness: The c om pany
Is a limited liability company;
Operates in Kuala Lumpur and does not engage in foreign trade;
Has 5 owners who are all Malaysian nationals;
Performs general industrial or commercial activities
such as the
production or sale of goods or services to the public (not subject tospecial tax regime and no heavily polluting processes);
Leases its commercial plant and offices and does not own any realestate;
Does not qualify for investment incentives or special benefits;
Has at least 10 and up to 50 employees 1 month after thecommencement of operations, all of them Malaysian nationals;
Has start-up capital of 10 times income per capita at the end of 2006(approx. 183,000 MYR);
Has a turnover of at least 100 times income per capita;
Has a company deed 10 pages long.
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
12/72
Procedures (number):
any interaction with an external party; Both pre- and post-incorporation procedures that are officially required for an entrepreneur
to legally operate a business are recorded; Both legal and common practice procedures are included; Shortcuts may be considered;
Industry-specific procedures are excluded;
Time (days): Median duration, recorded in calendar days; A procedure has a minimum duration of 1 day;
Procedures may take place simultaneously but cannot begin the same day; If procedure can be accelerated for a cost, the fastest procedure is recorded; Each procedure starts with the first filing of the application or demand, and ends once the
company has received the final document or service requested;
Cost (% of income per capita): Only official feesno bribes or special relationships; recorded as percentage of GNI per capita;
Paid-in capital: Before registration and up to 3 months following registration; measured as percentage of GNI per capita.
St ar t ing a bus iness m easures:
St ar t ing a business in Malays ia:
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
13/72
St ar t ing a bus iness in Malays ia :
St ar t ing a bus iness in Malays ia:
9 proc edures, 24 days, 18.1% of inc om e per c ap i t a
St ar t ing a bus iness : Top 10 and w hat t hey have in
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
14/72
1. Australia
2. Canada
3. New Zealand
4. United States
5. Ireland6. United Kingdom
7. Puerto Rico
8. Mauritius
9. Singapore
10. Georgia
Minimum capital requirementnominal or zero
Standardized forms
No courts involved
Online registration
Fixed registration fee
No publication in legal journalrequired
St ar t ing a bus iness : Top 10 and w hat t hey have in
c o m m o n
2. Deal ing w i t h L icenses
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
15/72
2. Deal ing w i t h L icenses
Malays ia s rank : 105
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
16/72
All procedures that are required in law orin practice to build a standardized
warehouse, up to the point that theproperty can be used as collateral or
transferred.
Deal ing w i t h l i c enses m easures:
Deal ing w i t h l i censes:
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
17/72
g
The c onst ruc t ion c ompany (Bu i ldCo)
Is a limited liability company operating in Kuala Lumpur;
Has 5 owners who are all Malaysian nationals;
Is fully licensed and insured to construct buildings;
Leases its commercial plant and offices and does not own any realestate;
Has 20 employees, all Malaysians with the necessary technical andprofessional expertise to obtain construction permits & approvals;
Has at least 1 employee who is a locally registered licensedarchitect;
Has paid all taxes and taken out all insurance necessary to itsbusiness activity (e.g. accident insurance for workers and liabilityinsurance);
Owns the land on which the warehouse is built.
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
18/72
Deal ing w i t h L ic enses: The w arehouse
Has road access and is located on the edge of Kuala Lumpur, butwithin city limits;
Is 2 stories high and covers an area of 1,300.6 square meters. Eachfloor is 3 meters high;
Is located on a land plot of 929 square meters, which is 100% ownedby the construction company (BuildCo) and is accurately registeredin the cadastre and land registry;
Is a new construction;
Has complete architectural and technical plans and is alreadyinsured;
Will be connected to electricity, water, sewerage and one land phoneline. The connection to each utility network will be 10 meters long;
Will be used for general storage, such as storing books or stationery;
Will include all technical equipment required to make the warehousefully operational.
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
19/72
Deal ing w i t h l i censes m easures :
Procedures (number) Every interaction with an external party (i.e. municipality, inspectors, utilities);
All procedures legally or in practice required for building a warehouse, including
connecting to electricity, water, sewage and phone services;
Time (days)
Median duration, recorded in calendar days;
A procedure has a minimum duration of 1 day;
Procedures may take place simultaneously but cannot begin the same day;
If procedure can be accelerated for a cost, the fastest procedure is recorded;
Each procedure starts with the first filing of the application or demand, and ends once
the company has received the final document or service requested;
Cost (% of income per capita)
Only official feesno bribes or special relationships;
recorded as percentage of GNI per capita.
Who must approve (and inspect ) a new c onst ruc t ion
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
20/72
i n K ua la Lumpur?
Planning
Department BuildingDepartment
Telekom
Malaysia
TNB
Public WorksDepartment
Town ServicesDepartment
Drainage &Irrigation
Department
WaterAuthority
Sewerage
ServicesDepartment
Fire & RescueDepartment
EngineeringDepartment
25 procedures
285 days
10% of incomeper capita
Deal ing w i t h L icenses: Top 10 and w hat t hey have in
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
21/72
c o m m o n
1. St. Vincent and the
Grenadines
2. New Zealand
3. Belize
4. Marshall Islands
5. Singapore
6. Denmark
7. St. Kitts and Nevis
8. Maldives
9. Kenya
10. Micronesia
Few pre-approval proceduresrequired before obtaining abuilding permit
Interaction with one agency toobtain a building permit ratherthan following up with different
offices and agencies
Few inspections of theconstruction site by the
authorities
3. Regis t er ing Propert y
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
22/72
Malays ia s rank : 67
R i t i t
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
23/72
All procedures that are required in law orin practice to transfer property title, up to
the point that the property can be used ascollateral or transferred.
Regis t er ing proper t y m easures:
Regist er ing proper t y: Sel ler and buyer
i
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
24/72
compan ies
Are limited liability companies;
Located on the outskirts of Kuala Lumpur;
Privately owned by Malaysian nationals;
Have 50 employees each, all Malaysian nationals;
Perform general commercial activities.
R i t i t Th t
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
25/72
Regis t er ing proper t y : The proper t y
Is sold for its market value of 50 times income per capita; Has been fully owned by the seller for the past 10 years;
Is not subject to any mortgage;
Is registered in the cadastre and/or land registry and is not the subject of
any title disputes;
Is located in a commercial zone on the outskirts of Kuala Lumpur, and does
not require rezoning;
Consists of a plot of land measuring 557.4 m on which stands a2-storey warehouse with an area of 929m; the warehouse is 10 years old, ingood condition, and complies with all safety standards;
Will not be subject to renovations or additional building following the
purchase;
Will not be used for special purposes or require special permits;
Has no trees, natural water sources, natural reserves or historical
monuments of any kind; Has no occupants, legal or illegal
Regis ter ing proper t y m easures:
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
26/72
Regis ter ing proper t y m easures:
Procedures (number)
Every interaction of the seller, or their agent with an external party
(i.e. municipality, inspectors, utilities)
Buyer follows the fastest legal option
Time (days)
Recorded in calendar days
Captures the median duration of each procedure Minimum time for each procedure is 1 day
Cost (% of property value)
Only official fees and taxes
Recorded as a % of property value (which is 50 times income per
capita)
Both costs borne by the buyer and those borne by the seller are
included
Regis t er ing proper t y in Malays ia:5 proc edures 144 days 2 4% of inc om e per c ap i t a
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
27/72
1. Sale-purchase agreementsent to Stamp Office forstamping (1 day)
2. Memorandum ofTransfer (14A) sent toStamp Office foradjudication of Stamp
Duty (1 day)
3. Inspection andvaluation of theproperty (36 days)
4. Memorandum ofTransfer (14A) sent toStamp Office forstamping (1 day)
5. The transfer isregistered at the LandOffice/Registry (144days)
5 proc edures, 144 days, 2 .4% of inc om e per c ap i t a
Total time to register property: 144 days
Regis t er ing Proper t y : Top 10 and w hat t hey have
i
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
28/72
i n com m on
1. New Zealand
2. Saudi Arabia
3. Armenia4. Lithuania
5. Slovakia
6. Norway
7. Sweden
8. Iceland9. United Arab Emirates
10. United States
Reduce taxes or fees
Speed procedures in the registry
Computerize procedures and goonline
Combine and reduce procedures
Speed procedures in the court
Liberalize professions like surveyors,valuers and notaries
4. Trading ac ross BordersMalays ia s rank : 21
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
29/72
Malays ia s rank : 21
Trad ing Across Borders: t he c ase
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
30/72
Trad ing Across Borders: t he c ase
The business:
Is a limited liability company located in Kuala Lumpur, outside of any
export processing zone or industrial estate with special export or import
privileges;
Is 100% privately owned by Malaysian nationals;
Has 100 or more employees;
Exports more than 10% of its sales;
The goods:
Are not hazardous and does not consist of military items;
Travel in a dry-cargo 20-foot full container;
Do not require refrigeration or any other special environment; Do not require special environmental or other safety standards other than
accepted international standards.
Respondents:
mainly freight forwarders, traders, customs and port authorities
Trad ing ac ross borders measures:
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
31/72
Trad ing ac ross borders measures:
Documents (number) All documents required to export and import the goods, including:
Bank documents;
Customs clearance and technical control documents;
Port and terminal handling documents;
Transport documents;
Import licenses;
Time (calendar days)
For export, from the packing of goods at the factory to departure from the Port of
Kelang;
For import, from arrival at the Port of Kelang to arrival at the warehouse; Includes inland transport time, but not ocean transport time;
Cost (US dollars)
All official fees for import and export;
Does not include tariffs or trade taxes.
Trad ing ac ross borders in Malaysia
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
32/72
Trad ing ac ross borders in Malaysia
Export 7 documents
Bill of lading Cargo release
order Certificate of origin Commercial
invoice Customs export
declaration Packing list Technical
standard/healthcertificate
18 days
US$432
Import 7 documents
Bill of lading Cargo release
order Certificate of origin Commercial
invoice Customs import
declaration Packing list Terminal handling
receipts
14 days US$385
Trade docum enta t ion in Ma lays ia and t he t op 10ec onom ies in overa l l ease of do ing business
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
33/72
ec onom ies in overa l l ease of do ing bus iness
0 1 2 3 4 5 6 7 8
Singapore
N ew Z ealand
United States
H o ng Kong, China
Denmark
United Kingdom
Canada
Ireland
Australia
Iceland
M alaysia
Documents for Export Documents for Import
Number of documents needed for export and import
Trad ing ac ross borders : Top 10 and w hat t hey have inc o m m o n
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
34/72
c o m m o n
1. Singapore
2. Denmark
3. Hong Kong, China
4. Norway
5. Finland
6. Sweden7. Estonia
8. Israel
9. Panama
10. Germany
Reduce paperwork
Use a single window
Allow shippers to declaretheir manifest online even
prior to arriving in port
Limit physical inspections
5. Paying Tax esMalays ia s rank : 56
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
35/72
y
Pay ing t ax es: t he c ompany
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
36/72
y g p y
Is a taxable limited liability company operating in Kuala Lumpur;
Began operations in January 2005, when it purchased all the assets on its balance sheet and hired
all its workers;
Is 100% privately owned by 5 Malaysian nationals;
Has a start-up capital of 102 times income per capita at the end of 2005; Produces ceramic flowerpots and sells them at retail;
Owns 2 plots of land, 1 building, machinery, office equipment, computers and 1 truck, and leases 1
truck;
Does not qualify for investment incentives or benefits;
Does not engage in foreign trade or handle products subject to a
special tax regime;
Has 60 employees (4 managers, 8 assistants and 48 workers), all nationals;
Has a turnover of 1,050 times income per capita; Makes a loss in the first year of operations;
Has a gross pretax margin of 20%;
Distributes 50% of profits as dividends at the end of the second
year;
Sells one of its plots of land at a profit during the second year;
Has annual fuel costs for its trucks equal to twice income per capita;
Pay ing Tax es ind ica t or m easures :
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
37/72
y g
Mandatory taxes/contributions paid or withheld in the second year of operation (FY 2006)
Payments (number)method and frequency of payment
Number of different taxes/contributions times the frequency of payment for each;
Includes advance payments or withholdings;
Includes consumption tax (sales or value added tax) withheld;
If a tax may be filed electronically and is filed electronically by a majority of businesses, only one
payment is counted, even if payments are more frequent;
If a tax is paid through third parties, only one payment is counted;
If 2 or more taxes or contributions are paid jointly on the same form, only one payment is counted;
Time (hours per year)
Hours per year to prepare, file and pay three major types of taxes:
Corporate income tax;
VAT or sales tax;
Labor taxes;
Preparation time, filing time and payment time;
Total tax rate:
Total amount of taxes payable as a percentage of commercial profits, generally: profit or corporateincome tax; social contributions and labor taxes paid by the employer; property taxes, turnover and
other taxes.
Paying t ax es in Malays ia :35 payment s , 166 hours , 32 .6% t o t a l t ax ra te
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
38/72
15
35
27
Payments (number per year)
Malaysia Regional Average OECD
Number of tax payments inMalaysia compared with East
Asia Pacific Region and OECD
Pay ing Taxes: Top 10 and w hat t hey have in com m on
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
39/72
1. Maldives2. Singapore
3. Hong Kong, China
4. United Arab Emirates
5. Oman
6. Ireland7. Saudi Arabia
8. Kuwait
9. New Zealand
10. Kiribati
Online filing
One tax per tax base
Low rates and wide taxbase
Simplify tax administration
Sc or ing Ind ica t ors
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
40/72
3. Em ploy ing Worker sMalays ia s rank : 43
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
41/72
Em ploying w orkers : The com pany
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
42/72
Is a limited liability company;
Operates in Kuala Lumpur;
Is 100% Malaysian-owned;
Operates in the manufacturing sector;
Has 201 employees; Is subject to collective bargaining agreements in
countries where such agreements cover more than
half of the manufacturing sector and apply even tofirms not party to them;
Abides by every law and regulation but does not grant
workers more benefits than what is legally mandated.
Em ploy ing w orkers : The w orker
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
43/72
Is a non-executive, full-time male employee who hasworked in the same company for 20 years, and is now 42years old;
Earns a salary plus benefits equal to the countrysaverage wage;
Is a lawful citizen who belongs to the same race andreligion as the majority of the countrys population;
Resides in Kuala Lumpur;
Is not a member of a labor union, unless membership ismandatory.
Em ploy ing w orkers m easures :
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
44/72
1. Rigidity of employment index (0-100), the average of:Difficulty of hiring index (0-100) fixed term contracts, minimum wage
Rigidity of hours index (0-100)
provisions relevant to non-standard work schedules and annualleave
Difficulty of firing index (0-100)
required procedures for redundancy
2.
Firing cost
(weeks of salary)
Notice periods and severance pay for a redundant worker (in weeks
of salary)
plus
3. Non-wage labor cost (% of salary) Labor taxes payable by employer (% of workers wage)
Di f f ic u l t y o f H i r ing Index
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
45/72
Range Malaysia
Does the law prohibit the use of fixed-term
contracts for permanent tasks (Yes/No)?
0 or 1 0
What is the maximum accumulative duration of
fixed-term contracts?
5 years = 0
3-5 years = 0.5
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
46/72
Range Malaysia
Is night work restricted? Yes/No No
Is weekend work unrestricted? Yes/No No
Can the workweek consist of 5
days? Yes/No No
Can the workweek exceed 50 hours (including
overtime) for 2 months a year?
Yes/No No
Is a worker automatically entitled to more than 21
working days of paid annual vacation?
Yes/No No
0-100 0
Dif f ic u l t y o f Fi r ing Index
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
47/72
Range MalaysiaDoes the law prohibit terminating workers because of
economic redundancy?
Yes/No No
Does an employer need to notify a third party to terminate 1
redundant worker?
Yes/No Yes
Does an employer need to notify a third party to terminate 25
redundant workers?
Yes/No Yes
Does an employer need third-party approval to terminate 1
redundant worker?
Yes/No No
Does an employer need third-party approval to terminate 25
redundant workers?
Yes/No No
Does the employer need to consider reassignment or
retraining options before terminating for redundancy?
Yes/No No
Do priority rules apply for redundancy? Yes/No Yes
Do priority rules apply for reemployment? Yes/No No
0-100 30
Fi r ing (i .e . re t renc hm ent ) c ost s : Com par ing Malays iaand t he t op 10 in overa l l ease o f do ing bus iness
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
48/72
4
0
0
62
0
22
28
24
475
0 10 20 30 40 50 60 70 80
Singapore
New Zealand
United States
Hong Kong, China
Denmark
United Kingdom
Canada
Ireland
AustraliaMalaysia
Firing Costs, expressed inweeks of a workers salary
Em ploy ing Work ers : Top 10 and w hat t hey have inc o m m o n
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
49/72
1. United States
2. Singapore
3. Marshall Islands
4. Georgia
5. Brunei6. Tonga
7. Maldives
8. Australia
9. Palau
10. Denmark
Fixed-term contracts allowedwithout limit for permanent tasks
Limited restrictions on night-timeor weekly-holiday work
Firing costs do not exceed the
equivalent of two months salary
No third-party approval required todismiss workers and no priority
rules in place
Non-wage labor costs do notexceed 20%
6. Get t ing Credi tMalays ia s rank : 3
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
50/72
Get t ing c red it i ndica t o rs
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
51/72
Legal rights index: 10 features of collateral/secured transactions law
Credit information index: 6 features of credit information system
plus
Public credit registry coverage:
Number of individuals and firms
Percentage of adult population
Private credit bureau coverage:
Number of individuals and firmsPercentage of adult population
Credi t in format ion Index
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
52/72
1. Are data on both firms and individuals distributed? Yes
/ No
2. Are both positive and negative data distributed? Yes
/ No
3. Does the registry distribute credit information fromretailers, trade creditors or utility companies as well
as financial institutions?
Yes / No
4. Are more than 2 years of historical credit information
available for distribution?
Yes
/ No
5. Is data on all loans below 1% of income per capita
distributed?
Yes
/ No
6. Is it guaranteed by law that borrowers can access
their data in the largest credit registry?
Yes
/ No
Credit information index 0 -
6
Answers for Malaysia are in bold. Public Registry Coverage equals 44.5% of
adult population.
Met hodology Legal Right s Index
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
53/72
1. Does the law allow all natural and legal persons to be party to collateral agreements? Yes
/ No
2. Does the law allow for general descriptions of assets, so that all types of assets can be used
as collateral?
Yes
/ No
3. Does the law allow for general descriptions of debt, so that all types of obligations can be
secured?
Yes
/ No
4. Does a unified registry exist for all security rights in movable property? Yes
/ No
5. Do secured creditors have absolute priority to their collateral outside bankruptcy procedures? Yes /No
6. Do secured creditors have absolute priority to their collateral in bankruptcy procedures? Yes
/ No
7. During reorganization, are secured creditors' claims exempt from an automatic stay on
enforcement?
Yes
/ No
8. During reorganization, is management's control of the company's assets suspended? Yes
/ No
9. Does the law authorize parties to agree on out of court enforcement? Yes
/ No
10. May parties have recourse to out of court enforcement without restrictions? Yes /No
Legal Rights Index 0-10
Answers for Malaysia are in bold. Malaysias total score is 8.
Get t ing Cred it : Top 10 and w hat t hey have inc o m m o n
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
54/72
1. United Kingdom
2. Hong Kong, China
3. Australia4. Germany
5. Malaysia
6. New Zealand
7. Canada
8. Israel9. Singapore
10. United States
Record positive and negative credithistory
Gather historical credit information
going back at least 2 years, of bothindividuals and companies
Utilities or retailers as well as banks
provide credit information
Allow all types of assets to be used ascollateral
Unified collateral registry
Out-of-court enforcement of security
rights
7. Pro t ec t ing Invest orsMalays ia s rank : 4
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
55/72
Protec t ing Invest ors : t he case
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
56/72
Seller
Co.
Buyer Co. buys trucks from Seller Co.
Mr. James owns 60%of Buyer Co. shares,
sits on its board ofdirectors
Mr. James owns90% of Seller Co.
shares
Mr. James
Buyer Co.
Protec t ing Investors m easures :
Extent of disclosure (0-10)
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
57/72
Extent of disclosure (0-10)
who approves the transaction what needs to be disclosed, when and to whom
Malaysias score:
10
Extent of director liability (0-10)
available claims against Mr. James and the other directors
what needs to be proven for each claim
what remedies are available if they are found liable Malaysias score:
9
Ease of shareholder suits (0-10)
access to company information for proving the investors case
Malaysias score: 7
Strength of investor protection: average of the three indicesMalaysias score: 8.7
Ex t ent o f Disc losure Index
Score Malaysia
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
58/72
Score Malaysia
1.
What corporate body can legally approve the transaction? 0-3 3
CEO or managing director alone 0
Board of directors or shareholders; Mr. James may vote 1
Board of directors; Mr. James may not vote 2
Shareholders; Mr. James may not vote 3
2.
Is immediate disclosure to the public, regulator or shareholders
required? 0-2 2
No disclosure is required 0
Disclosure of the transaction but not of the conflict of interest is required 1
Disclosure of the transaction and of the conflict of interest is required 23.
Is disclosure in the annual report required? 0-2 2
Disclosure in the annual report is not required 0
Disclosure of the transaction but not of the conflict of interest is required 1
Disclosure of the transaction and of the conflict of interest is required 2
4.
Must Mr. James disclose to the Board of Directors? 0-2 2
No disclosure is required 0
Disclosure of the conflict of interest is required without any specifics 1
Full disclosure of material facts of the conflict of interest is required 2
5. Must an external body approve the transaction (Yes/No)? 0-1 1
Total 0-10 10
Ex t en t o f Di rec t o r L iabi l i t y Index
Score Malaysia
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
59/72
1.
Can a shareholder plaintiff hold Mr. James liable for damages? 0-2 2
No, or only for fraud or bad faith 0
Only if Mr. James was negligent or influenced the approval 1
If the transaction is unfair or prejudicial to other shareholders 2
2.
Can a shareholder plaintiff hold the approving body liable for damages? 0-2 2
No, or only for fraud or bad faith 0
Only if the approving body was negligent 1
If the transaction is unfair or prejudicial to other shareholders 2
3.
Can a court void the transaction if the plaintiff is successful? 0-2 1
No, or only for fraud or bad faith 0
Only if the transaction is oppressive or prejudicial to other shareholders 1
If the transaction is unfair or involves a conflict of interest 2
4.
Does Mr. James pay damages if the plaintiff is successful (Yes/No)? 0-1 1
5.
Does Mr. James pay back profits if the plaintiff is successful (Yes/No)? 0-1 1
6.
Can Mr. James be fined or imprisoned (Yes/No)? 0-1 1
7.
Can minority shareholders sue directly or derivatively for damages? 0-1 1
Only shareholders holding 10% or more of share capital may sue 0 Shareholders holding less than 10% of share capital may sue 1
Total 0-10 9
Ex t ent o f Shareholder Sui t s Index
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
60/72
Score Malaysia
1.
What range of documents is available to the shareholder during trial? 0-4 4
Information the defendant has indicated he/she will rely on for
defense 1
Information that directly proves specific facts in plaintiffs claim 2
Any information relevant to the subject matter of the claim 3 Any information that may lead to the discovery of relevant information 4
2.
Can the plaintiff examine the defendant and witnesses directly? 0-2 2
No 0
Only if the judge approves the questions beforehand 1
Yes, and the judge does not need to approve the questions beforehand 2
3.
Can the plaintiff obtain categories of relevant documents without identifying
each document (Yes/No)?
0-1 0
4.
Can shareholders with 10% or less of share capital, without filing suit,
request that a government inspector investigate the transaction (Yes/No)?
0-1 0
5.
Can shareholders with 10% or less of share capital inspect transaction
documents before filing suit (Yes/No)?
0-1 0
6.
Is the standard of proof for civil suits lower than for criminal
cases (Yes/No)? 0-1 1
Total 0-10 7
Protec t ing Investors : Top 10 and w hat t hey havein c omm on
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
61/72
1. New Zealand2. Singapore
3. Hong Kong, China
4. Malaysia
5. Canada
6. Israel7. United States
8. Ireland
9. South Africa
10. United Kingdom
Regulate approval of related-partytransactions;
Require extensive internal and
external disclosure requirementsfor relatedparty transactions;
Facilitate shareholder judicial
redress for damage caused tocompany through self-dealing;
Greater remedies against directors
involved in harmful related-partytransactions;
Open company books for
shareholder inspection.
8. Enforc ing Cont rac t sMalays ia s rank : 63
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
62/72
Enforc ing c on t rac t s : t he c ase
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
63/72
The Premise:
Seller and Buyer are two businesses located in Kuala Lumpur.
Seller sells and delivers goods worth 200% of income per capita to Buyer, who
refuses to pay disputing the quality of the goods. Seller sues Buyer in Kuala
Lumpur Sessions Court (Mahkamah Sesyen Kuala Lumpur).
The claim equals 200% of income per capita (approx. 36,700 MYR); Seller attaches Buyers goods prior to obtaining judgment;
Expert opinions are given on the quality of the goods; the parties each call an
expert witness or the judge appoints an independent expert;
Seller wins the case and Buyer does not appeal;
Seller immediately moves to enforce the judgment through a public sale of
Buyers movable assets (e.g. office equipment).
Enforc ing c ont rac t s m easures :
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
64/72
Procedures
(number):
Service of process; Trial and judgment; Enforcement of judgment through public sale of buyers movable goods;
Measures procedures applicable to either civil or common law jurisdictions;
Time
(calendar days)
Service of process; Trial and judgment; Enforcement of judgment through public sale of buyers movable goods; Includes waiting period between actions;
Cost
(% of value of claim)
Court costs + average attorneys fees + enforcement fees
Ease of Enforcing Contracts = Average of Rank on Time, Rank on Cost and Rankon Procedures)
Enforc ing con t rac t s in Ma lays ia
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
65/72
Procedures (number) 30
Duration (days) 600
Filing and service 60
Trial and judgment 360
Enforcement of judgment 180
Cost (% of claim)* 27.5
Attorney cost (% of claim) 20.2
Court cost (% of claim) 1.1
Enforcement Cost (% of claim) 6.2
Enforc ing cont rac t s : Top 10 and w hat t hey have inc o m m o n
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
66/72
1. Hong Kong, China2. Luxembourg
3. Latvia
4. Iceland
5. Singapore
6. Austria7. Finland
8. United States
9. Norway
10. Korea
Specialized commercialcourts
Changes to procedural rules
More efficient enforcementof judgments
Introduce out-of-courtenforcement of small or
uncontested claims
9. Closing a BusinessMalays ia s rank : 54
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
67/72
Closing a b usiness: The business
Is a domestic limited liability company whose major asset is a hotel in downtown
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
68/72
Kuala Lumpur (approx. 60 rooms);
Has had average annual revenue of 1,000 times income per capita over the past3 years;
Took out a 10-year loan from a domestic bank 5 years ago, using the hotel real
estate as security; Worth more as a going concern than it would be in a piecemeal liquidation
Has a mortgage whose remaining principal is equal to the hotels market value;
The companys founder owns 51% of shares, with no other shareholder holdingmore than 5% of the company;
The hotel has a professional manager, 201 employees, and 50 suppliers;
The bank is the only secured creditor, holding 74% of the outstanding debt;
OWES A LOT OF PEOPLE MONEY:
the bank (mortgage on the hotel property), suppliers, employees, back taxes
and cant pay them.
Clos ing a bus iness m easures:
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
69/72
Time: How many years does it take to put the company through the
bankruptcy process?
Cost: What percentage of the estate value is spent going throughthe bankruptcy process?
Recovery rate: How many cents on the dollar can claimants
creditors, tax authorities and employees recover from the
insolvent company?
Closing a bus iness:Rec overy ra t es in Ma lays ia and o t her c ount r ies
Closing a business in Malaysia:Ti 2 3
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
70/72
0
10
20
30
40
50
60
70
8090
100
Japa
n
Australia
HongKon
g
Thaila
nd
Mala
ysia
Chin
a
Indon
esia
India
Time: 2.3 yearsCost: 15% of estate valueRecovery Rate: 38%
Recovery Rate(percent)
93%
79% 79%
42% 38%36%
13% 12%
Clos ing a bus iness: Top 10 and w hat t hey have inc o m m o n
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
71/72
1. Japan2. Singapore
3. Norway
4. Canada
5. Finland
6. Ireland7. Denmark
8. Netherlands
9. Belgium
10. United Kingdom
Establish creditors committees
Increase creditors priority
ranking
Allow pre-insolvency
proceedings
Reduce time limits
Minimize court involvement
Thank You
8/3/2019 Doing Business 2008 - Malaysia Methodology and Best Practises
72/72
For more information,
or if you would like to become a Doing Business
contributor,
please visit
www.doingbusiness.orgor contact us directly:
Sylvia Solf: [email protected] Yap:[email protected]
http://www.doingbusiness.org/mailto:[email protected]:[email protected]:[email protected]:[email protected]://www.doingbusiness.org/