ANALYSIS ON 2011 WORLD BANK
RANKING ON STARTING A BUSINESS
FOR MALAYSIA
LOKMAN BIN RAMLI
HEAD OFSECTION
PRODUCT AND BUSINESS DEVELOPMENT
COMPANIES COMMISSION OF MALAYSIA
1
SSM’S BUSINESS PROCESS IMPROVEMENTS
YEAR
SSM’s BUSINESS PROCESS IMPROVEMENTS
June 2005
Full implementation of the new Companies and Business
System (CBSROC & CBSROB)
End 2005
Commencement of Business Process Re-engineering of
SSM’s public delivery system
May 2006
Introduction of SSM e-Info
March 2007
May 2007
November 2007
February 2010
April 2010
February 2011
Official Announcement of the SSM’s New Clients’ Charter
SSM Business e-Lodgement rolled out
SSM Companies e-Lodgement rolled out
Launch of MyCoID Phase 1
Introduction of 1 Day Incorporation as according to World
Bank Starting a Business
Roll-out of MyCoID Phase 2
2
MILESTONES
• SSM’s New Client Charter in March 2007
Activity
After
Before
Approval of business name
1 hour
3 days
New business registration
1 hour
3 days
Renewal of business registration
15 mins
1 hour
Registration for termination of business
15 mins
1 day
1 hour
1 day
Approval of company name
1 day
5 days
Incorporation of a new company
1 day
5 days
Conversion of status
1 day
5 days
Change of company name
1 day
5 days
Commencement of business for public companies
1 day
5 days
Registration of charge
2 days
5 days
Approval of a trust deed
5 days
14 days
Registration of prospectus
3 days
14 days
Supply company/business information via computer printout
30 mins
1 hour
Uncertified copy of company documents
30 mins
1 hour
1 hour
3 hours
WORK PROCESSES
BUSINESS REGISTRATION
Registration of changes in registered particulars of business
Work process
re-engineering
COMPANY REGISTRATION
Certified copy of company documents
3
Note: Time taken begins from the moment payment is received until the certificate is issued.
THE 2011 WORLD BANK’S DOING BUSINESS REPORT ON MALAYSIA
Malaysia’s rank improved 2 places in 2011 to 21st from 23rd in 2010 out of 183
economies ranked. The report highlighted 5 areas of significant improvement
for Malaysia:
• Enforcing Contracts: Malaysia introduced performance index for judges in
2009; the case disposal rates are improving; use of active case
management, and maintenance of specialised commercial court/divisions;
• Starting a Business: Malaysia introduced/improved on-line procedures;
• Registering Property: Malaysia was the country to improve the most in
Registering Property (4th); the digitised property registration saved more
than 2 months in the process; the introduction of online procedures to
asses and pay stamp duties cut 6 days from the process;
• Paying Taxes: taxes can be paid online; and
• Trading Across Borders: in Malaysia it cost the least to move a 20ft
container (exporting), and 2nd for importing.
4
WORLD BANK’S DOING BUSINESS GENERAL METHODOLOGY
•
•
•
•
Doing Business records all procedures that are officially required for an entrepreneur to
start up and formally operate an industrial or commercial business. These include
obtaining all necessary licenses and permits and completing any required notifications,
verifications or inscriptions for the company and employees with relevant authorities.
The ranking on the ease of starting a business is the simple average of the percentile
rankings on its component indicators.
World Bank also considers the laws, regulations and publicly available information on
business entry, a detailed list of procedures is developed, along with the time and cost of
complying with each procedure under normal circumstances and the paid-in minimum
capital requirements. Subsequently, they will verify the findings with local practitioners
and government officials.
Information is also collected on the sequence in which procedures are to be completed
and whether procedures may be carried out simultaneously. It is assumed that any
required information is readily available and that all agencies involved in the start-up
process function without corruption. If answers by local experts differ, inquiries continue
until the data are reconciled.
To make the data comparable across economies, several assumptions about the
business and the procedures are used.
5
ASSUMPTIONS ON BUSINESS AND PROCEDURES USED ON STARTING A
BUSINESS
Type of company:
Limited Liability company or equivalent in the country
Located in:
country’s largest business city
Start-up capital:
equal to 10 times income per capita
Activities:
General industrial or commercial activities, such as the production
or sale of products or services to the public.
Note: It does not perform activities of foreign trade and does not
handle products subject to a special tax regime, for example, liquor or
tobacco. The business is not using heavily polluting production
processes.
Assets:
It is not a proprietor of real estate, It leases the commercial plant
and offices
Company deed:
10 pages long
Number
employees:
Annual
(turnover):
of 50 employees (within 1 month of commencement of operations).
All are nationals.
sales equal to 100 times income per capita
Sourced from Doing Business - Time and Motion Methodology Training,
6
WHAT DOING BUSINESS SURVEY COVERS
Doing Business survey provides quantitative measure of regulations for:
1. Starting a business;
2. Dealing with construction of permits;
3. Employing workers;
4. Registering property;
5. Getting credit;
6. Protecting investors;
7. Paying taxes;
8. Trading across borders;
9. Enforcing contracts; and
10. Closing a business.
World Bank will review other indicators from time to time
7
WORLD BANK DOING BUSINESS RANKING
• DB2011
9 indicators are included in the aggregate ranking on the ease of
doing business from 10 indicators previously. The Employers
Workers indicator was not included for DB2011 as the
methodology is being reviewed and consultations have yet to be
completed.
• DB2010
The indicators ranking for 2010 were revised due to corrections.
The report provides a comparable time series for research, as
such the *data is back-calculated to adjust for changes in
methodology.
*This issue will be discussed at the World Bank Workshop
scheduled in March 2011.
8
COMPARISON ON MALAYSIA’S RANKINGS
9
METHODOLOGY FOR STARTING A BUSINESS
10
METHODOLOGY FOR STARTING A BUSINESS
Sourced from Doing Business - Time and Motion Methodology Training,
11
METHODOLOGY FOR STARTING A BUSINESS – THE PROCESS
Sourced from Doing Business - Time and Motion Methodology Training,
12
STARTING A BUSINESS –TOP 10 AND BEST PRACTICES
1.
New Zealand
2.
Australia
3.
Canada
4.
Singapore
5.
Macedonia, FYR
6.
Hong Kong SAR, China
7.
Belarus
8.
Georgia
9.
United States
9.
Rwanda
•
•
•
•
•
•
Nominal or zero minimum capital
Standardized forms
No court involvement
Online registration
Fixed registration fee
No publication in Gazette
Sourced from Doing Business - Time and Motion Methodology Training,
13
DB2011 COMPARISON WITH ASIAN COUNTRIES – STARTING
A BUSINESS
COUNTRY
DB2011
DB2010
CHANGE IN
RANKINGS
Singapore
4
4
Hong Kong SAR,
China
6
5
1
Korea, Rep
60
55
5
Thailand
95
89
6
Japan
98
90
8
Malaysia
113
116
3
14
UNDERSTANDING WORLD BANK’S ‘STARTING A BUSINESS’
•
Business Reforms in Malaysia
= Doing Business reform making it easier to do business.
DB2011:
•
Starting a Business: Malaysia eased business start-up by introducing more online services.
Registering Property: Malaysia’s introduction of online stamping reduced the time and cost to transfer property.
DB2010:
•
Starting a Business: Business start-up was eased with a new one-stop shop to streamline registration. In addition,
the Malaysian Institute of Chartered Secretaries and Administrators (MAICSA) reduced company incorporation
charges and corporate fees. The service is still new, and the government is planning a public awareness campaign
about the new system. Enforcing Contracts: Enforcing contracts through the courts was made easier by increased
staff and stricter deadlines that have shortened case filing times from 45 days to 30.
DB2009:
•
Starting a Business: Amendments to the Companies Act facilitated e-Lodgement and reduced the time required by
introducing online filing of registration documents. Paying Taxes: The real property gains tax was abolished and the
corporate income tax rate was reduced to 26 percent (the rate had previously been tiered). A further reduction to
25 percent is planned for next year. The reform also introduced a single-tier tax system, in which profits are taxed
only after dividend payments are exempted.
DB2008:
•
Starting a Business: Name checking and registration were sped up, reducing delays by a week.
Paying Taxes: The profit tax was reduced by 1 percentage point (with another 1 percentage point reduction planned
by 2008) and tax filing was simplified online to reduce the time burden by 24 hours.
15
COMPARISON OF MALAYSIA’S RANKINGS FOR STARTING A BUSINESS
Starting a Business
Ease of
Doing
Business
Rank
Year
Rank
Procedures
(number)
Time (days)
Cost (% of
income per
capita)
Min. capital
(% of
income per
capita)
DB2004
..
..
10
37
33.1
0
DB2005
..
..
10
37
32
0
DB2006
..
..
10
37
26.6
0
DB2007
..
..
10
37
25.1
0
DB2008
..
..
10
31
23.1
0
DB2009
..
..
10
20
18.9
0
DB2010
23
116
10
18
15.6
0
DB2011
21
113
9
17
17.5
0
16
WORLD BANK’S DOING BUSINESS METHODOLOGY
Calculation on ‘cost’ to start a business:
• Total costs to start a business (US$) X 100
(gross national income) GNI per capita (US$)
Eg:
US$ 500 x 100 = 8.33%
US$ 6,000
17
TAKE UP RATE FOR 1 DAY INCORPORATION
18
PROCEDURES, DAYS AND COSTS AS HIGHLIGHTED IN DB2011
No.
Procedure
Time to
Complete
Associated
Costs
1.
Application to the Companies Commission of Malaysia (CCM) on the
prescribed form (13A) to ensure the availability of the proposed
company's name
1 day
MYR 30
2.
Company Secretary prepares company incorporation documents (not
previously reflected as a procedure in 2010, but now identified as a
procedure)
3 days
MYR 1,000
(cost charged by
Co. Sec)
3.
File necessary documents with the Companies Commission of Malaysia
and obtain stamps
2 days
MYR 2,770
4.
Make a company seal
1 day
MYR 150
5.
Purchase statutory books and share certificates books
2 days
MYR 200
6.
Register with the Income Tax Department
5 days
no charge
7.
Register for Employment Provident Fund (EPF)
1 day
no charge
8.
Register with Social Security Organization
1 day
no charge
9.
Notify the Director General of the Inland Revenue Board of the
employment of workers
1 day
no charge
19
PROCEDURES AND DAYS AS HIGHLIGHTED IN DB2010
Activity
Procedures
No. of days
proposed company’s
1
1
Articles of Association
1
1
(iii) Filing the necessary documents within 3 months after the
name reservation
1
2
(iv) Making a company seal
1
1
(v) Purchasing statutory books and share certificates
1
2
(vi) Registration with the income tax department (IRB)
1
1
(vii) Registration with the Employment Provident Fund (EPF)
1
1
(viii) Register with the Social Security Organization (SOCSO)
1
1
(ix) Notifying the Director General of IRB of the employment of
workers
1
1
TOTAL
9
11
(i) Determining the availability of the
name
(ii) Stamping of Memorandum and
(M&A)
20
SSM’S REFORM INITIATIVES: THE BUSINESS PROCESS RE-ENGINEERING
I. IDENTIFY & CLUSTER
1. Name search and
approval
III. PROJECTED OUTCOME
FOR DOING BUSINESS 2011
II. RECONCILE
SSM’s
processes
1. Name search and
approval
Process 1
2. Lodgement of
documents
2. Lodgement of
documents
Further
reconciliation
3.Stamping of M&A
* The purchase of revenue
stamp and cancellation of
such stamp can now be
done in SSM
3. Purchase of statutory
books and share certs
4. Make a company seal
4. Make a company seal
5. Stamping of M&A
6. Register with IRB
7. Register with EPF
8. Register with SOCSO
9. Notify IRB of
employment of workers
SSM as a
‘One-Stop
Centre’
* In Kuala Lumpur
and Klang Valley,
the company seal
can be obtained
on the same day
External
processes
5. Purchase of statutory
books and share certs
Process 2
6. Register with IRB
7. Register with EPF
8. Register with SOCSO
9. Notify IRB of
employment of workers
Process 3
MyForm
* Initiative by MAMPU
21
SSM’S REFORM INITIATIVES: THE BUSINESS PROCESS RE-ENGINEERING
• Determining the availability of the
proposed company’s name
• Stamping of Memorandum and Articles
of Association (M&A)
• Filing the necessary documents within 3
months after the name reservation
• Making a company seal
• Purchasing statutory books and share
certificates
Consolidated
into 1
process
Note: Company Secretary prepares company incorporation documents - 3 days and
costs of RM1,000. Previous DB Reports this was not included. Why the discrepancy
in the DB2011?
22
SSM’S REFORM INITIATIVES: THE BUSINESS PROCESS RE-ENGINEERING
• Memorandum & Articles of Association
 Under the initiatives introduced on 1 April 2010,
stamping of the M&A, purchase and cancelling of
revenue stamps now done at SSM upon submission of
incorporation documents.
 Amendments made to Schedule 2 of the Stamp Act
1949 whereby the Registrar of Companies was
conferred the power to cancel the revenue stamps
beginning 1 January 2010. SSM was also granted the
permission by the Minister of Finance to make
available such stamps at its premises beginning 1
April 2010.
23
SSM’S REFORM INITIATIVES: THE BUSINESS PROCESS RE-ENGINEERING
• Purchase of share certificates, share certificates
& company seal
 Not part of incorporation procedure but SSM
facilitative to needs of users.
 Ordered
simultaneously
when
submitting
incorporation documents.
 Sold in a package at RM100.
 Receive same day with certificate of incorporation.
 Under the DB2011, cost as stated by respondents for
these items is RM350 if purchased outside SSM.
24
SSM’S REFORM INITIATIVES: THE BUSINESS PROCESS RE-ENGINEERING
• Registration with the income tax
department (IRB)
• Registration with the Employment
Provident Fund (EPF)
• Register with the Social Security
Organization (SOCSO)
• Notifying the Director General of IRB
of the employment of workers
Can be done in 1
procedure
under
MyForm
@
www.gov.my
Note: Register with the Income Tax Department - 5 days. Previous DB Reports indicate
that it only took 1 day for the registration. Why the discrepancy in the DB2011?
25
SSM’S NEW CLIENTS CHARTER & ITS IMPLEMENTATION CONCEPT
COLLECTION OF
CERTIFICATE
SIGNING OF
CERTIFICATE
APPROVAL
DATA ENTRY
APPROVAL
DATA ENTRY
COUNTER
COUNTER
Approval of
name +
payment
Approval of
name +
payment
ISLAND 1
ADVISORY
COUNTER
1
ADVISORY
COUNTER
2
ISLAND 2
26
THE 3-STAGE EVOLUTION OF IMPROVEMENTS IN ‘STARTING A
BUSINESS’
DOING BUSINESS 2010 (AS IS)
Procedures
1. Determining the availability
of the company’s name
2. Stamping of M&A
TARGET: DOING BUSINESS 2011
(Deployment by 31 March 2010)
Day
1
Procedures
1. Incorporation process
BEYOND DOING BUSINESS 2011
Day
Procedures
Day
1
1. Incorporation process
and simultaneous
automatic registration
with the IRB, EPF and
SOCSO
1
• Consolidation of name approval,, stamping
of M&A and lodgement of documents
• Business process re-engineering
• Outcome: Restructuring of SSM Clients’
Charter
1
2. Purchase of company seal, statutory
books and share certificates
• MyCoID
1
• All items to be sold at SSM’s premises/online
3. Filing of the necessary
documents within 3 months
after the name reservation
2
3. Online registration via
MyGovXchange with the IRB, EPF
and SOCSO
4. Making a company seal
1
• A project by MAMPU
5. Purchasing statutory books
& share certificates
2
6. Registration with IRB
1
7. Registration with EPF
1
8. Registration with SOCSO
1
9. Notifying the DG of IRB for
employment of workers
1
1
27
INTRODUCTION TO MYCOID
http://www.ssm.com.my
28
INTRODUCTION TO MYCOID
http://www.ssm-mycoid.com.my
29
SERVICES OFFERED
30
AUTOMATED INFORMATION SHARING
- Name Search
- Incorporation
- Master Form
Start
Via MyCoID
Information
Sharing
31
DETAILED SERVICES OFFERED
32
SPECIAL FEATURES IN MyCoID







Auto validation against License Secretary Registration
Name Search :
 Public gets the message up front if name is not available
 Validation against;
i. Gazetted words
ii. Restricted words
iii. Similar names
iv. Reserved names
Ready Template for M&A (Omission Handwritten signature)
Package (Stamping, Company Seal, Share Cert, Statutory
Book)
Master Form
Auto transfer of Information to Agencies
E-mail Notification
33
FUTURE SERVICES TO BE OFFERED
• Services to be provided by end of 2011:
 Form 24
 Form 44
 Form 49
34
THANK YOU
35