Malaysia is the ninth simplest place to do business in Asia, according to a new report by TMF Group, a leading provider of international administrative services. The Global Business Complexity Index, which compares key administrative and compliance demands, ranked Malaysia 25th most complex overall out of 76 jurisdictions that were analysed worldwide.
Among its regional neighbours, Thailand (73rd), South Korea (61st), Japan (59th), Hong Kong (56th), Taiwan (46th), Singapore (42nd), Vietnam (27th) and India (28th) were all seen as more straightforward environments for international firms to operate in. Malaysia was however, deemed less complex than the Philippines (20th), China (9th), and Indonesia (2nd).
Sharon Yam, TMF Group’s Managing Director for Malaysia, said: “There have been efforts from the Malaysian government and the government agencies to make it more conducive for people to do business in Malaysia. From the Companies Act 2016 and Companies Regulations 2017, a single online ‘superform’ was introduced to replace the multiple forms which were previously required by business individuals who want to incorporate a company in Malaysia. Digitalization reduces the complexity via online submission. However, the country’s digital infrastructure is still not as mature yet and further investment is required.”
The report was based on a combination of statistically weighted data and qualitative research among local market experts. It focuses on three areas: 1) rules, regulations and penalties; 2) accounting and tax; and 3) hiring, firing and paying employees.
Malaysia is among the minority (30%) of jurisdictions worldwide, who say that the responsibilities of directors and officers of companies have increased over the last three years.
In terms of HR practices, Malaysia was seen to have a strong labour law wherein the services of an employee cannot be terminated unless there is just cause, or good reasons provided objectively and not just from the employer’s perspective.
Sharon Yam added: “Malaysia still has plenty of attractive advantages for businesses looking to set up here or get established. It’s legal and accounting practices are derived from the British system and familiar to most international companies. In the area of accounting and tax, for example, it scores well for its adherence to IFRS (International Financial Reporting Standards), compared with much of the rest of the region which continues to use a local GAAP (Generally Accepted Accounting Principles) framework.”
The report found that The Cayman Islands was the least complex country of all 76 surveyed. Greece tops the index as the world’s most complex business environment.