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SMEs need good rules to stay ahead

Improving the regulatory environment for small- and medium-sized enterprises is a work in progress, said Pemudah co-chairman Tan Sri Saw Choo Boon.

“It used to take months and years to register a business, obtain a construction permit, get electricity, or register a property.

“Today, a business can be started in four days, construction permits can be obtained in 80 days, electricity can be connected in 30 days and property can be registered in 13 days. Further reductions of these timelines are on the horizon,” he said.

Such achievements are some of the results of looking at the regulatory burden that affects businesses.

Regulatory burden is one of the areas which the Government and private sector are continuously working on to make the regulatory environment more conducive for businesses to remain competitive in the ever-changing business landscape.

Saw, who is also Federation of Malaysian Manufacturers president since 2014, added that the private sector recognised the need for regulations to help level the playing field, prevent abuse and exploitation, and ensure sustainable development.

“As important as they are, they need to be transparent, clear, consistent and credible,” he said.

Regulations are important as they allow government agencies to monitor and control developments such as recruitment of foreign workers in the country, inspection of selected imported products to contain biosafety risks, registration of drugs to ensuring compliance with standards such as health, environmental and labour standards as well as collection of revenue through fees to duties.

This means they have to be easily understood, practical and reasonable while taking into consideration about keeping up with business conditions.

Otherwise, issues may arise. For example, applications that are submitted could be rejected because of unclear instructions which could then lead to a long to-and-fro process, prolonging approval time.

“Regulatory burden must be viewed in the perspective of competitiveness as Malaysia needs to compete with other countries in terms of exports and attracting investments. If it is less costly and easier to comply with regulatory requirements in other competing nations, we must then reform to be as good or even better than our competitors in order to stay competitive,” Saw said, adding that unnecessary regulatory burden also increases the cost of doing business which, in turn, increases cost for consumers.

The World Bank Doing Business 2016 exercise ranks Malaysia as 18th out of 189 countries in terms of ease of doing business. This includes assessment of regulatory compliance in areas such as Starting A Business, Dealing With Construction Permits and Registering Property.

“We need to be in the top 10. We have improved in all these areas, but we need to improve further,” Saw said.

To stay ahead in the competitive business environment, regulators need to continuously examine every rule and regulation, and make them as efficient as possible and pertinent to today’s needs. But they cannot do it alone.

“The days of ‘government knows best’ are over. Calls by people for greater participation, accountability and transparency are picking up pace all over the world with an increasingly educated and informed citizenry, stronger civil society, watchdogs and rising Internet and e-governance,” he said.

The Government realised this need and in 2007, the then prime minister Tun Abdullah Ahmad Badawi established a Special Task Force to Facilitate Business (Pemudah) to look into the ease of doing business.

Pemudah, chaired by the then chief secretary to the Government, Tan Sri Mohd Sidek Hassan, consists of senior representatives from the public and private sectors which worked collaboratively to improve the regulatory environment.

“At the inaugural meeting of Pemudah, the then chief secretary called on the public service to every segment of the people, and adapt to the changing needs of customers and the nation. The essence was ‘One Service, One Delivery and No Wrong Door’,” Saw said.

In addition to the main Pemudah council, there are numerous focus groups consisting of public and private sector members looking at various regulations.

One of the first focus groups formed in 2007 is the Business Licensing Re-engineering Focus Group. It starts off by challenging the existence of every licensing requirement.

“If the responsible department or agency cannot justify its need, the licensing requirement will be abolished. Hundreds of licences have been abolished or consolidated into single licensing applications,” he said.

There is also a Focus Group looking into putting all licensing requirements into one common computer system for access through a single window and for online use called BLESS (Business Licensing Electronic Support System).

Launched in 2008, many licences in some states can already be applied online, with more licences being put into the system. The aim is to include all licenses and cover the whole country.

Apart from that, any new changes or introductions of new regulations needs to be properly done.

In July 2013, Chief Secretary to the Government, Tan Sri Dr Ali Hamsa, launched the National Policy on the Development and Implementation of Regulations (NPDIR) which promotes a regulatory process that will achieve coherence across ministries and agencies.

A practice adopted by most developed countries, Saw said the policy required the proposer of changes or introduction of new regulations to carry out a Regulatory Impact Analysis (RIA) on businesses and the public.

This include providing adequate notice and public consultation, assessment of ease of implementation and enforcement and post implementation review.

“Extensive training has been carried out on the new policy with increasing adoption of the policy by departments and agencies.

“This policy will help to ensure that the country’s rules and regulations remain as efficient as possible,” he said, adding that SMEs could play their role by reporting any problems they face with compliance to regulatory matters to

“But the journey is not over; it is continuous. We cannot stand still as other countries are also improving their regulatory environment.

“I believe the Malaysian public service has responded well to the call for greater engagement with the people, but we are in early days of comprehensive and effective engagement,” he concluded.

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