SSM National Conference 2015 – Reforming Procedures on Doing Business in Malaysia

Bismillahirrahmanirrahim
Assalamualaikum wa Rahmatullahi wa Barakatuh
Salam Sejahtera
dan Salam 1Malaysia

I would like at the very outset record my appreciation to the organisers, SSM, for inviting me to share my thoughts and my experiences in this session on ‘Reforming Procedures on Doing Business in Malaysia.’

2. I like to thank, in particular the CEO of SSM, YBhg Dato’ Zahrah Binti Abdul Wahab Fenner for moderating this session. I fervently believe that sharing and listening is very important for improving service delivery in the Public Sector. Or any sector for that matter.

3. Public service delivery is an area I was active in for over 38 years. Which I had the privilege of leading for 6 years. And that is what I would like to discuss today.

Ladies and Gentlemen,

4. The World Bank’s latest ‘Ease of Doing Business 2015’ ranks Malaysia as the 18th easiest jurisdiction to do business in the world. The top five, in order of ranking, are Singapore, New Zealand, Hong Kong, Denmark and Korea.

5. The Global Competitiveness Index 2014-2015 ranks Malaysia as the 20th competitive in the world, and the 6th most competitive in Asia-Pacific. The top five globally are Switzerland, Singapore, the USA, Finland and Germany.

6. These two reports rate the ease and competitiveness of the systems and processes of a country’s machinery. In other words, the readiness of a country’s infrastructure to attract foreign direct investments.

7. So, how did these countries do in attracting FDI in 2013, the most recent year with complete data. Malaysia was 26th. The top five were the Netherlands, China, the USA, Brazil and Hong Kong.

8. Despite being the 18th easiest and 20th most competitive economy, we are 26th in attracting FDI. The Netherlands is not in the top five of either the Ease of Doing Business or the Competitiveness Index. But they are number one in attracting FDI. The message is, putting the right systems, policies and processes are great. But that is not the end. Those are the means towards an end. What matters is the outcome. DDI, FDI, annual economic growth, per capita income growth. The service experience with our delivery system must be consistent with the purported efficiency of our infrastructure. It must deliver where it matters. When it matters.

9. Let us be frank on this. The adage “First world infrastructure with third world services” is something we are all familiar with. The challenge is to ensure that that adage does not become associated with our policy implementation.

10. In the context of this conference, the proposed amendments made to the Companies Act is a natural progression for Malaysia as our economy matures. As boundary walls disappear between economies, they are replaced by bridges of integration. Countries have a choice on how to respond. We can retreat inwards and fortify smaller economic pies with new walls. Or march towards the integration bridges armed with more progressive policies. That will invite more competition, by making it easier to establish new business entities. At the same time, they also make Malaysia, as an economy, more competitive.

Ladies and Gentlemen,

11. Back in 2007, the Malaysian Government set up PEMUDAH, the Special Task Force to Facilitate Business, with the aim of improving public sector delivery through Public-Private Partnership. A collaboration between and among the 13 Senior Officials and 10 Captains of Industry in PEMUDAH. Until my retirement in June 2012, I chaired PEMUDAH together with Tan Sri Yong Poh Kon, then the President of Federation of Malaysian Manufacturers (FMM).

12. In 2007, when we started PEMUDAH, the World Bank’s Ease of Doing Business Index ranked Malaysia number 25 in the world. We set the target of top 10 by 2015. There were many detractors, of course. Some called PEMUDAH a waste of time. Others simply dismissed it outright. We soldiered on. Driven by the singular goal of ‘service’ to the Nation and the People. It is worth highlighting that PEMUDAH was a joint effort of public and private sectors. And the members were not paid any remuneration. Despite that, attendance was 100% almost all the time. And, the meetings were always on time!

13. Fast forward to October, 2013. Seven years later, Malaysia was ranked by the World Bank as the country with the Sixth most business-friendly regulatory environment. Not Tenth, but Sixth. Against target, that was four positions higher, two years earlier.

14. Today, we are ranked number 18. The reason for the drastic change in ranking is explained by the seven key changes introduced to the methodology in the latest evaluation. That is okay. Our earlier target of top ten was based on the previous methodology. It also doesn’t change the fact we have moved up from 25th place before. If we could move from 25th to 6th with the old methodology, I am pretty confident we can, and we shall, move from 18th to top 10 with the new methodology too. There are less steps to climb! Perhaps we can move up 8 steps say by 2020? As YAB PM wrote in the 2014 PEMUDAH Annual Report, our target is to be among the top five in the world.

15. To be clear, we didn’t embark on the improvements to chase World Bank ranking. We did it for ourselves. For our Country. The rankings are only a useful yardstick. And of course, it gives us bragging rights in the global arena! The challenge has always been, and shall always be, in sustaining and translating the policies into service delivery. And what is important is for the people, our customers, to feel that indeed dealing with the service providers, with the Government, is easy.

16. We may have a lot of detractors and critics – but we have also won praises, domestically and internationally, for what PEMUDAH has achieved. The World Bank has highlighted PEMUDAH as an extraordinarily effective model of Public-Private Partnership (PPP) and has advocated its adoption by other countries. Even countries like Switzerland and Singapore have come to Malaysia to learn a thing or two from PEMUDAH.

Ladies and Gentlemen,

17. The amendments to be made to the Companies Act are primarily anchored on the principle of ‘Simplification’. Making it SIMPLE. MUDAH. To be delivered by a government machinery that embraces a ‘PEMUDAH’ mindset. Not ‘PENYUSAH’ mindset. Simplification and self-governance are the only way forward. There is no turning back to the days of religiously monitoring each entity to the nth degree. Filling up a million forms. And, making entrepreneurship feel like the privilege of the elite. We must ensure the processes do not make entrepreneurship exclusive for those who had the stamina and endurance to see through the processes.

18. At this point, I would like to briefly touch on the topic of entrepreneurship. This is an arena for risk takers. Those who dream of something, and have a go at it. Those who go through various obstacles and risk all they have just because they passionately believe in something. Therefore, as a Nation, let us not make policies and processes involved in starting a business another obstacle.

19. Budget 2015 introduced various incentives aimed at entrepreneurs because of the multiplier effect it can have on our economy. TEKUN (Tabung Ekonomi Kumpulan Usaha Niaga) was allocated RM500 million. RM5 billion was allocated for SME financing with 70% government guarantee. RM20 million for franchise development. And then there is Malaysian Innovation and Global Creativity Centre, MAGIC, that was jointly launched by our PM and President Barack Obama no less. And many more. That’s how much the Government believes in entrepreneurship. Perhaps, the real test of the amendments to be made to the Companies Act is in how the budding entrepreneurs, the novices, feel about it. Not the corporate titans.

20. It is important to acknowledge that the work towards enhancing Malaysia’s competitiveness in the global economy is our joint responsibility. Everybody’s responsibility. Not just the Parliament to pass the Act. Or just the Public Sector to deliver the service. It is also the responsibility of the Academia to continuously research and study ways to improve our delivery. To add rigour and discipline to policy proposals and development. It is also the responsibility of the private sector to help identify gaps in delivery. And propose ways to improve. Just like the role played in PEMUDAH. By PEMUDAH. And to practise Malaysia Inc at international platforms through our network and partners.

21. Hence, I encourage everyone in this room to make challenging the ‘status-quo’ a personal quest. A quest to continuously identify and highlight policies and procedures that have outlived its usefulness and living on borrowed time. There are many a policy that we adhere to just because, “that’s how it has always been done.” This quest is not going to start over night. It must be encouraged, rewarded even.

22. Again, we could take a leaf from PEMUDAH Challenge. The days of Government knows best have long been confined to the pages of history. As the saying goes, “necessity is the mother of invention.” Who knows necessity better? Who has the incentive to do away with outdated policies? The one who is paid to manage the process? Or the one who can’t wait to be done with the process so he can move on to creating value?

23. Getting the answer on how to improve our competitiveness is not only about asking the right questions. It is also about asking the right people. Why limit ourselves to the 1.4 million public servants when we can tap into the brilliant minds of the 29 million Malaysians? Or even the Non-Malaysians – in Malaysia and outside Malaysia. Isn’t the internet wonderful? But the important pre-requisite is for officials to acknowledge that they don’t have all the answers. A government machinery, including its most junior officers, that invites ideas and suggestions. A government machinery that listens and implements the good suggestions.

24. So here is probably the right time to ask the questions, “How will the proposed changes to the Companies Act make a real difference in your day-to-day activities?” I believe Mr Wong Tat Chung will be detailing shortly the proposed changes to the Companies Act. And I am sure, as practitioners, you will benefit from the presentation. In addition, I will also ask some questions: “Can it be improved further? Can it be made simpler?”

25. So, it is good if policymakers and policy formulaters in this room, and outside, open up the channels of communication with our wider constituents. Beyond just the Companies Act. Also all other Acts. Having facebook page is good. Making email addresses available is excellent. But we need to translate those inputs into actions on our part, into outcome. It shouldn’t take two weeks to reply to an email. That is no different from having a suggestion box at the counter that is opened only once a month. Make each and every idea and view count. Sooner rather than later. AND ACT ON THOSE IDEAS AND SUGGESTIONS CONSIDERED GOOD.

Ladies and Gentlemen,

26. As we improve our policies and delivery, so do others. We need to run to keep up with others. To get ahead, we need to sprint. And to sprint, we need the muscle power of every leg in the country – public servants, academics, corporate captains. Every one of us here. And everyone out there.

Wabillahi taufik, walhidayah, wassalamualaikum warahmatullahi wabarakatuh.