Chapter 6. Malaysia

Malaysia has been using good regulatory practice (GRP) tools to enhance productivity and competitiveness. Since 2007, the government has undertaken a number of initiatives through the Modernising Business Regulation (MBR) programme to reduce regulatory burden and facilitate business processes in the country. The government continues to innovate by proactively identifying regulations that affect businesses, including through regular regulatory mapping exercises. E-government activities have also been used to lessen paperwork and ease day-to-day operations of small and medium-sized enterprises (SMEs). More initiatives are being introduced to improve regulatory delivery with a focus on compliance, enforcement and inspection activities. For example, the government has introduced a number of programmes and informational sessions to improve the capacity of businesses - notably SMEs - to comply with new regulations. These initiatives have been introduced with support from academia as well as from industry.


Regulatory context

In 2007, Malaysia launched the Modernising Business Regulation (MBR) programme. The programme envisions enhancing the productivity and competitiveness in the country by modernising the business regulatory structure. This entails the need to progressively improve the quality of new and existing regulations (Figure 6.1).

Figure 6.1. Framework for Modernising Business Regulation in Malaysia

Source: Malaysia Productivity Corporation (2016), Annual Report on Modernisation of Regulations,

In the same year, the government established the Special Task Force to Facilitate Business (PEMUDAH), a private-public sector collaboration that is responsible for spearheading work related to public service delivery. The establishment of PEMUDAH and its secretariat, the Malaysia Productivity Corporation (MPC), was motivated by regulatory issues raised in relation to the ease of doing business in Malaysia.

Malaysia envisions becoming a high-income and developed nation by 2020. In line with this vision, Malaysia launched the National Policy for the Development and Implementation of Regulations (NPDIR) in 2013, which aimed to standardise and improve the overall regulatory process and enhance the transparency, accountability, and credibility of regulatory decisions through private-public collaboration and people-centred approach.

Prior to the NPDIR, there has been no policy that sets the direction and principles for the implementation of good regulatory practices. Nonetheless, Malaysia has continuously committed itself to adopting and sharing best practices for implementing good policies in the country.

Malaysia’s regulatory reform initiatives are well reflected in the NPDIR. It has provided the government with a structured approach to addressing public policy objectives and promoting good governance in the country. Initial efforts have been focused on reducing inefficiencies and burden in existing regulations faced by both the public and the business sector, notably SMEs. The National Small and Medium Development Act of 2017 has also emphasised the importance of reviewing and simplifying business-related regulations.

SME development landscape

Small and medium-sized enterprises (SMEs) in Malaysia represent 98.5% of the total business establishments in the country. In 2016, SMEs contributed to around 36.6% of the country’s gross domestic product (GDP) and 18% of the total exports (OECD, forthcoming[1]). Given its growing importance in the overall economy, the government continues to encourage business formation and the growth of enterprises, notably among potential high-growth and innovative firms. To do this, the country has set important targets for SMEs by 2020 – that is, it aims to increase the contribution of Malaysian SMEs to the overall GDP to 41% and of exports to 23%.

A distinct feature of the Malaysian SME landscape is the focus on Bumiputera entrepreneurs, which represent around 50% of the country’s SMEs. Bumiputera refers to the diverse ethnic or indigenous community in the country, such as the Malays, Orang Aslis and natives from Sabah and Sarawak. A number of programmes and initiatives have been introduced to encourage the growth of SMEs that fall under this category.

Furthermore, Malaysia has emphasised increasing entrepreneurship among women. The country’s SME authority, SME Corporation Malaysia (SME Corp.), has introduced a wide range of programmes to strengthen the role of women in the Malaysian economy. This includes a number of training sessions and seminars that are aimed at fostering awareness and receiving feedback and ideas concerning issues that women entrepreneurs face.

Regulatory governance

Institutional and regulatory setup

Table 6.1. Institutional and regulatory setup



State structure

Federal government

Head of state

Yang di-Pertuan Agong (YDPA), an elected monarch that holds extensive power as defined by the constitution. The YDPA oversees the executive with the advice of the cabinet and holds power over the legislative body and can dismiss or dissolve parliament, with the guidance of the Prime Minister.


Prime Minister is appointed by the YDPA and heads the executive body and government.

Cabinet is also appointed by the YDPA and is collectively responsible for reporting back to parliament.



Lower house (House of Representatives or Dewan Rakyat) with 222 elected members from single-member districts.

Upper house (Senate or Dewan Negara) with 70 members serving within a three-year term, 26 of which are elected by assemblies and the rest appointed by the YDPA, with the advice of the Prime Minister.

Legal system

Common law and, to a lesser extent, Islamic law

Legislative appeals can be done through the Magistrate Court, Sessions Court, the High Court, the Court of Appeals, and the Federal Court.

Administrative-territorial structure

13 states

All states adopt a Westminster Parliamentary system with a unicameral state legislative assembly. There are nine monarchical states (Johor, Kelantan, Negeri, Pahang, Perak, Perlis, Selangor, Sembilan, and Terengganu), seven of which are headed by sultans who are eligible for the position of YDPA. The rest of the states (Malacca, Penang, Sabah, and Sarawak) are headed by governors.

Ministry or agency responsible for SMEs or SME-related issues

SME Corporation, a body under the Ministry of International Trade and Industry, responsible for formulating, co-ordinating, and overseeing policies and strategies on SMEs.

Regulatory oversight body or bodies

Special Task Force to Facilitate Business (Pasukan Petugas Khas Pemudahcara Pernuagaan, PEMUDAH) oversees the service delivery of policies related to investment or starting a business. Representatives of PEMUDAH include individuals from both the public and private sectors.

National Development Planning Committee (NPDC) is responsible for overseeing and assessing the overall implementation of the National Policy for the Development and Implementation of Regulations (NPDIR) and also examines all regulatory impact statements (RIS) of regulations to check for quality and appropriateness.

Malaysia Productivity Corporation (MPC), a body under the Ministry of International Trade and Industry, is responsible for delivering high impact services with regard to productivity enhancement, innovation and global competitiveness. MPC also helps implement the NPDIR and assists the NPDC in developing and reviewing regulatory impact assessments (RIA) and RIS, developing programmes and guidelines, and conducting related reviews and capacity building programmes.

Other support structures within government on regulatory policy

Companies Commission of Malaysia is responsible for all business registration services in the country.

National Institute of Public Administration (INTAN) supports MPC in providing capacity building training for RIA and RIS.

Attorney General’s Chamber provides legal advice to the cabinet or minister.

Regulatory process

There are a number of legislative and regulatory instruments that affect businesses and these are formulated at the parliament, state level, or concurrently between the parliament and the state.

At the parliamentary level, a bill can be introduced by either house. Once this has been reviewed and agreed within the responsible house, it would then need to pass it to the other house for review and approval. The contents of the bill would need to undergo a number of readings and discussion among the members. Finally, the bill is passed on to the Yang di-Pertuan Agong (YDPA) for assent.

At the state level, ministries or regulators can formulate their own policies. Together with the proposal, the responsible ministry would need to provide a regulatory impact assessment (RIA), consult with the public, and prepare the regulatory impact statement (RIS). Ministries can also draft their RIA concurrently when drafting laws. The RIA and RIS are then reviewed by the Malaysia Productivity Corporation (MPC) and the National Development and Planning Committee (NPDC). If the quality of the RIS is deemed unsatisfactory, the issues would need to be addressed by the responsible ministry and then reviewed once again by MPC and the NPDC before it is passed on the cabinet of ministers for approval and then to parliament for it to be passed as an Act (OECD, 2015[2]).

Figure 6.2. Regulatory-making process in Malaysia

Source: Malaysia Productivity Corporation (2016), Annual Report on Modernisation of Regulations,

Business laws and regulations

There is no separate regulatory policy directed to SMEs. SMEs in Malaysia are therefore subject to all business regulations unless otherwise specified (World Bank, 2017[3]). Nonetheless, in 2017, the government passed a National SME Bill to help better facilitate the oversight of SME policies and programmes. The Bill aimed to complete the realisation of the SME Master Plan (2012-20) launched by the government in July 2012. The SME Master Plan intended to create a conducive ecosystem to accelerate the growth of SMEs towards achieving a high-income economy. The plan covered all sectors, regions, and strategic areas, complementing the existing national economic strategies and outlining 32 measures and 6 high impact programmes that would help achieve the 4 strategic goals of the SME Master Plan.

Table 6.2. Business-related laws and regulations in Malaysia



Banking and credit laws

Islamic Banking Act 1983

Banking and Financial Institutions Act 1989

Central Bank of Malaysia Act 1958

Commercial and company laws

Companies Act 1965 (revised 1973, amended 2007)

Companies Regulations 2017; Companies Act 2016

Labour laws

Employment Act 1955;

Code of Conduct for Industrial Harmony and Areas for Co-operation and Agreed Industrial Relations Practices

Customs law

Customs Act

Source: World Bank (2017), Law Library, (accessed on 8 March 2018).

Since 2005, ministries, agencies and institutions involved in SME development programmes have adopted a single SME definition. As a result of a growing SME sector and new developments in the economy, a new SME definition has been endorsed and simplified in 2013 (SME Corporation Malaysia, 2013[4]). SMEs can be qualified by either its number of employees or sales turnover:

Table 6.3. SME definition in Malaysia





No. of employees

Sales turnover (MYR)

No. of employees

Sales turnover (MYR)

No. of employees

Sales turnover (MYR)


< 5

< 300 000

5 to < 75

300 000 to < 15 million

75 to < 200

15 million to < 50 million

Services and other sectors

< 5

< 300 000

5 to < 30

300 000 to < 3 million

30 to < 75

3 million to 20 million

Source: Information provided by SME Corporation Malaysia, 2018.

Business registration

The Companies Commission of Malaysia (Surahanjaya Syarikat Malaysia, SSM) is responsible for all business registration in the country. There are three forms of business entities in Malaysia: sole proprietor (enterprise or trading co), partnership, or private limited company. For the latter, the enterprise would need to specify in its articles of association the type of company (limited or unlimited). In order to register a business, the company would need to prepare the needed information and supporting documents and visit the nearest SSM office. The certificate can often be obtained within one hour after payment. Upon registration and incorporation, the enterprise or company would need to obtain the needed licences and permits before it is allowed to operate (Suruhanjaya Syarikat Malaysia, 2018[5]).

Table 6.4. Registration requirements in Malaysia


Sole proprietorship




One-person business

Business owned by at least 2 and not more than 20 partners

Limited by shares

Registration requirements

● At least 18 years

● Malaysian citizen or permanent resident

● Company name and business activity

● Photocopy of identity card

● Supporting proof and documents

● Minimum of two subscribers

● Minimum of two directors (has not been bankrupt, convicted, or imprisoned for prescribed offences)

● Licensed or accredited company secretary

● Company name and business activity

● Incorporation documents (memorandum and articles of association specifying whether limited or unlimited and other supporting proof)

Setup fee

MYR 30 (when using personal name)

MYR 60 (when using trade name)

+ MYR 5 for each branch

+ MYR 10.60 business information print-out

MYR 60 (when using trade name)

+ MYR 5 for each branch

+ MYR 10.60 business information print-out

Fees between MYR 1 000-70 000 depending on authorised share capital

+ MYR 30 for name registration

Continuity of the business entity

Renewal for a period of 1 year and not more than 5 years (with fee)

Perpetual succession unless wound up

Closure of business



Death of owner

Court order

Winding up or striking off

Closure of business

Source: Suruhanjaya Syarikat Malaysia (2018), (accessed on 8 March 2018).

Highlights of regulatory opportunities and challenges to support SMEs

Administrative simplification

Since 2007, PEMUDAH has been working with the Malaysia Productivity Cooperation (MPC) to address regulatory issues concerning the ease of doing business. In the 10th Malaysia Plan (2010-2015), MPC was granted the mandate to improve the government’s regulatory management system, which led MPC to undertake a review to assess, repeal or modify unnecessary rules and compliance costs that negatively impact businesses or the economy.

This regulatory review was carried out as part of Malaysia’s Modernising Business Regulation (MBR) programme, which included the following key initiatives implemented by the Malaysia Productivity Corporation (Malaysia Productivity Corporation, 2016, p. 10[6]):

  • Reducing Unnecessary Regulatory Burden (RURB).

  • Facilitating initiatives in Ease of Doing Business.

  • Conducting comprehensive scanning of business licensing.

  • Promoting Business Enabling Framework for 18 services subsectors.

  • Developing policy and guidelines for ensuring the quality of new regulations such as the National Policy on the Development and Implementation of Regulations.

A Guideline on Reducing Regulatory Burden was established to help guide policymakers in identifying and analysing areas for burden reduction. Initial activities under the programme have been focused on increasing efficiency within the government by simplifying the administrative requirements related to the issuance of permits and licences.

Box 6.1. Identifying regulatory burden in Malaysia

In Malaysia, regulatory burdens are considered as regulations or processes that can adversely impact businesses such as those that require a change in behaviour or practices. Some of the costs faced by businesses usually fall into four categories:

  1. 1. Administrative and operational requirements, e.g. reporting, record keeping, legal advice, training.

  2. 2. Requirements on production and supply, e.g. prescriptions on production, labelling requirements, occupational registration requirements.

  3. 3. Requirements on the characteristics of the product or supply, e.g. providing airbags for all motor vehicles and requiring specific topics for teachers or trainers to focus on.

  4. 4. Prohibitions that lead to loss of production and marketing opportunities, e.g. where certain products are banned or strictly regulated.

Source: Malaysia Productivity Corporation (2015), Reducing Unnecessary Regulatory Burdens (RURB) – Malaysia Productivity Corporation (MPC),

Subsequently, PEMUDAH expanded the Modernising Business Licensing (MBL) programme, which involved reforming a number of business licensing process across the government – from ministries to agencies and from the national to the federal level (Malaysia Productivity Corporation, 2016[6]). As a result of the MBL review carried out between 2011 and 2014, 767 business licences were re-engineered, 454 converted into composite licences and 29 were abolished (Malaysia Productivity Corporation, 2016, p. 10[6]). Consequently, the government was able to save up around MYR 729 million (approximately USD 185 000 000) (Jayasiri, 2016[7]; Malaysia Productivity Corporation, 2016[6]). A similar exercise was also carried out at the local level across the 13 Malaysian states. 2 659 licences were reviewed and were then reduced to 1 915 with an estimated cost savings of MYR 1.7 billion.

Additionally, a Business Licensing Electronic Support System (BLESS, was launched to serve as an online one-stop shop for business licensing in the country (Box 6.2).

Box 6.2. Improving business licensing in Malaysia

The Malaysian government launched the Business Licensing Electronic Support System (BLESS, as part of the Modernising Business Regulation Programme. The system served as an online one-stop shop for business licensing in the country and aimed to make license issuance more efficient by automating the process. The online tracking and monitoring function of the system allowed for faster, more transparent and more predictable business licensing processes.

The system currently provides the following features: multiple licensing application; simultaneous processing and updating by respective agencies; composite and standard forms; online submission, approval and notification; online query; online tracking and monitoring; electronic payment; feedback mechanism; and bilingual access. As of December 2017, services linked to the application of 214 licences from 75 federal agencies are available in the system. More licences from other agencies are being integrated into the system. Each licence included in the system will have their own set of conditions and requirements based on current policies set by licensing agencies. To facilitate this, the website provides businesses with a checklist and a set of guidelines as they submit their application.

Sources: Jayasiri (2016)Good Regulatory Practice (GRP) in Malaysia, Presentation,; Malaysia Productivity Corporation (2016), Annual Report on Modernisation of Regulations,

The MBL programme was followed by a Reducing Unnecessary Regulatory Burden (RURB) initiative in 2014 and 2015. Through this initiative, 23 regulatory burden reduction activities were carried out between 2014 and 2015 for specific industries such as construction, healthcare, logistics, and oil and gas and other issues related to the movement of goods and registration requirements. These activities were considered to generate around MYR 2.5 billion in savings (Malaysia Productivity Corporation, 2016[6]).

Table 6.5. Summary of administrative simplification activities and cost savings

Initiative or programme




Potential cost savings (MYR)

Modernising Business Licensing – national


Review 767 licences

29 licences abolished

Reduced to 454 licences

729 million

Modernising Business Licensing – state


Review 2 659 licences

Reduced to 1 915 licences

1.7 billion

Reducing Unnecessary Regulatory Burden


Implement 23 regulatory burden reduction activities

Provided recommendations

2.5 billion

Source: Malaysia Productivity Corporation (2016), Annual Report on Modernisation of Regulations,

Apart from the government-wide administrative simplification programmes, the government has also targeted efforts in18 services subsectors to identify bottlenecks and facilitate business-related processes. For example, Box 6.3 shows how burden reduction was carried out for licensing in private hospitals. The exercise involved simplifying regulations and the regulatory process by ensuring coherence across multiple agencies involved.

Box 6.3. Case study: Reducing Unnecessary Regulatory Burden on private hospitals


A number of members from the Association of Private Hospitals of Malaysia (APHM) highlighted that the process of renewing their hospitals’ operating licensing was tedious and time consuming. This appeared to be the most burdensome aspect of private hospital regulation, which is contributed by various factors which include the requirement for documentation during the submission of a renewal application.

The business found that applying for operating licence renewals requires a lot of documentation that contribute to heavy burdens in paperwork and administrative overheads for private hospitals. For example, if the hospital has 500 personnel, at least 500 interactions (with regulators) are required to prepare the documentation for licensing personnel, all documents are to be submitted in 3 sets and Annual Practising Certificate (APCs) are to be validated. The renewal fee and the cost of processing amounts to more than MYR 10 000 and it takes approximately 9 months to obtain the approval.

Issues to be addressed

The tedious process of operating licence renewal application and the heavy paperwork (documentation requirements) is burdensome to businesses.


The use of information technology (e.g. online licence renewal application for private hospitals’ or clinics) and a move from “evidence-based” to “information-based” procedure (removing duplication of requirements by different regulators within the Ministry of Health) in the process of renewal licence application.

Source: Malaysia Productivity Corporation (2016), Annual Report on Modernisation of Regulations,


As Malaysia continues to adapt and implement good regulatory practices, new tools and platforms are needed to support this. The Digital Malaysia programme headed by the Multimedia Development Corporation (MDEC) under the Ministry of Communications and Multimedia (MCMC) aims to create a more connected economy. This includes facilitating processes for SMEs, continuously reviewing the quality of regulations and streamlining processes to enable the use of these tools.

The SME Hub, formerly known as One Referral Centre, is a platform operated by SME Corp. Malaysia and serves as a one-stop shop for SMEs to access information on various business aspects (start-up, access to finance, industry development and market access, etc.) both on line and off line. At present, the SME Hub is rolled out in almost all states and an SME Hub-on-wheels have also been developed as a way to further reach out to SMEs in the rural areas. Other information available in the Hub includes programmes from partner organisations and government agencies such as Suruhanjaya Syarikat Malaysia (SSM), Majlis Amanah Rakyat (People’s Trust Council, MARA), the Central Bank of Malaysia and Telekom Malaysia, among others.

Malaysia has been progressively searching for new ways to encourage SMEs to adopt and use new technologies, as a way to help SMEs connect better with their clients and increase their potential of increasing their client base.

Box 6.4. Adopting e-payment for SMEs in Malaysia

As a way to encourage SMEs to adopt hassle-free and secure payment systems, the government had introduced an e-payment system.

However, in order to be part of the scheme, the business must ensure that they are recognised as legal entities under the Business Act 1956 or Company Act 1965 and fulfil the criteria of an SME. In order to benefit from this system, interested businesses must enable their e-payment service through a Third Party Acquirer: or

Source: Information provided by the Government of Malaysia, 2017.

Regulatory quality management

Regulatory impact assessment

According to the 10th Malaysia Plan (2011-15), the Malaysia Productivity Corporation (MPC) is responsible for undertaking research in productivity and the impact of regulations on SMEs. There is no distinct regulatory process for SME regulations. All regulations need to undertake a regulatory impact assessment (RIA) and are required to systematically identify and assess the cost and benefits underlying these regulatory objectives. This also applies to feasible alternatives, including non-regulatory options, as a way to ensure that all possible options are systematically reviewed and chosen.

In 2011, the government had developed a roadmap for the implementation of GRP within the next five years. The initial phases of the roadmap focused on engaging and consulting with stakeholders in the government and private sector on the proposed plan and implementation activities. Following the responses, three pilot projects were carried out as a way to assess possible implementation issues in 2012. These tests, therefore, led to the introduction of the National Policy for the Development and Implementation of Regulations (NPDIR)in 2013.

Figure 6.3. Roadmap to GRP implementation

Source: Malaysia Productivity Corporation (2016), Annual Report on Modernisation of Regulations,

The NPDIR paved the way towards the introduction of the concept of good regulatory practices, notably regulatory impact analysis (RIA). RIA was introduced as an important step in the decision- and regulatory-making process and serves as a way to further enhance transparency and guarantee the quality and credibility of new regulations, including regulatory proposals that concern small and medium-sized enterprises (SMEs). The following years then focused on training and outreach as a way to accelerate GRP implementation and disseminate its use and importance among regulators and stakeholders. Events focused on best practice sharing are also organised on a regular basis by the MPC to help strengthen and monitor its implementation.

Following the introduction and pilot of RIA, the number of regulatory notifications forms (RNFs) received by MPC increased from 41 in 2014 to 54 in 2015. The number of completed regulatory proposals (regulatory impact statement or RIS) also increased from five to seven in the respective years. Around 50% of RNFs received that year focused on health and safety and 20% on domestic and consumer affairs. Since then, the number of RIA done for regulatory proposals has continued to increase and its quality improving over time.

Box 6.5. Considering small businesses in the development of new regulations

The Best Practice Regulation Handbook mentions that regulations may have a disproportionate impact on small business. This entails that small firms would need to allocate a greater proportion of their resources to meet regulatory requirements. Therefore, it is necessary to ensure that decision-makers are aware of the various impacts on small businesses. For example, any new regulation introduced should consider the degree of impact on individual small businesses, the number for small businesses affected and whether the overall impact on small business is proportionate to the impact on other businesses or groups. This is given particular attention to compliance cost impact on small businesses and the ability or inability of these businesses to absorb such costs.

Source: Malaysia Productivity Corporation (2013), Best Practice Regulation Handbook

Several documents have been developed to support policymakers and regulators to implement the NPDIR, namely: the Guideline on Reducing Unnecessary Burden, the Best Practice Regulation Handbook, a Quick Reference Best Practice Regulation Handbook, and the Guideline on Public Consultation Procedures (Malaysia Productivity Corporation, 2013[8]).

RIA is exempted in cases where the impact of the proposed regulation is minor and does not significantly change existing regulatory arrangements. In this situation, the regulator may implement the regulation after the approval of the decision maker, in accordance with the law, and MPC is informed when the regulation has been issued (Malaysia Productivity Corporation, 2016[6]).

Ex post evaluation

The NPDIR specifies that all requirements on regulatory process management would apply to all concerned regulators. Since 2015, the government continues to focus on reviewing regulations according to specific sectors and topics as a way to make them more targeted. To date, the government has reviewed regulations and processes that are linked to logistics, medical professional, construction, professional services in the building industry, warehousing services and processed food products (Malaysia Productivity Corporation, 2015[9]).

Plans for regulatory review are prepared by regulators on an annual basis. The regulators subsequently notify the MPC with this information in January of each year, which are compiled in an annual regulatory report to inform the government and the public of proposed regulatory actions for the year. This also provides the possibility for stakeholders to be familiar with upcoming activities and contribute to the process.

Regulatory delivery

Regulatory compliance

Compliance with standards

Non-tariff barriers (NTBs), particularly linked to specific standards, impede the growth of Malaysian SMEs into the global value chains (GVCs). Oftentimes, this is linked to the lack of capacity from SMEs to be able to cope with emerging standards and labelling requirements that need to be met from trading or potential trading partners. Non-recognition of certain standards, labelling requirements, as well as importing requirements can create significant burden among SMEs that are willing to grow and export abroad

The initiatives in reviewing NTBs are carried out at the federal level. This allows the government to identify areas in which regulation can be improved, consolidated or simplified to reduce unnecessary burdens related to these issues. Analysis is not conducted on the non-tariff measures (NTMs) per se, but rather on the regulatory process and the procedural requirements associated with the NTBs, which cut across various agencies and ministries, including regulatory and enforcement practices that might impede the productivity in trade-related businesses.

In parallel, a number of capacity building workshops and programmes are organised by SME Corp. Malaysia as well as relevant ministries and agencies as a way to strengthen the capacity and capability of SMEs (SME Corporation Malaysia, 2018[10]).

Ministries have introduced ways to standardise the branding, packaging, and labelling of a product. For example, the Ministry of Agriculture and Agro-based Industry (MOA) through the Muda Agricultural Development Authority (MADA) supports agricultural entrepreneurs to upgrade the branding and packaging of agricultural products.

Stakeholder engagement

In October 2014, the government released a set of guidelines on public consultation procedures. The guideline ensures that the following principles are met: 1) transparency with accessibility; 2) accountability; 3) commitment; 4) inclusiveness that is equitable; 5) timely and informative; and 6) integrity with respect.

Figure 6.4. Public consultation process in Malaysia

Source: Malaysia Productivity Corporation (2016), Annual Report on Modernisation of Regulations,

The Government of Malaysia strives to create an inclusive public consultation for citizens and businesses. Concerned stakeholders are involved throughout the regulatory process – from notification to the finalisation of the draft regulation.

PEMUDAH, the Special Task Force to Facilitate Business, serves as an important agency that drives the implementation of good regulatory practices and helps strengthen discussion with the public sector. In addition to taking an active role in the regulatory-making process, PEMUDAH also holds monthly meetings with the public to discuss initiatives to enhance the country’s business environment. To do this, the government has established a number of focus groups and working groups to devote their attention to specific issues of interest. Furthermore, PEMUDAH also welcomes complaints and suggestions through their web portal from the public, to consider in their annual work programme (Malaysia Productivity Corporation, 2016[6]).

The government is currently in the process of developing a unified online public consultation platform to strengthen the implementation of good regulatory practices in the country. The aim of the website is to create an even more inclusive regulatory process by developing an accountable and transparent system.

Figure 6.5. Framework for establishing a unified public consultation mechanism in Malaysia

Source: Figure provided by Malaysia Productivity Corporation, 2018.

SME linkage policies

Information and networking

To support potential exporters, businesses can access the Beginner’s Guide to Exporting, published by the Malaysia External Trade Development Corporation (MATRADE, 2016[11]). The guide is regulatory update by MATRADE and provides businesses or corporations with the needed information when deciding to export products, including the various legal requirements and international requirements and standards needed to succeed.

Table 6.6. Capacity building programmes in Malaysia



Business Accelerator Programme (BAP)

An integrated assistance programme to enhance capabilities of small and medium-sized enterprises (SMEs) through business advisory and financial support. The programme supports a wide range of capacity building initiatives to assist SMEs to grow their businesses locally and abroad. Two types of financing available under the Business Accelerator Programme (BAP) are Matching Assistance and Soft Loan.

SME University Internship Programme

This programme helps link SMEs to universities as a way to create and strengthen synergies between SMEs and universities. The programme aims to assist SMEs in improving their business performance and enhance productivity while also providing a platform for students to have exposure in a business environment and acquire the skills to create and manage their own enterprises.

SME@University Programme

This programme helps develop capacity among SME CEOs by providing them with the possibility to have a more structured learning environment in the SME University of Japan.

SME Mentoring Programme

Together with Nestlé Malaysia and Halal Industry Development Corporation, a two-day mentoring programme is offered to SMEs in the Halal Food and Beverage industry as a way to enhance their knowledge and improve their performance internationally. This includes a set of knowledge enrichment activities as well as a focus on design and management aspects such as product optimisation, food regulations, labelling requirements, and other operational activities.

Source: SME Corporation Malaysia (n.d.), Our Programmes, (accessed on 21 January 2018).

The Business Linkage (BLing) Programme of SME Corp. Malaysia aims to identify synergies and linkages with SMEs and large companies, multinational corporations or government-linked corporations to support vertical growth of enterprises in the country. These networking opportunities are carried out through business matching sessions or annual flagship events. In 2016, around 443 SMEs have been involved in the programme and have generated around MYR 714.7 million in potential sales.

Special economic zones

Malaysia has two special economic zones (SEZ). The first economic zone is the East Coast Economic Region, which was inaugurated in 2009. This SEZ aims to stimulate entrepreneurship and growth in specific industries and regions, notably in the oil and gas sector. In 2017, Malaysia launched the world’s first Digital Free Trade Zone (DFTZ), which is aimed to be completed in 2020. Once completed, the 409-hectare DFTZ will host a large air cargo, aerospace and aviation, digital and internet-related, and logistics industry.

Labour mobility

Foreign workers are permitted to work in specific sectors in the country, namely: manufacturing, construction, plantation, agriculture and services. These must also come from only a selected list of countries, as stated in the Immigration Act and the Ministry of Home Affairs’ Immigration Department (Ministry of Home Affairs, 2018[12]).


Launched in 2009, Malaysia’s National Single Window for Trade Facilitation system aims to reduce the time and costs of doing business and increasing efficiency in export-import, facilitating the electronic exchange of trade-related information or data and improving service delivery with regard to product clearance, among others.

Box 6.6. Features of Malaysia’s National Single Window (NSW)

Malaysia’s National Single Window features five elements for its first implementation (Ministry of International Trade and Industry, 2017[13]). These include:

  • E-Declare, which allows electronic declaration of all customs forms.

  • E-Permit, which allows fast, automatic issuance of permits from permit-issuing agencies.

  • Electronics Fund Transfer (EFT) as a way to facilitate payment of customs fees.

  • E-Preferential Certificate of Origin, which provides users with the possibility to access and download their application for a certificate of origin.

  • E-manifest, which allows users to submit manifests on line.

Source: Ministry of International Trade and Industry (2017), National Single (accessed on 21 January 2018).


  • Continue to strengthen the use of RIA by exploring other approaches to further improve the analysis regulations.

  • Strengthen ex post evaluation activities as a way to considerably improve the stock of regulation and to ensure its relevance in the long run. Consider other forms of review ex post reviews, including post-implementation review and sunset reviews, among others.

  • Adopt a whole-of-government approach to regulatory policy, by linking the different efforts in improving RIA, ex post evaluation and stakeholder engagement.

  • Review the NPDIR based on experience and implementation to date. This exercise will be useful in highlighting the efforts and achievements based on its implementation, as well as evaluate its feasibility and relevance in the long run.

  • Streamline and strengthen governance among industry leaders across the different priority sectors that support SME growth. Empower the actors across sectors to identify issues of concern with regard to reducing regulatory burden and encourage continuous dialogue in the long run.


[7] Jayasiri, J. (2016), Good Regulatory Practice (GRP) in Malaysia,

[6] Malaysia Productivity Corporation (2016), Annual Report on Modernisation of Regulations, Malaysia Productivity Corporation,

[9] Malaysia Productivity Corporation (2015), Reducing Unnecessary Regulatory Burdens (RURB) – Malaysia Productivity Corporation (MPC), Malaysia Productivity Corporation,

[8] Malaysia Productivity Corporation (2013), Best Practice Regulation Handbook, Malaysia Productivity Corporation,

[11] MATRADE (2016), Beginner’s Guide to Exporting - MATRADE, MATRADE,

[12] Ministry of Home Affairs (2018), Foreign Workers,

[13] Ministry of International Trade and Industry (2017), National Single Window, Ministry of International Trade and Industry, (accessed on 21 January 2018).

[2] OECD (2015), Implementing Good Regulatory Practice in Malaysia, OECD Publishing, Paris,

[1] OECD (forthcoming), ASEAN SME Policy Index 2018: Boosting Competitiveness and Inclusive Growth in ASEAN, OECD Publishing, Paris.

[10] SME Corporation Malaysia (2018), Our Programmes, (accessed on 21 January 2018).

[4] SME Corporation Malaysia (2013), Guideline for New SME definition,

[5] Suruhanjaya Syarikat Malaysia (2018), Registration, (accessed on 08 March 2018).

[3] World Bank (2017), Law Library, (accessed on 8 March 2018).