Compliance Cost Savings’ Goal Of 1 Pct GDP in Line With International Standards -- MPC

By Nurul Hanis Izmir

PUTRAJAYA, Dec 7 (Bernama) -- Malaysia’s aim to reduce compliance costs to up to 1 per cent of gross domestic product (GDP)  as part of the civil service reform agenda is in line with international standards, including those of the Organisation for Economic Co-operation and Development (OECD).

Malaysia Productivity Corporation (MPC) director-general Datuk Zahid Ismail said that under the ILTIZAM Act, the government has set a minimum target of 25 per cent improvement for each initiative, particularly in reducing compliance costs, which are considered a “waste” in the economy as they involve costs and time that could have been avoided.

“Under the ILTIZAM Act, we target a minimum of 25 per cent improvement as the government's commitment. If we follow international standards, especially those of the OECD, in a top-down view, we assume that compliance costs amount to one per cent of GDP. 

“So if our GDP is RM1 trillion, one per cent is RM100 billion. And from that RM100 billion, we set aside another 25 per cent for savings. The potential is very big,” he told Bernama on the sidelines of the Rancakkan MADANI Bersama Malaysiaku Programme and the National Convention on Public Service Reform 2025 here. 

Commenting on the cost savings of more than RM2 billion so far through the Bureaucratic Red Tape Reform (RKB), Zahid said this major achievement is in line with the country's growth trajectory, which is currently in the early phase of reform and has vast potential for improvement.

“At its infant phase, the growth does seem big, but when it matures, the savings may not be as much. But now, there are many 'quick wins' that can be achieved.

“In the example given by KSN, the 36-month process at the land office can be reduced to six months, which is a four-fold savings,” he said. 

Zahid also cited the success in Kulim, Kedah, which saw a significant surge in investment after the government expedited and simplified the regulatory and approval process. 

"Previously, in 25 years, cumulative investments were approximately RM50 billion. But in the last three years alone, investments have tripled to RM150 billion.

“That is because processes are expedited. The government is more efficient, and the business ecosystem is strengthened,” he said. 

Zahid also said that government efficiency is a critical factor in economic growth as it influences investment, competitiveness and perceptions of the country’s business ecosystem. 

“In the economy, investment is one of the components of GDP. When the process is fast, the incoming investment is greater. 

“People see the rapid development in Kulai, for example. The reason is that the government is efficient, and investors see the government as more efficient, similar to a road without potholes. When there is less red tape, the cost of doing business also goes down,” he said. 

Zahid said MPC is currently focusing on reducing compliance costs to improve the ease of doing business, including ensuring that compliance costs in Malaysia are more competitive than those in regional countries. 

Asked about the level of satisfaction after two years of implementing the RKB, Zahid said he was “very satisfied” but noted that there was still plenty of room for improvement.

He said the initiative is still young and needs further improvement, including expanding the voice of the rakyat and customers.

He said MPC is also optimising the use of technology as a key solution in response to industry and public suggestions. 

“To find a solution, now there is no choice as we must use technology. We need to identify applications that fit the solution needed,” he said.

It was previously reported that a total of 323 RKB projects had been completed, an increase of 182 projects previously, successfully saving compliance costs of over RM2.01 billion per year. 

Yesterday, Chief Secretary to the Government (KSN) Tan Sri Shamsul Azri Abu Bakar launched the ILTIZAM Circular and the Public Service Performance Index (I-PPA), which will serve as the main catalyst in strengthening performance-based governance across the government delivery system. 

The Rancakkan MADANI Programme is a continuation of the Setahun Bersama Kerajaan MADANI Programme and the Dua Tahun Kerajaan MADANI Programme, which have become a tradition in the government's annual reporting directly to the people. 

In conjunction with the programme, the National Convention on Public Service Reform 2025 was also held, bringing together policy thinkers from across the civil service and industry.

The national programme organised by the Prime Minister’s Office through the Performance Improvement Coordination Unit (PACU) has successfully attracted 304,107 visitors over the two days of the programme, exceeding the target of 300,000 visitors. 

-- BERNAMA