Two Neighbours, Two Systems: Business Efficiency in Malaysia and Singapore

Introduction

Starting a business in Southeast Asia offers both promise and complexity. Malaysia and Singapore, despite being neighbors, operate under very different licensing regimes. For entrepreneurs, investors, and companies eyeing regional growth, understanding these differences is not just helpful , it’s essential.

This commentary reflects my own observations from working with compliance teams in both countries, paired with real-world examples that show how regulatory design can shape business outcomes.

A Real-World Example: The Petrol Station

I’ve been following The Game of Impossible podcast on Spotify, hosted by Idris Jala and Leon Jala. In a recent episode, they drew a powerful contrast between Malaysia and Singapore through a simple but striking example: the process of setting up a petrol station.

• Malaysia: Around 20 separate licenses are required, covering environmental, safety, municipal, and industry-specific approvals.

• Singapore: The same business usually requires about 10 licenses — roughly half.

That example really stuck with me because it highlights more than just bureaucracy, it shows how regulatory design directly shapes business outcomes. The challenge isn’t about individual, but about the system itself.

Sure, safety and compliance are non-negotiable in such high-risk industries. But this comparison raises a bigger question: are licensing systems designed for efficiency as well as oversight?

From my perspective, Malaysia’s fragmented framework points to a need for better coordination among authorities. Streamlining wouldn’t mean lowering standards, it would mean making compliance more efficient and predictable. It has since been forever about the discussion for coordination between authorities, it's not about integration but more on coordination, be it manually or automation.

MY Example: The coordination

I experienced this first-hand when my father passed away, leaving behind assets without a will. Being legally trained, I knew the immediate steps, though, like many legally trained, I still had to research specific procedures.

In cases like this, the usual path is to apply for a Letter of Administration from the court. But if the estate doesn’t exceed a certain amount, there are alternative less than certain amount. I decided to go through AmanahRaya, thinking it would be straightforward, but what followed was anything but.

They provided a long list of documents to submit: birth certificates, death certificates of grandparents, detailed asset information, much of which is nearly impossible to gather unless you’re the authorised person or the deceased themselves. Banks were slightly more straightforward: producing a death certificate usually allowed them to close accounts and request beneficial ownership details.

But across government departments, it felt like being stuck in a maze. At every step, I had to submit the same documents multiple times. Departments would point to each other, asking me to get approval elsewhere before they could proceed and when I went there, they would send me back with the same instructions. Communication between agencies was virtually non-existent, and I spent countless hours manually collating documents, making calls that often went unanswered.

The process was exhausting, confusing, and drawn out. Even after submitting everything, approvals could easily take another six months. It wasn’t about incompetence of individual officers, it was a systemic issue. The procedure lacked clarity, coordination, and efficiency, leaving families like mine to navigate an unnecessarily complex and stressful process during an already difficult time.

Now, imagine if you are a small business, the ripple effects are real: longer timelines, heavier admin work, and tougher operational planning.

Understanding the Two Systems

Malaysia: Opportunities within Complexity

Malaysia’s licensing system is layered across federal, state, and municipal authorities. While this approach allows flexibility, it often leads to complexity and longer timelines.

• Small Businesses and Partnerships: Registering a sole proprietorship or partnership with the Companies Commission of Malaysia (SSM) is just the first step. Depending on the activity, additional permits — such as municipal approvals, safety inspections, or health certifications may be required.

• Private Limited Companies (Sdn. Bhd.): Beyond SSM incorporation, certain industries require sector-specific approvals. For example, a restaurant may need local council permits, food handling certification, and signage approval.

• Highly Regulated Industries: Finance, healthcare, education, and construction are subject to oversight by specialized agencies like Bank Negara Malaysia or the Ministry of Health.

While these layers are designed to ensure safety and compliance, coordinating across multiple authorities can be time-consuming and sometimes confusing for entrepreneurs.

Singapore: Centralized and Digital

Singapore takes a more streamlined approach. Its regulatory framework is centralized, digital-first, and activity-specific, which makes the process faster and more predictable.

• Business Registration: Companies are registered online via ACRA, offering a single point of entry.

• Licensing: Licensing depends on the type of business, for instance, the National Environment Agency (NEA) regulates F&B, while the Monetary Authority of Singapore (MAS) oversees financial institutions.

• Efficiency: Digital systems allow entrepreneurs to track applications in real time, reducing the likelihood of delays and repetitive paperwork.

This centralized model reduces administrative burdens, enabling businesses to focus on growth rather than bureaucracy.

Key Differences and Takeaways

1. Centralization vs. Fragmentation: Singapore consolidates processes in a digital platform; Malaysia distributes them across multiple agencies.

2. Speed and Predictability: Singapore’s digital system accelerates approvals, while Malaysia’s multi-layered approach can extend timelines.

3. Flexibility vs. Complexity: Malaysia allows discretion in approvals, but with added complexity; Singapore’s rules are stricter but clear.

4. Impact on Entrepreneurship: Regulatory systems influence not only operational efficiency but also who chooses to start a business and how quickly they can scale.

A Personal Perspective

Both markets have their strengths:

• Singapore: Efficient, digital, and predictable, ideal for speed and clarity, but stricter rules and regulations. 

• Malaysia: Rich with opportunity and flexibility, but layered with more approvals and administrative effort.

Conclusion

Malaysia and Singapore both present attractive opportunities, but their licensing regimes require different strategies. Careful research, local expertise, and early planning are essential to navigate the terrain effectively.

Ultimately, as The Game of Impossible highlights, licensing frameworks are more than compliance checklists, they’re fundamental to shaping the ease, cost, and confidence with which businesses can enter and thrive in a market.

Looking to set up a Company in Malaysia or Singapore ? Talk to us : hello@sociusconnectasia.com