rationalising revenue raising – business licences (local ... › ... › uploads › 2016 › 11...
TRANSCRIPT
DISCUSSION PAPER
JANUARY 2016
RATIONALISING REVENUE
RAISING – BUSINESS LICENCES
(LOCAL GOVERNMENT)
Page | i
CONTENTS
Index of Boxes ........................................................................................................... iii
Index of Tables ........................................................................................................... iii
Abbreviations ............................................................................................................. v
1 Key Points ............................................................................................................ v
1.1.1 ..................................................................................................................... v
2 Licences are Very Costly to Business .................................................................. 1
2.1 There are Many Licences Issued by Local Authorities .................................. 5
2.2 Most Licences are Renewed More Frequently than necessary .................. 21
2.3 Criteria for Licences are unclear ................................................................. 23
2.4 New Licences can be created or New Criteria Added without Explanation . 31
2.5 Most of These Costs are Unnecessary and Reflect Poor Regulatory
Practices ............................................................................................................... 33
3 Yet Unclear that Licences are Efficient or Contribute Much to Economic
Performance or Social Well-Being ........................................................................... 37
3.1 Licences and Raising Revenue ................................................................... 37
3.2 Licences and Regulatory Objectives ........................................................... 41
3.3 Not Efficient to Try to Have Licences Serve Both Social/Economic
Objectives and Raise Revenue ............................................................................. 42
4 Options for Reducing the Unnecessary Burdens From Too Much Licensing ..... 45
4.1 Three Broad Approaches to Reducing Burdens .......................................... 45
4.1.1 Option One: Local Government Only Uses Licences to Regulate and not
to Raise Revenue .............................................................................................. 45
4.1.2 Option Two: Local Government Only uses Licences to Raise Revenue
Rationally ........................................................................................................... 45
4.1.3 Option Three: Abolish All Business Licensing by Local Government ... 46
4.2 Will Malaysia Use Licensing for Revenue Raising or Regulation? .............. 47
Page | ii
4.2.1 Licensing for Regulatory Purposes only ............................................... 47
4.2.2 Licensing for Revenue Raising only ..................................................... 51
4.3 Single Actions to Reduce the Burdens of Licensing Irrespective of Whether
use Licensing IS Used for Regulation or Revenue Raising or Both ...................... 55
4.3.1 Extend the Period of Licences .............................................................. 55
4.3.2 Provide Explanations when a Licence is Refused ................................ 56
4.3.3 Regulatory and Licensing Requirements Must Be Publicly Available ... 57
4.3.4 A Register of Regulations ..................................................................... 58
4.3.5 Review the Local Government Act (Act 171) ........................................ 59
References ............................................................................................................... 62
Appendix A: Case Studies – Licensing Burdensome Features ................................ 64
A-1 Business Premise Licence .......................................................................... 64
A-2 Signboards and Outdoor Advertisements ................................................... 66
A-2-1 Differing Standards and Requirements (Inconsistency) ........................ 67
A-3 Renewing Licences and Permits ................................................................. 68
Appendix B: Business Licences of the Local Authorities .......................................... 70
Appendix C: Example of Licences and Its Fees ....................................................... 78
Appendix D: Ministry of Urban Wellbeing, Housing and Local Government’s circular
“Guideline for the Improvement of the Issuance of Business Premise Licence and
Hotel Composite Licence (Amendment 2011) .......................................................... 82
Appendix E: ProvisIons of A Licence........................................................................ 92
Page | iii
INDEX OF BOXES
Box 2-1: Subsection (s) of Section 102 of the Local Government Act 1976 (Act 171) 3
Box 2-2: Excerpts from Section 107 of the Local Government Act 1976 (Act 171) .... 3
Box 2-3: Excerpts from Licencing of Trades, Businesses and Industries (…) By-Laws
2007 ......................................................................................................................... 21
Box 3-1: Subsection (a) of Section 39 of the Local Government Act 1976 (Act 171)
............................................................................................................................... 377
Box 4-1: Minimising Adverse Impacts of Licensing and Approvals on Business ...... 50
Box 4-2: Excerpts from Section 107 of the Local Government Act 1976 (Act 171) .. 59
Box A-0-1: Excerpts from Licensing of Premises for Trades, Businesses and
Industries By-Laws ................................................................................................... 64
Box A-0-2: Subsection (c) of Section 102 of the Local Government Act 1976 (Act
171) .......................................................................................................................... 67
Box A-0-3: Grant or Refusal for Granting Licence - Excerpts from the Licensing of
Premises for Trades, Businesses and Industries By-Laws ....................................... 68
Box A-0-4: Duration of Licence – Excerpts from Licensing of Premises for Trades,
Businesses and Industries By-Laws ......................................................................... 68
Box A-0-5: Renewal of Licence – Excerpts from Licensing of Premises for Trades,
Businesses and Industries By-Laws ......................................................................... 69
Box E-0-1: Excerpts from Licensing of Premises for Trades, Businesses and
Industries (Perbadanan Putrajaya) By-Laws 1999 ................................................... 93
INDEX OF TABLES
Table 2-1: Licensing Costs on businesses ................................................................. 2
Table 2-2: List and Summary of Local Authorities’ By-Laws ...................................... 4
Table 2-3: Example of a Schedule of Trade, Business and Industrial Licensing By-
Laws ........................................................................................................................... 6
Table 2-4: Example of a Schedule of Controlling and Monitoring Food Premise By-
Laws..........................................................................................................................11
Table 2-5: Example of the Schedules of Other By-Laws Affecting businesses ........ 11
Page | iv
Table 2-6: Business Activities in Singapore that May require Licences ................... 14
Table 2-7: Category of Business Requiring Licences in the United Kingdom ........... 17
Table 2-8: Licences Requirements of a Business Activity (Stationery Retail) in
Victoria, Australia ..................................................................................................... 24
Table 2-9: Licence Requirements of a Business Activity (Stationery Retail) in the
United Kingdom ........................................................................................................ 28
Table 2-10: Comparison of Types of Business Activities of a Municipal Council
Requiring Licences in 1992 and 2007 ...................................................................... 31
Table 3-1: Sampling of City Council Revenue .......................................................... 38
Table 3-2: Sampling of Municipal Council Revenue ................................................. 39
Table 3-3: Sampling of District Council Revenue ..................................................... 39
Table 3-4: Average Value and Percentage of Revenue by Type of Local Authority . 40
Table 4-1: International Experience with Local Business Taxation and Licensing ... 53
Table 4-2: Example of Tax on Tourism and Entertainment ...................................... 54
Table B-0-1: Example of Non-risky Businesses ....................................................... 70
Table B-0-2: Example of Businesses Deemed Risky ............................................... 70
Table B-0-3: Grouping of Licences According to Category of Business ................... 71
Table C-0-1: Type of Business and Its Annual Fees – Excerpts from the Schedule of
Licensing of Hawkers and Stalls By-Laws ................................................................ 78
Table C-0-2: Type of Business and Its Annual Fees – Excerpts from the Schedule of
Market By-Laws ....................................................................................................... 78
Table C-0-3: Type of Business and Its Annual Fees – Excerpts from the Schedule of
Licensing of Food Establishments By-Law ............................................................... 79
Table C-0-4: Type of Business and Its Annual Fees – Excerpts from the Schedule of
Licensing of Premises for Trades, Business and Industries By-Laws ...................... 80
Page | v
ABBREVIATIONS
RIA Regulatory Impact Analysis
NEM New Economic Model
NPDIR National Policy on the Development and Implementation of Regulations
MPC Malaysia Productivity Corporation
1 KEY POINTS
1.1.1
Licences are very costly to business and yet it is unclear what benefits they provide. After
presenting the evidence which lies behind this statement, this discussion paper presents
a number of options for reducing the costs of licensing.
Licences appear to be used both to regulate businesses to achieve economic and social
objectives, and to raise revenue. However, it is not possible to serve both objectives
effectively and rationally with the one instrument. To improve economic performance and
raise revenue efficiently Malaysia needs to clarify which objective licensing should serve
– to raise revenue or to regulate – and find alternative ways to pursue the objective not
intended to be served by licensing.
2 LICENCES ARE VERY COSTLY TO BUSINESS
Licensing is seen as a major way by which local governments ensure policy
objectives, as determined by regulations, are implemented. In Malaysia, all business
premise licences, market licences, hawker stall licences, entertainment premises,
industry and advertisement licences are intended to ensure business activities are in
line with legislated policies. And as such, businesses have a lot of dealings with the
local government.
Licensing can be in various forms, such as registrations, notifications, approvals,
licences and permits. Except where specified, throughout this paper, the term
‘licence’ is used generically to refer to all these various forms of licensing. The main
characteristic of licensing as a regulatory instrument is that a prior approval from the
government is required before any commencement of business or operations of
business. This prior approval comes with a set of conditions with which businesses
have to comply. Satisfying these pre-set conditions attached to business licences will
affect them even before they commence practising and can prevent them from
conducting business. Licensing activities can also inhibit healthy competition when
entry barriers to particular economic activities and markets are unnecessary and
have significant impact.
Business licensing activities which may be very prescriptive can at times impede the
operations of an effective business environment. These types of licensing can inhibit
competition, and innovation in producing and delivering goods and services, and can
limit the capacity of businesses in responding to drastic external economic changes.
The undesirable outcomes can reduce productivity levels, incomes and wealth
creation. Furthermore, as the implementation of licensing and its associated
compliance requirements is at the discretion of the issuing authorities may lead to
abuses, corruption, uncertainty and other unforeseen risks which may have adverse
effect on businesses. And the imposition of licence fees and charges increase the
cost and uncertainty on doing business which are mostly passed on to consumers.
Licence fees and/or charges should be set to recover administrative cost. In general,
using licensing as a revenue raising instrument is in itself inefficient compared to the
broader taxation system
Page | 2
The World Bank in its report “Policy Framework Paper on Business Licensing
Reform and Simplification” identified a number of these costs that businesses have
to bear to operate (see Table 2-1). The indirect costs have also some significance to
the protection and well-being of the community within the local government.
Table 2-1: Licensing Costs on Businesses
Direct Costs Indirect Costs
unnecessary duplication of licensing
requirements (such as providing
same documents to different
departments)
inconsistencies in the licensing
procedures,
delays and uncertainties in the
approval process, and
formal and informal compliance
activities (which may include
administrative and compliance costs
and out of pocket expenses).
lower levels of investment and
economic activity,
revenue foregone,
lower employment,
lesser skills development,
reduced technology transfer and
reduced economic growth.
(Source: (World Bank 2010))
Business Licences of the Local Government
Section 102 of the Local Government Act 1976 (Act 171) specifies the general
functions of the local authority in making, amending and revoking by-laws. The by-
laws legislated by the local authorities as prescribed under this section are for the
purpose of maintaining the health, safety and well-being of the population. This
section also pertains to the good order and government of the local authority area.
The subsections of Section 102 states the purposes for which local authorities are
allowed to administer and for which by-laws can be made.
Local governments have been given a large role in issuing, amending and allocating
licences. Box 2-1 shows Subsection (s) of Section 102 of the Local Government Act
1976 (Act 171) which pertains to businesses. The subsection provides for local
authorities to control and supervise businesses. Furthermore, the subsection
suggests that local authorities administer businesses either by registration, licensing
or other appropriate methods. In Malaysia, all local authorities mainly use licensing
as the regulatory instrument to supervise businesses and their activities. Section 107
(refer Box 2-2) of the same Act further describes the basic conditions and
Page | 3
requirements for a local authority to be allowed to prescribe licences or permits,
notably this section allows authorities to charge fees for licences and stipulates that
a licence cannot be valid for longer than three years.
Box 2-1: Subsection (s) of Section 102 of the Local Government Act 1976 (Act 171)
General power to make by-laws
102. In addition to the powers of making by-laws expressly or impliedly conferred
upon it by any other provisions of this Act every local authority may from time to
time make, amend and revoke by-laws in respect of all such matters as are
necessary or desirable for the maintenance of the health, safety and well-being of
the inhabitants or for the good order and government of the local authority area
and in particular in respect of all or any of the following purposes:
(a) … (r)
(s) to control and supervise, by registration, licensing or otherwise, including in
proper cases by prohibition, a trade, business or industry which is of an obnoxious
nature or which could be a source of nuisance to the public or a class of the public;
(t) … (u)
Box 2-2: Excerpts from Section 107 of the Local Government Act 1976 (Act 171)
Licences
107. (1) A local authority in the granting of any licence or permit may prescribe
the fees for such licence or permit and the charges for the inspection or
supervision of any trade, occupation or premises in respect of which the licence
is granted.
(1A) Any licence or permit granted under this Act may be issued jointly with any
other licence or permit.
(2) Every licence or permit granted shall be subject to such conditions and
restrictions as the local authority may think fit and shall be revocable by the local
authority at any time without assigning any reason therefor.
(2A) The revocation of any particular licence or permit issued jointly with any other
licence or permit under subsection (1A) shall not affect the validity of any other
Page | 4
licence or permit with which it had been jointly issued.
(3) The local authority may at its discretion refuse to grant or renew any licence
without assigning any reason therefor.
(4) A licence shall be valid for a period not exceeding three years.
There are several by-laws that have been legislated under the Local Government Act
1976 (Act 171) by local authorities that directly impact on businesses. Table 2-2
below lists the by-laws and descriptions.
Table 2-2: List and Summary of Local Authorities’ By-Laws
Legislation Description
1. Licensing of
Trades,
Businesses and
Industries By-
Law
This by-law was legislated with the objective of controlling
all activities which relate to licensing, business trading and
industrial within the areas under the jurisdiction of the
Council. It also defines the powers vested upon the
Council from the aspects of licensing, fees to be levied
and the enforcement actions which can be taken including
prosecutions against the offences under this enactment
including the determination of terms for the activities which
will be licensed under this by-law.
2. Market By-Law This by-law was legislated with the objectives of
controlling all activities which relate to the market including
public or private markets within the areas under
jurisdiction of the Council. It also defines the powers
vested upon the Council in regard to licensing and
enforcement actions which can be taken including
prosecutions against the offences under this law.
3. Hawkers By-Law This by-law was legislated with the objectives of
controlling all activities that fall under the definition of
hawkers within the areas under the jurisdiction of the
Council to include static hawkers, mobile hawkers and
temporary hawkers. It also defines the powers vested
upon the Council from the aspects of licensing, and
enforcement actions which can be taken including
prosecutions against the offences under this enactment
including the determination of terms for the activities and
the hawkers' licenses.
4. Advertisement This by-law was legislated with the objective of controlling
Page | 5
By-Law all activities which relate to advertisements and the
installation of advertisements within the areas under the
jurisdiction of the Council. It is to ensure that the
advertisements being displayed or the advertisements
being installed abide by the regulations being stipulated
while also defines the enforcement actions which can be
taken including prosecutions against the offences under
this by-law.
5. Food
Establishment
Licensing By-Law
This by-law was legislated with the objective of controlling
all activities which relate to food establishment within the
areas under jurisdiction of the Council. It also defines the
powers vested upon the Council in regard to licensing,
fees and enforcement actions which can be taken
including prosecutions against the offences under this law.
(Source: Official Portal of Kajang Municipal Council)
In addition, some local authorities have legislated by-laws for specific businesses
such as:
Barber Shops and Hairdressers By-Laws
Health Care and Beauty Centre By-Laws
Laundries By-Laws.
It is unclear why these businesses are given special attention whereby these
businesses have their own specific by-laws governing them. It would be more
appropriate for the local authorities to emphasise assisting and facilitating
businesses to ensure the safety and well-being of the community and upkeep and
protection of the surrounding environment.
2.1 THERE ARE MANY LICENCES ISSUED BY LOCAL
AUTHORITIES
For any business to operate, it is required by law to obtain a licence from the local
government. This as has been prescribed by the relevant by-laws: “No person shall
act as a hawker without licence issued by the Mayor under this By-Laws” as stated in
the section Prohibition to hawk without licence (Hawkers (… City Council) By-laws
2010). In a Public and Private Market (… City Council By-Laws 2010), under the
section Licence for private market, it is stated that “No person shall establish,
Page | 6
conduct or carry on a private market in any place, holding or building without a
licence issued by the Mayor under these By-Laws.” Another example, shows that the
Putrajaya Corporation (a modified local authority) have stated in its Licensing of
Premises for Trades, Businesses and Industries (Perbadanan Putrajaya) by-laws
1999 as that “No person shall use any place or premises within Kawasan
Perbadanan Putrajaya for any trade, business or industry as prescribed in the
Schedule without a licence issued by the Perbadanan.”
In general, the category of licences issued by the local authorities can be
categorised as the following but there are no hard and fast rules which leads to
duplication and inconsistencies:
1) Business Premise Licence
a. Industrial Licence
b. Special Business Licence
c. Trade Licence
d. Food Establishment Licence
2) Advertising Licence
a. Signboard
b. Banner & Buntings
3) Hawker Licence
a. Static
b. Mobile
c. Temporary
4) Entertainment Premise Licence
a. Liquor licence
The following tables (Table 2-3 to Table 2-5) show the full list of businesses requiring
licences issued by a particular local authority provisioned under the relevant by-laws.
This local authority does not appear to issue permits, registrations, etc.
Table 2-3: Example of a Schedule of Trade, Business and Industrial Licensing By-Laws
By-Law Licences
1. Licensing, Trade, Business and
Snooker Centre Licence
2. Billiard Saloon Licence
Page | 7
3. Industrial (Municipal Council) (Amended) By-Law 1988
Video Machine Saloon Licence
4. Music Hall Licence
5. Family Entertainment / Bowling Centre Licence
6. Disco Licence
7. Karaoke Licence
8. Cinema Licence
9. Used Car Display Licence
10. Storing Old / Used Things Licence
11. Sawmill Licence
12. Furniture Factory Licence
13. Plastic Factory Licence
14. Fish Fertiliser Factory Licence
15. Electrical / Electronic Factory Licence
16. Iron / Metal Factory Licence
17. Washing Powder / Detergent Factory Licence
18. Livestock Feed Factory Licence
19. Zinc / Chloride Producing Factory Licence
20. Agricultural Fertiliser Factory Licence
21. Chemical Factory Licence
22. Sewing Factory Licence
23. Fibreglass Products Factory Licence
24. Cement / Stone Products Factory Licence
25. Rubber Products Factory Licence
26. Coal / Charcoal Processing Factory Licence
27. Biodiesel Factory Licence
28. Kindergarten / Nursery Licence
29. Animal / Fish Fertiliser Manufacturing / Processing Licence
30. Children Toys Factory Licence
31. Rattan Factory Licence
32. Battery Factory Licence
33. Spare Parts / Accessories Factory Licence
34. Fish / Prawns Freezing Factory Licence
35. Aluminium / Glass Factory Licence
36. Carpet / Fabric Product Factory Licence
37. Cosmetic / Toiletries Factory Licence
38. Rope (Ship) Factory Licence
39. Coal / Attap Processing/Manufacture Licence
40. Workshop Licence
41. Engineering Workshop Licence
42. Boat Display Licence
43. Boat Engine Repair Licence
44. Boat Making Licence
45. Selling Boat Engine Licence
46. Unloading Cargo at Ship Licence
47. Heavy Vehicles Display (Open Space) Licence
48. Roller-skates Court Licence
49. Mini Car Track Licence
Page | 8
50. Ironsmith Licence
51. Tinker Licence
52. Glass / Aluminium Maker Licence
53. Carpenter Licence
54. Electrician / Pipe maker Licence
55. Car / Lorry / Bus Repair Licence
56. Motorcycle Repair Licence
57. Air-conditioner / Electric Repair Licence
58. Exhaust Repair Licence
59. Car air-conditioner Installation / Repair Licence
60. Welding Licence
61. Electrical / Electronic Equipment Repair Licence
62. Cushion Repair Licence
63. Advertisement / Sign Board Maker Licence
64. Servicing and Supplying Fire Extinguisher Licence
65. Vehicle Electronic Shop Licence
66. Selling / Installing Spare Parts & Accessories Licence
67. Battery / Vehicle Wiring Shop Licence
68. Car Painting Licence
69. Bricks-maker Licence
70. Printing Licence
71. Rubber Storage Licence
72. Construction Materials Storage Licence
73. Wood and Planks Storage Licence
74. Fertiliser Storage Licence
75. Latex / Copra Storage Licence
76. Stone / Clay Products Storage Licence
77. Food / Drinks Storage Warehouse Licence
78. Quarry Licence
79. Batik / Fabric Processing (Dyeing / Printing) Licence
80. Cigar making / Tobacco storage Licence
81. Prayers’ Items Making Licence
82. Prayer’s Items Selling Licence
83. Electronic Items Processing Licence
84. Shoe Repair Licence
85. Repairing and Selling Machine / Equipment Licence
86. Repairing Machine / Heavy Vehicle Licence
87. Liquid Gas Petroleum Storage Licence
88. Skid Tank Storage Licence
89. Dangerous Oil Storage Licence
90. Non-dangerous Oil Storage Licence
91. Electrical Shop Licence
92. Nursery / Potted Plants Shop Licence
93. Goods Distributor Licence
94. Prayer Items Selling Licence
95. Cosmetic Items Selling Licence
96. Furniture Shop Licence
Page | 9
97. Sewing Items Licence
98. Bicycles Shop Licence
99. New Cars Display Licence
100. Used Cars Display Licence
101. Kindergarten (Business Building) Licence
102. Service Station Licence
103. Pet shop Licence
104. Pesticide Shop Licence
105. Plastic ware Selling Licence
106. Rubber Shop Licence
107. Glass cutting / Framing Shop Licence
108. Hardware Shop Licence
109. Tyre Shop Licence
110. Aquarium Shop Licence
111. Construction Material Selling Licence
112. Goldsmith Shop Licence
113. House Furnishing Selling Licence
114. Livestock Feed / Medicines Licence
115. Motorcycle Display Licence
116. Paints Storage Licence
117. Tobacco Produce Selling / Storage Licence
118. Warehouse Licence
119. Nursery Licence
120. Rubber Smoking House Licence
121. Chemical / Fertiliser Shop Licence
122. Bicycle Storage / Selling Licence
123. Pet Food Licence
124. Music / Dancing School Licence
125. Private School Licence
126. Physical Exercise Centre Licence
127. Tailor Licence
128. Laundrette / Dry Cleaning Shop Licence
129. General Business Licence
130. Carpet / Fabric Products Selling Licence
131. Carpet / Fabric Products Storage Licence
132. Cement Storage Licence
133. Cement Selling Licence
134. Hardware Storage Licence
135. Fabric / Linen Selling / Wholesaling Licence
136. Fabric / Linen Storage Licence
137. Cement products Storage Licence
138. Prawn Breeding (Wholesale / Selling) Licence
139. Horse Paddock Licence
140. Charcoal / Coal Selling / Wholesale Licence
141. Charcoal / Coal Storage Licence
142. Gas Storage Licence
143. Electronic Cable Workshop Licence
144. Fibreglass Display Licence
Page | 10
145. Heavy vehicles storage (open area) Licence
146. Heavy vehicles storage (in building) Licence
147. Aluminium / Glass Products Storage Licence
148. Wood / Rattan/ Bamboo products Storage Licence
149. Silver Wholesale / Sale / Silversmith Licence
150. Gold Wholesale / Sale / goldsmith Licence
151. Selling / Wholesaling Animal / Fish Fertiliser Licence
152. Glue processing Licence
153. Cosmetic / Toiletries Selling / Wholesaling Licence
154. Coal / Attap Storage Licence
155. Refrigerator Repair Licence
156. Lorry Body Making Licence
157. Licensing, Trade , Business and Industrial (Municipal Council) (Amended) By-Law 2007
Cyber / Cyber Cafe Centre Licence
158. Swiflets Nest Industry Licence
159. Selling Three/Four Numbers / TOTO ticket Licence
160. Coffin Shop Licence
(Source: Official Website of Manjung Municipal Council)
Table 2-4: Example of a Schedule of Controlling and Monitoring Food Premise By-Laws
By-Law Licences
161. Controlling and Monitoring Food Premise (Municipal Council) (Amended) By-Law 1988
Beer House Licence
162. Dining Hall Licence
163. Pub / Bar / Lounge Licence
164. Toddy Shop Licence
165. Liquor Wholesale / Storing / Selling Licence
166. Private Abattoir Licence
167. Cooking Oil Factory Licence
168. Chicken Processing Factory Licence
169. Vermicelli Factory Licence
170. Soy Sauce Factory Licence
171. Sauces Factory Licence
172. Bakery Factory Licence
173. Ice Factory Licence
174. Flour Factory Licence
175. Palm Cooking Oil Factory Licence
176. Sea Produce Factory Licence
177. Spices Factory Licence
178. Rice Processing / Factory Licence
179. Sugar Processing / Factory Licence
180. Private Stall Licence
181. Beer Warehouse / Distributor Licence
182. Selling (Retail) Liquor Licence
183. Flour Mill Licence
184. Sea Produce Storage/ Selling Licence
Page | 11
185. Chicken Slaughter / Processing Licence
186. Breeding Cow /Ox / Horse Licence
187. Cocoa / Palm Storage Licence
188. Coffee Processing Licence
189. Bean curd Processing Licence
190. Ice-cream Making / Distributing Licence
191. Salted Fish Making Licence
192. Food and Drink Distributor / Storage Licence
193. Refrigerated Food Storage Licence
194. Nuts / Coconuts Processing Licence
195. Salted Eggs Making Licence
196. Animal Skin Processing Licence
197. Noodles (Mee) Processing Licence
198. Sea produce snack food Processing Licence
199. Fish satay Making Licence
200. Food Colouring / Flavouring and preservative Making / Selling Licence
201. Cooking Oil Canning Licence
202. Drinking water processing
203. Restaurant (air-conditioned / non-air-conditioned) Licence
204. Food Provider Licence
205. Pastry Shop Licence
206. Bakery Shop Licence
207. Grocery Shop Licence
208. Fruit Shop Licence
209. Vegetable Shop Licence
210. Sweets / Ice-cream/ Snacks Selling Licence
211. Medicine Shop Licence
212. Pharmacy Licence
213. Coffee Shop Licence
214. School Canteen / Canteen Licence
215. Beef / Mutton / Chicken Shop Licence
216. Pork Shop Licence
217. Tapioca Drying Licence
218. In-premise Stall Licence
219. Food Packing Licence
220. Soft drinks Distributor Licence
221. Preparing/ Making Fruit pickles Licence
222. Rotten Fish Storage Licence (Source: Official Website of Manjung Municipal Council)
Table 2-5: Example of the Schedules of other By-Laws Affecting Businesses
2.2
By-Laws Licences
223. Lodging House Regulations
Lodging House Licence
Page | 12
(Municipal Council) (Amended) By-Law 1985
224. Massage Parlour (Municipal Council) By-Law 1984
Massage Parlour Licence
225. Massage Parlour(Reflexology) Licence
226. Massage Parlour (Spa) Licence
227. Sauna Licence
228. Temporary Building-Related Licence
229. Violation of Conditions Business Building Licence
230. Advertisement (Municipal Council) By-Law 1984
Sign Board (Billboard) Licence
231. Signboards Licence
232. Notice board Licence
233. Hawker (Municipal Council) By-Law 1983
Hawkers Centre Licence
234. Hawker Licence (Night market only) Licence
235. Mobile / Static / Tricycle Bicycle / Pushcart / Hawker Vehicle / Hawker Van / Tricycle bike Hawker Licence
236. Market (Municipal Council) (Amended) By-Law 1996
Private Market Licence
237. Supermarket Licence
238. Mini Market Licence
239. Swimming Pool Control and Supervision (Municipal Council) By-law 1992
Swimming Pool Licence
240. Private Parking Licensing (Municipal Council) By-law 1992
Parking Licence
241. Roadside Municipal Council-owned Stall By-Law (Municipal Council) 1996
Roadside Stall / Market table (council-owned only) Licence
242. Barber and Hair Saloon (Municipal Council) By-Law 1984
Barbershop Licence
243. Hair Saloon Licence
244. Makeup Saloon Licence
245. Public Market (Municipal Council) (Amended) By-Law 1996
Public Market Licence
(Source: Official Website of Manjung Municipal Council)
From the tables above, there are 245 business activities that are licensed by one
particular local government which is a municipal council. These types of business
activities are prescribed in the Schedules of the relevant by-laws. A review of other
local governments shows a city council licenses 128 business activities and another
city council licenses 108 business activities. This shows inconsistencies in the
Page | 13
identification of business activities or type of businesses requiring licences. Appendix
B shows other examples of the types of businesses that other local authorities
require to have licences to operate.
It was noted that a municipal council which is smaller than a city council has more
business activities to license compared to the city councils. Also, from the Schedules
of the accessible by-laws indicate that any business activity which is not currently in
the schedule’s list can be required to apply for a licence and pay corresponding fees
up to the stated limit. Furthermore, some local authorities classify business activities
into three main categories of licence: making and processing, wholesale and
storage, and retail and providing services. And these categories of licence have
different fees attached to it. Thus, if a business has more than one business activity
class, they have to pay more. Thus depending local authorities discretion in issuing,
implementing and interpreting licensing criteria which can lead to a mushrooming of
licences and the associated compliance burdens for businesses.
The examples discussed are licences that are issued by the local government to
businesses that use a premise within the local government’s jurisdiction. Specific
businesses are also required to obtain other relevant licences and/or permits from
other government agencies for their business activities. As an example, a sundry
shop which sells rice and household gas is required to obtain licences from the
Ministry of Agriculture and Agro-based Industry, and Ministry of Domestic Trade, Co-
Operatives, and Consumerism respectively.
Business licensing in other countries
Kenya
Kenya initially had more than 1,300 licences that had been imposed on its
businesses by all levels of government. In 2005, Kenya underwent a comprehensive
business licensing reform. Musau reported “As of October 2007, out of the 1,325
licences initially identified, 315 licences were eliminated, 379 licensing activities were
simplified, whereas 294 licences were retained and 25 licences were reclassified and
not counted as licences” (Jacobs, Ladegaard and Musau 2007).
Page | 14
Singapore
In Singapore, business licences are issued by the national government and are
required for certain types of business activities and categorised according to the
types of industry (see Table 2-6).
Table 2-6: Business Activities in Singapore that May require Licences
Industries / Business Activities
Sub Industries/Sub Business Activities
Entertainment, Recreation and Sports
Amusement Parks/ Centres
Bars and Pubs
Cabarets, Night Clubs, Discotheques and Karaoke Lounges
Cyber 'Cafes'
Martial Arts and Pugilistic Arts Institutions
Recreation Clubs/ Associations (except country and golf clubs)
Sports Clubs/ Associations (except country and golf clubs)
Other Entertainment Activities
Events and Exhibition Services
Organiser of exhibitions, concerts and indoor events
Organiser of community, sporting and outdoor events
Organiser of meetings, conventions and conferences
Exhibition stand designers and contractors
Food and Beverage Outlets
Bakeries without Seating Area
Coffee Shops, Cafes and Canteens
Hawkers and Stall-holders
Restaurants
Others
Hotel and Accommodation
Camping sites and other provision of short-stay accommodation
Chalets
Hotels
Letting and operating of self-owned real estate except hotels, lodging and boarding houses
Lodging and boarding houses
Manufacturing Manufacture of Accumulators, Primary Batteries and Primary Cells
Manufacture of Chemical and Chemical Products
Manufacture of Communications Equipment
Manufacture of Electric Lamps and Lighting Equipment (including Silver Reflectors, Fittings and Parts)
Manufacture of Electric Motors and Generators
Manufacture of Electricity Distribution and Control Apparatus
Manufacture of Electronic Office and Related Equipment
Manufacture of Office and Accounting Machinery except electronic (e.g. Accounting and Duplicating Machines, Typewriters)
Manufacture of Electronic Valves, Tubes and Other Electronic Components
Page | 15
Manufacture of Other Electrical Apparatus and Supplies (including Sound or Visual Signalling Apparatus, Electrical Insulators except porcelain or glass)
Manufacturing of Food and Beverage
Manufacturing of Furniture
Manufacture of Insulated Wire, Cable and Related Components
Manufacture of Machinery and Equipment
Manufacture of Machinery for Special Purpose
Manufacture of Medical, Precision and Optical Instruments, Watches and Clocks
Manufacture of Metals (Basic/ Fabricated) and Metal Products
Manufacture of Mineral Products
Manufacture of Rubber and Plastic Products
Manufacture of Television and Radio Receivers, Sound or Video Recording or Reproducing Apparatus and Associated Goods
Manufacture of Other Domestic Appliances
Manufacture of Textiles and Fabric
Manufacture of Wearing Apparel
Manufacturing of Tobacco Products
Manufacture of Transport Equipment
Manufacture of Wood and Paper
Other Manufacturing Activities
Retail Books and Stationery Shops (include Newsvendors)
Cigarette and Tobacco Shops (include Small-scale Retail of Cigarettes/ Tobacco Products)
Do-It-Yourself Shops
Electrical Appliances and Electronic Goods Shops
Flea Market and Second-hands Goods Stalls
Florists
Handphone and Pager Shops (include Sales of Other Telecommunication Equipment)
Hobby Shops (eg. Retail of Antiques, Works of Art, Handicrafts, Curios, Stamps and Coins)
Home Furnishing and Kitchen Utensils Shops
Personal Effects Shops
Pet Shops
Pharmacies, Cosmetics and Toiletries Shops
Recreational Goods Shops
Small Vehicles and Spare-part Shops
Stores, Minimarts and Provision Shops
Textiles, Apparel and Leather Goods Shops
Other Retail
Services Architectural, Advertising, IT, Management and Professional Consultancy
Childcare Services
Delivery Services
Page | 16
Design Services and Modelling Services
Education Services
Engineering Services
Event Management Services
Financing, Pawnbrokerage and Money Changing Services
General Household Services
General Repairs and Vehicle Maintenance Services
Hairdressing Services
Health Care and Medical Services
Insurance, Reinsurance and Pension Funding Services
Land Transport Services for Passengers
Massage and Health Centres
Pest Control, Laundry and Cleaning Services
Printing, Book-Binding and Services Related to Printing
Private Detective and Security Services
Publishing Services
Real Estate Agent (include Appraisers and Valuers)
Recruitment and Employment Services
Rental Services
Reproduction of Recorded Media (including Reproduction of Phonograph Records, Recorded Magnetic Tapes, Compact Discs and Non-customised Software)
Security Dealing, Stock Exchange and Fund Management Services
Theatrical, Video and Filming Services
Travel Services
Veterinary Services
Other Services
Wholesale (Import, Export and Distribute)
Wholesale of Animal Feed, Chemicals and Chemical Products
Wholesale of Books, Stationery and Packaging Materials
Wholesale of Cars, Motorcycles, Other Vehicles and Spare Parts
Wholesale of Cigarettes and Tobacco Products
Wholesale of Construction Materials, Hardware, Plumbing and Heating Equipment
Wholesale of Cosmetics, Toiletries and Medicinal Products
Wholesale of Electrical Appliances and Electronic Finished Products
Wholesale of Electronic Components, Commercial and Industrial Machinery
Wholesale of Flowers, Plants and Decorative Items
Wholesale of Foodstuffs and Beverage
Wholesale of Handicrafts and Hobby Products
Wholesale of Handphones, Pagers and Telecommunication Equipment
Wholesale of Home Furnishing Products and Kitchen Utensils
Wholesale of Intermediate Products, Waste and Scrap (Including Metals and Metal Ores)
Page | 17
Wholesale of Personal Effects
Wholesale of Pets (Birds, Fishes and Other Animals)
Wholesale of Primary Produce
Wholesale of Recreational Goods
Wholesale of Solid, Liquid and Gaseous Fuels
Wholesale of Textiles, Apparel, Leather Goods and Apparel-related Products
Wholesale of Other Products
Other Wholesale Activities
Others Agriculture
Agricultural and Animal Husbandry Services except veterinary service
Banks and Other Financial Intermediation
Charities
Commercial Fishing and Fish Farming Activities
Construction
Data/ Telecommunications Services and Network Operators
Electricity, Gas and Water Supply
Forestry, Logging And Related Service Activities
Logistics and Other Transport Activities
Mining and Quarrying
Real Estate Development and Management
Recycling
Research and Experimental Development on Natural Sciences and Engineering
Residentially Based Social Activities (E.g. Children's Homes, Homes For The Elderly)
Sewage, Refuse Collection, Sanitation and Similar Activities
Storage and Warehousing
Television/ Radio Broadcasting (Source: Online Business Licensing Service (OBLS) (https://licences.business.gov.sg)
United Kingdom
Table 2-7 below shows the categories of businesses that may require licences in the
United Kingdom.
Table 2-7: Category of Business Requiring Licences in the United Kingdom
Activity / Business Sub activity / sub business Specific business activities
Agriculture, forestry and fishing
Agriculture Animal farming support services
Arable farming
Arable farming support services
Beekeeping
Cattle farming
Page | 18
Other animal farming
Pig farming
Poultry farming
Seed merchants, processor and packers
Sheep and goat farming
Fishing and hunting
Forestry
Arts, sports and recreation Arts and entertainment
Gambling facilities operation
Sports and recreation
Catering and accommodation
Accommodation
Bars
Catering
Construction Architectural and other building services
Building construction
Building trades
Education Adult and other education
Formal education
Health and social care services
Complementary therapy services
Health services
Social care services
IT and telecommunications services
Computer services
Internet services
Telecommunications services
Manufacturing Arts, sports and recreation goods manufacturing
Building materials manufacturing
Chemical and petroleum products manufacturing
Clothing, footwear and accessories manufacturing
Electrical equipment manufacturing
Electronic equipment and computer manufacturing
Food, drink and
Page | 19
tobacco manufacturing
Jewellery, watch and clock manufacturing
Machinery manufacturing
Metal and metal products manufacturing
Paper products manufacturing
Printing and printing support activities
Textiles and furniture manufacturing
Vehicle manufacturing
Media and creative services
Design and photographic services
Film production and distribution
Music production and publishing
Publishing
Television and radio broadcasting
Mining, energy and utilities Energy utilities
Mining and oil and gas extraction
Personal services Personal care services
Professional and business services
Advertising and marketing services
Business support services
Financial services
Legal services
Management consultancy
Real estate services
Waste management and environmental services
Retail, hire and repair Arts, antiques and second-hand goods retail
Books, stationery and gifts retail
Clothing, footwear and accessories retail, hire and repair
Page | 20
Electric and electronic appliance retail, hire and repair
Food, drink and tobacco retail
Home and garden products retail, hire and repair
Jewellery, watch and clock retail and repair
Motor vehicle and fuel retail, hire and repair
Non store retail
Pharmaceuticals, health and beauty products retail
Sports and recreation goods retail, hire and repair
Wholesale Agricultural materials wholesale
Arts, sports and recreation goods wholesale
Books, stationery and gifts wholesale
Building materials and hardware wholesale
Clothing, footwear and accessories wholesale
Cosmetics, medicinal and chemical products wholesale
Electric and electronic equipment wholesale
Food, drink and tobacco wholesale
Jewellery, watches and clocks wholesale
Machinery wholesale
Metal and metal ores wholesale
Motor vehicle and parts wholesale
Petroleum and fuel products wholesale
Textiles, furniture and furnishings wholesale
Timber and timber
Page | 21
products wholesale (Source: UK Licence Finder (https://www.gov.uk/licence-finder)
As shown (refer to Tables 2-6 and 2-7), Singapore and the United Kingdom have
clearly determined the businesses and industries that may require licences. As
Singapore is a small city-state it is easier to impose the same classification of
business throughout the country. But the United Kingdom, which comprises more
than 100 counties, uses the same business classification throughout the nation.
Whereas, in Malaysia, it appears that the determination of business activities is
decided by each local government. Thus, there are inconsistencies in the types of
business licensed.
2.3 MOST LICENCES ARE RENEWED MORE FREQUENTLY
THAN NECESSARY
Most local governments in Malaysia require businesses to renew their licences
annually. This annual renewal of business licences runs contrary to what has been
prescribed in the Local Government Act 1976.Subsection (4) of Section 107 of the
Local Government Act 1976 states:“A licence shall be valid for a period not
exceeding three years.”
In some local authorities, the Licensing of Trades, Businesses and Industries By-
Laws have conflicting statements with regard to the duration of the licence validity as
shown in Box 2-3 below. Subsection 4 of the by-law states that a licence issued by
the local authority may not exceed three years. But Section 6 of the same by-law
states that the duration of the licence is until 31 December of the current year. It
appears most likely that the local authority issues a business licence annually rather
than providing a licence of up to three years by virtue of Section 6 of the by-law.
Box 2-3: Excerpts from Licensing of Trades, Businesses and Industries (…) By-Laws 2007
Grant or refusal for granting licence
…
(4) The Licensing Authority may issue a licence not exceeding three years and is
Page | 22
renewable, …
Duration of licence
6. Any licence any sooner suspended or cancelled, shall remain in force from the
date of the payment of the licence fee until 31 December of the current year.
The validity of the licence up to three years has been further emphasised by the
Federal Government through the Ministry of Urban Wellbeing, Housing and Local
Government which issued a circular - “Guideline for the Improvement of the Issuance
of Business Premise Licence and Hotel Composite Licence (Amendment 2011).”The
guideline recommends that the local authority provides businesses the choice to
have a licence of three years validity. But only a few local authorities have adopted
this recommendation. Most local authorities continue to require business licences to
be renewed annually.
Having to renew business licences annually burdens businesses much more than
renewing every three years. The renewal application must be submitted three
months before the expiry date. Some local authorities require the same documents
initially required on the application of the licence to be submitted again. As the local
authority has the final decision to renew or a not a business licence, renewing a
business licence annually can cause uncertainties to businesses as there is no
assurance the local authority would renew the licence. Due to this uncertainty
businesses would be reluctant to expand or innovate. And this would indirectly
impede the economic growth of the area of jurisdiction.
However, some local authorities have made it easier to renew licences by requiring
businesses only to present their current licence as the document for renewal.
Another local authority requires the business to only pay the annual fee and the
licence is automatically renewed. This shows that there are inconsistencies among
the different local authorities in the administering of the licensing procedures that
unnecessarily burdens businesses.
Page | 23
2.4 CRITERIA FOR LICENCES ARE UNCLEAR
Subsection (s) of Section 102 (General power to make by-laws) of the Local
Government Act 1976 (see Box 2-1) prescribes the general criteria for the purpose
or making, amending or revoking by-laws pertaining to the control and supervision of
a business, trade or industry. It states that a trade, business or industry which is of
an obnoxious nature or which could be a source of nuisance to the public or a class
of the public are allowed to be controlled and supervised. And these businesses or
industries can be controlled or supervised appropriately by some regulatory
instruments such as registration or licensing. Subsection (2) of Section 107
(Licences) of the same Act states: “Every licence or permit granted shall be subject
to such conditions and restrictions as the local authority may think fit and …”
The Local Government Act 1976 interpreted “nuisance” as “any act, omission or
thing occasioning or likely to occasion injury, annoyance, offence, harm, danger or
damage to the sense of sight, smell or hearing or which is or is likely to be injurious
or dangerous to health or property or which affects the safety or the rights of the
inhabitants at large;” but the term “obnoxious” is not explained.
However, it appears that local authorities do not use the criteria of obnoxious or of
public nuisance to determine which classes of business require licensing. And
subsection (2) of Section 107 provides the local authorities complete empowerment
in determining the conditions or restrictions of the licence. A review of available and
accessible documents, such as by-laws and application forms, indicates statements
pertain to the types of supporting documents which businesses must supply when
applying for a licence, such as for business registration, building/premise purchase
or rental agreement, location plan, floor plan and proof of payment of assessment
tax. There is not any explanation why these documents are required in terms of how
they relate to protecting the community from obnoxious or nuisance items or other
factors such as public health. It appears that the only reason is because local
authorities want assurance that a business has the capability and capacity to do the
business.
Conditions of preserving a licence is provided in the by-law under the section titled
General Provisions for Trades, Businesses, and Industries. This section prescribes
the conditions that the business has to provide to continue operating. These
provisions pertain to the security, cleanliness and facilities that the business premise
Page | 24
must provide. An example of the provisions of a licence is shown in Box E-0-1
(Appendix E).
Comparison with other countries
Australia
Table 2-8 shows the licences required for a specific business activity (stationery
retail in Melbourne, Victoria) in Australia.
Table 2-8: Licences Requirements of a Business Activity (Stationery Retail) in Victoria, Australia
Service Service
Overview
Eligibility requirements (summary)
1 Application
for Work
Safe
Insurance-
Victoria
Published by:
Victoria-Work
Safe Victoria
Topic
:Employing
Staff for
Contractors
Service type:
Licence
The purpose of this compulsory insurance
arrangement is to provide your business with
insurance coverage for the cost of workers
compensation entitlements if any of your workers
are injured or become ill because of their work.
2 Background
Music
Licence
Published by :
Australian
Government-
Revenue and
Licensing
Topic: Music
in your
Business
Service type:
Licence
You will require this licence if you intend to play
copy righted music in your business.
3 Fair Work
Information
Statement
Published by:
Australian
Government-
Fair Work
Ombudsman
Topic:
Employing
Staff or
It provides basic information on national
standards for employment matters.
Page | 25
Contractors
Service type:
Licence
4 Licence to
Play
Protected
Sound
Recordings
or Music
Videos
Published by:
Australian
Government-
Licensing
Department
Topic: Music
in your
Business
Service type:
Licence
You will require this licence if you operate a
business where you intend to play sound
recordings (such as CDs, tapes, digital
downloads)in a public place, exhibit music videos
or use sound recordings for music on hold (for
telephones) that are covered by copyright.
5 National
Business
Name
Registration
Published by:
Australian
Government-
Registry
Topic:
Business
Names
Service type:
Licence
You will require this registration if you intend to, or
currently, carry on a business in Australia.
6 Permit to
Distribute
Handbills
Published by:
Victoria-City
of Melbourne
Topic:
Advertising/W
ebsites
Service type:
Licence
You will require this permit if you intend to
display, handout or distribute handbills ,notices,
pamphlets, flyers or any other form of advertising
or promotional material to persons or premises.
7 Permit to
Erect or
Remove an
Advertising
Sign or
Notice on a
Building,
Road or
Footpath
Published by:
Victoria-City
of Melbourne
Topic: Public
Spaces and
Roads
Service type:
Licence
You will require this licence if you intend to erect,
place or remove an advertising sign, banner or
notice on a building, road or footpath.
8 Registration
of Cooling
Tower
Systems
Published by:
Victoria-
Legionella
Program
You will require this registration if you own an
operating cooling tower system. A cooling tower
is a heat-rejection or heat-exchange device that
uses outdoor air to cool recirculated water, but
Page | 26
Topic: Water
and Air-based
Cooling and
Heating
Service type:
Licence
does not include an evaporative air cooler or
evaporative air conditioner.
Cooling tower systems are often associated with
air-conditioning systems and industrial processes
including dry cleaning, plastic injection moulding
and some dairy farming.
9 Registration
of a Trade
Mark
Published by:
Australian
Government-
Trade Marks
and Designs
Group
Topic:
Protecting
your Ideas
Service type:
Licence
A Trade Mark is a mark used by traders in goods,
or provision of services, to distinguish their goods
or services from those of other traders .A
registered trademark gives you the legal right to
use, license or sell it within Australia for the goods
and services for which it is registered.
10 Variation to
Environment
Managemen
t Plan
Applicable to
Premise
Published by:
Victoria-City
of Melbourne
Topic:
Business Pr
mises
Service type:
Licence
You will require this permit if you intend to vary
the Environment Management Plan(EMP)
applying to your premises.
Councils have environmental management plans
which are applicable to all business owners and
occupiers. These plans promote responsible
management of the environment throughout the
municipality.
11 National
Employment
Standards
Published by:
AustralianGov
ernment-Fair
Work
Ombudsman
Topic:
Employing
Staff for
Contractors
Service type:
Code of
Practice
If you are an employer you must comply with the
National Employment Standards (NES).The NES
are ten minimum standards of employment
entitlements for employees covered by the
national workplace relations system.
12 Workplace
Gender
Equality
(Minimum
Standards)
Instrument
Published by:
Australian
Government-
Workplace
Gender
Equality
You will be required to comply with this standard
if you are:
A registered higher education provider that
employs staff; or
Operating a business that employs 500 or
more employees in Australia.
Page | 27
2014
Agency
Topic:
Employing
Staff for
Contractors
Service type:
Code of
Practice
14 Fire
Services
Property
Levy
Published by:
Victoria-
Department
of Treasury
and Finance
Topic:
General
Taxation
Requirements
and
Registrations
Service type:
Advisory
Material
The Fire Services Property Levy is an annual
charge levied on Victorian properties. Every
property owner is liable to pay the levy,either
through their council rates or through a separate
notice. The levy is made up of a fixed charge, and
available cost calculated according to the type of
property, its capital improved value, and which
fire service covers the area.
16 Victorian
Public
Holidays
and
Restricted
Trading
Days
Published by:
Victoria-
Department
of Economic
Development,
Jobs,
Transport and
Resources
Topic: Public
Holidays
Service type:
Advisory
Material
Victorian law specifies that there are two and a
half restricted trading days each year.On these
particular days, only exempt shops are allowed to
open.
(Source: Australian Business Licence and Information Service (ABLIS) (https://ablis.business.gov.au/pages/home.aspx)
Table 2-8 above shows the regulatory instrument that may apply on a stationery
retail business in Melbourne, Australia. There are three types of regulatory
instruments used: licence, code of practice, and advisory materials. This shows that
the Australian government does not rely only on licences (as licences incur cost to
Page | 28
businesses) but other regulatory instruments such as code of practices and advisory
materials. Licences and permits are used to ensure the well-being, security and
protection of the public’s health and protecting the environment. The employment
code of practice ensures that employees are provided with their rights and protection
according to a standard that is acceptable to all parties concerned.
United Kingdom
In the sampling of licences in the UK, the licences required are based on the criteria
of the business operations. An example of the licences requirements is as shown in
the table below (Table 2-9). The example is based on a stationery shop located in
England. Table 2-9 clearly shows that the licensing requirements for a stationery
retail business in England to ensure that the public’s (which includes employees)
well-being, convenience and health are taken care of. Items 2 and 3 ensure the
public’s well-being and security. This ensures that the business does not misuse
information gathered. Items 4 and 5 ensure that the public is not inconvenienced due
to the business’s operations. And item 6 ensures that underage employees are not
taken advantage of. The United Kingdom has-- also provided a legislation (Licensing
Act 2003) which pertains to licensing of a business premise which sells alcohol. This
legislation was enacted to ensure the safety and well-being of the general public.
Table 2-9: Licences Requirements of A Business Activity (Stationery Retail) in the United Kingdom
Licences
may need
to apply
for:
Summary Details
1 Licence to
play
backgroun
d music
(PRS)
Licence to play
recorded music in
public (eg a radio ,CD
or music channel ) on
your business
premises
You’ll probably need a PRS for Music
licence if you play recorded music in
public,e.g.a radio,CD or music channel on
your business premises.
PRS for Music collects and distributes
money for the use of them musical
composition and lyrics on behalf of
authors, songwriters,composers and
publishers.
2 Notification
to process
Notify the Information
Commissioner's
You must notify the Information
Commissioner’s Office (ICO) if your
Page | 29
personal
data
Office (ICO) if your
organisation
processes personal
data in an automated
form.
organisation processes personal data in
an automated form.
‘Personaldata’meansdatathatrelatestoalivi
ngpersonwhocanbeidentifiedfromthatdata.I
tincludesemploymentdetails,clientinformati
onandinformationcapturedonCCTV.
3 Publics
pace
surveillanc
e (CCTV)
licence
A public surveillance
licences is needed to
carry out manned
guarding activities
with the use of CCTV
equipment.
You must get a licence from the Security
Industry Authority (SIA) if you work as an
operative (or supply operatives under a
contract for services) who uses closed
circuit television (CCTV) equipment to:
Monitor the activities of a member of
the public in a public or private place
Identify a particular person
This includes the use of CCTV to record
images that are viewed on non-CCTV
equipment, but excludes the use of CCTV
solely to identify a trespasser or protect
property.
There are 2 types of SIA licence:
A front line licence for operatives
carrying out surveillance
A non-front line licence for managers,
supervisors and other staff who don’t
carry out frontline duties
4 Permission
to place
tables and
chairs on
the
pavement
Licence to place
furniture on the
pavement
Apply for a licence from your local council
if you want to place tables, chairs or other
temporary furniture on the pavement in
England and Wales.
5 Pavement
or street
display
licence
(England
and Wales)
A licence for putting
advertising signs on
the road or
pavement.
Contact your council to find out if you need
a licence to put an advertising sign or
display on the road or pavement in
England or Wales.
6 Child work
permit(Eng
land and
Wales)
Apply to your local
authority for a child
work permit
If you want to employ a child you may
need to obtain a work permit for that child
from the local authority where your
business is based. A child includes any
person who has not yet reached
compulsory school leaving age.
Page | 30
It’s illegal to employ children under the age
of 13 unless they are taking part in a paid
performance (e.g. a play or film), sport or
modelling and you have obtained a child
performance licence from the relevant
local authority.
(Source: UK Licence Finder (https://www.gov.uk/licence-finder))
Tables 2-8 and 2-9 of the licence requirements of Australia and United Kingdom
respectively, clearly indicate the requirements and reasons of the licences. This
greatly assists business in being compliant with the regulations and policies of doing
business. In general, the licensing that businesses require in Australia and the
United Kingdom ensures that employees’ rights, safety, and health are taken care of,
the general public’s convenience and security are not compromised and the
environment is protected.
Unlike in Malaysia where the criteria set by the local authorities does not seem to
conform to subsection(s) of Section 102 of the Local Government Act 1976. And any
criteria of a licence is not easily accessible by businesses and not many local
authorities provide the conditions of a licence. From accessible by-laws, provisions
of a licence are stated in the by-laws and these provisions can be assumed as the
criteria of the licence. An example of the provisions is shown in Appendix E.
In 2011, the Ministry of Urban Wellbeing, Housing and Local Government has
provided some guidelines on the issuance of licences of the local governments. The
guideline identifies businesses into risky and non-risky businesses. The objectives of
the guideline is to make the issuance of the licences faster where non-risky business
is to be issued licences in one day whereby all the criteria and documentation are in
order. But what is identified as a risky or non-risky business is not explained. Tables
B-0-1 and B-0-2 in Appendix B show examples of businesses deemed non-risky and
risky.
Some local authorities have categorised licences into technical and non-technical
licences. Technical licences require up to ten days for approval and non-technical
licences can be issued immediately if all documentations are complete. But no
explanation is provided what is meant by technical or non-technical licence and why
and how the businesses are categorised as such. Examples of technical and non-
technical licences are shown in Table B-0-3 (Appendix B).
Page | 31
2.5 NEW LICENCES CAN BE CREATED OR NEW CRITERIA
ADDED WITHOUT EXPLANATION
Table 2-10 shows businesses within a municipal council which did not require a
licence in 1992 but now require one as amended by the Trade, Business and
Industrial Licensing (MPAJ) By-Law 2007. It also shows that some business
activities have had their licence fees increased.
Table 2-10: Comparison of Types of Business Activities of a Municipal Council Requiring Licences in 1992 and 2007
Type of Industry
1992 (Fees (RM))
2007 (Fees (RM))
Processing /
Manufacture
Wholesale /
Storage
Retail / Service
s
Processing /
Manufacture
Wholesale /
Storage
Retail / Servic
es
Trade
Telephone & Telephone Accessories Shop
200
3 4
200
Medical Shop / Pharmacy
400 200
Kiosk
a) Under 6 sq m
150
b) Above 6 sq m
200
Selling / Repairing Bicycle
240
Automotive Accessories Shop
240
5
220 240
Electrical Goods Shop
240
6
400 400
Making advertisement board
180
7
140 180
Selling and servicing computer
240
Selling leather goods
240
Selling infant goods
240
Page | 32
Selling direct goods
240
Selling construction materials
220 240
Embroidery 200
Trade / Business Office
200
Musical instrument
200
Private schools, private higher education institutes, other educational institution, other academy, tuition centres
150
8 9
500
Kindergarten, nursery
150
10 11
150
The local authority concerned has not provided any explanation as to why the new
business activities require a licence to operate. There was also no real explanation
of the reason that some licence fees were increased and while some were not. The
increase ranged between 16% and 66%. And no explanation has been
communicated for the wide differences in licence fee increases. Thus, it is very
doubtful that the local authority has conducted any risk assessment or impact
analysis on these businesses. It appears that the local authorities are using the
business licensing as a method to raise revenue. Recently, it has been reported in
the media that another local authority is going to raise business licence fees by
between 100% and 300%. The only explanation provided by the local authority is
that the increase in business licence fee is long overdue as it has not been increased
for 25 years(Hike in business licence fee 2015).
Page | 33
2.5 MOST OF THESE COSTS ARE UNNECESSARY AND
REFLECT POOR REGULATORY PRACTICES
To summarise the preceding analysis, licensing in Malaysia suffers from the
following weaknesses:
to date, Regulation Impact Analysis (RIA) has not been used to ensure new
local government regulations, including licences, are thoroughly analysed to
ensure they will deliver a net benefit to the economy and the community
the number of businesses requiring licences has been increasing without
explanation, so it appears that there are too many licences
most licences appear to be renewed annually when in most cases it appears
that the risks posed do not justify this, so licences are renewed too frequently
it usually takes at least three months for licence approval or renewal
some fees have been increased and no explanation has been given why
some fees were increased and others were not, nor of the varied rates of
increase
while not explicitly stated, it appears that licensing is not viewed primarily as a
regulatory instrument but rather as a revenue raising instrument
there is a lack of transparency because businesses are generally unable to
access the criteria for getting any licence
there is a lack of accountability because local governments generally do not
explain to businesses the reasons for not being approved for a licence nor
can businesses appeal decisions against them.
While it is generally accepted that businesses must bear some of these costs for
regulatory goals to be achieved, where licensing requirements are poorly designed
or they are not administered well, they will impose higher costs on them than
necessary. Addressing the weaknesses identified above would reduce the
unnecessary burdens.
One of the main components of quality regulatory management is the undertaking of
RIA. The National Policy on the Development and Implementation of Regulations
(NPDIR) established that all new regulations undergo RIA. This requirement applies
to all federal government ministries, departments, statutory bodies and regulatory
commissions. But state and local governments are only encouraged to adopt the
Page | 34
NPDIR, as the federal government does not have the authority to impose such a
policy on the state and local governments. As RIA has only recently been adopted by
the Malaysian Government, it is crucial that all government agencies review current
regulations. It is suggested that the Local Government Act 1976 (Act 171) undergo a
review as an observation of the Act specifically in relation to businesses may not be
applicable for this modern age. This observation is presented in detail in Chapter
3.3.5.
RIA advocates that all regulations undergo a comprehensive impact analysis
involving all stakeholders before the regulations are enforced. As a review of the
licensing system of the local authorities has been found wanting, it is of importance
that RIA is employed not only on the regulations but also on the administrative
procedures and the businesses being licensed. When guided by a comprehensive
risk assessment of the administration procedures and businesses would show that
licensing the lowest risk business is not justified. And the renewal of licences
annually does not really reflect the risk of the business. Businesses with a low risk
should automatically be provided with licence validity to the maximum provisioned in
the current licensing environment which is three years.
Licensing requirements should have the minimum necessary for operation. It can be
shown that local authorities have similar licences that can be imposed on the same
business (refer to Table B-0-3 of Appendix B – Health Therapy). It would be better
that licences are provisioned under category of business as this would require
business only a single business premise licence instead of multiple business activity
licences currently that can be imposed. Another unnecessary burden imposed on
business is the duplicative information that is required to be submitted to different
government departments or agencies. The preparation of these required documents
to several different regulators impose a substantial cost to business which the
government is ignorant of. This where applying RIA is of importance.
Businesses have contended that local government has not applied regulations
consistently even by the same local authority. An example of the inconsistency is
presented in Appendix A-2-1 as the local authority does not have a consistent
interpretation of the regulations themselves. Business has found that the criteria of
their businesses are not readily accessible. At times businesses are only aware of
the criteria on the submission of their licence application. As an example, a
convenience store owner had gone to the local authority to submit his application for
Page | 35
a business premise licence only to be informed that he is required to have an annual
agreement for pest control. Nowhere in the application form was the requirement
stated nor was he informed earlier.
The government through the Government Transformation Programme (GTP) is
advocating government transparency and accountability. One main contention of the
Local Government Act 1976 is Section 107 (2) and (3) whereby the local authority
has the absolute power to revoke, not renewing, and refuse approving of any licence
without giving any reasons whatsoever. The only recourse for businesses is to
reapply for the licence as there are no provisions in the Act or procedures or policy
for appeal or mediation procedures in the licensing system. This is quite an
outmoded regulation which has no place in this modern times.
Businesses have to bear some direct and indirect costs when getting approval for
licences and when making changes to their business in order to meet licensing
requirements. As stated in A Guide to Reducing Unnecessary Regulatory Burdens
(pp12) (Malaysia Productivity Corporation 2014), costs may include;
administrative and operational requirements, such as documentation, training
requirements on the ways goods are made or sold
requirements on the ways services are supplied
requirements on the characteristics of goods and services which are produced
or supplied
lost production and marketing opportunities because licensing requirements
prevent businesses from innovating and taking advantage of new
developments.
Furthermore, The World Bank in its Policy Framework Paper on Business Licensing
Reform and Simplification has suggested the elements of direct and indirect costs
that businesses may bear (see Table 2-1).Case studies of the burdensome features
of licensing have shown that these direct and indirect costs have hampered
businesses in Malaysia for quite some time (refer to Appendix A).
The Malaysian Government through the New Economic Model (NEM) has realised
the need for better policies and regulations management which would improve
regulatory quality. It is stated in the 10th Malaysia Plan specifically on the topic of
Modernising Business Regulations;
Page | 36
“The regulatory environment has a substantial effect on the behaviour and
performance of companies. Private sector participation in the economy and
innovation requires a regulatory environment that provides the necessary
protections and guidelines, while promoting competition. Too often, Malaysian
firms face a tangle of regulations that have accumulated over the years and
now constrain growth. At the same time, regulations that would promote
competition and innovation are absent or insufficiently powerful”.(The
Government of Malaysia 2010)
Following this realisation, the Government has worked towards formalising the
procedures and processes to produce quality regulations. In 2013, the Government
launched the National Policy on the Development and Implementation of Regulations
(NPDIR). The main objective of the NPDIR is to address the gaps in the
management system for regulations. NPDIR guides the development of good
regulations, which is essential in achieving the NEM policy objectives. It sets out the
core principles that regulatory authorities should adhere to in regulating and outlines
a number of steps that will be taken to put the principles into practice. It also seeks to
reduce, if not eliminate, cumbersome and inappropriate bureaucratic procedures that
may affect the cost of investing and the potential returns on investment.
In the 10th Malaysia Plan, the MPC has been tasked to review business licences.
Under the Modernising Business Licensing (MBL) initiative it was initially determined
that over 700 types of licences were to be reviewed for abolishment or otherwise. As
of March 2015, at the federal government level, 717 licences were re-engineered or
simplified and composited into 448 business licences. Whereas, 9 licences were
abolished and another 14 licences are due for abolishment. At the state level, 1,627
licences were re-engineered or simplified and composited into 541 business
licences.
Page | 37
3 YET UNCLEAR THAT LICENCES ARE EFFICIENT OR
CONTRIBUTE MUCH TO ECONOMIC PERFORMANCE OR
SOCIAL WELL-BEING
3.1 LICENCES AND RAISING REVENUE
Licensing can serve two broad purposes:
One, as a regulatory instrument to ensure businesses have the capacities to
fulfil specified policy objectives usually concerned with protecting the general
public and the environment
Two, as a revenue raising instrument that would be used to provide public
services to the community.
As provisioned under the Local Government Act 1976, it seems that Malaysian local
authorities emphasise business licensing as a major revenue raising activity. And, as
noted in section 1.4, licensing has been increasing.
Revenue of the Local Government
As local government in Malaysia is self-sustaining, it requires revenue to fund the
services for which they are responsible to provide to the community within its
jurisdiction. This is stipulated in the Local Government Act 1976 Section 39.
Box 3-1: Subsection (a) of Section 39 of the Local Government Act 1976 (Act 171)
“PART V
GENERAL FINANCIAL PROVISIONS
Revenue of the local authority
39. The revenue of a local authority shall consist of
(a) all taxes, rates, rents, licence fees, dues and other sums or charges
payable to the local authority by virtue of the provisions of this Act or any other
written law;
(b) all charges or profits arising from any trade, service or undertaking carried on
by the local authority under the powers vested in it;
(c) all interest on any money invested by the local authority and all income arising
Page | 38
from or out of the property of the local authority, movable and immovable; and
(d) all other revenue accruing to the local authority from the Government of the
Federation or of any State or from any statutory body, other local authority or from
any other sources as grants, contributions, endowments or otherwise.”
In general, the main sources of government revenue are:
1. Tax Revenue
2. Non-Tax Revenue
3. Non-Revenue Receipts
4. Federal Territories Revenue
This classification is adhered to by all government levels - federal, state and local.
For local government, tax revenue mainly comprises property and assessment tax.
Non-tax revenue comprises:
Fees from licences, registration & permits
Services
Sales
Rentals
Interest & Investments
Fines & Compounds
Non-revenue receipts are mainly grants from the federal or state government.
In Malaysia, there are three categories of local government depending on the
population size:
City Council
Municipal Council
District Council
Tables 3-1 to 3-3 show a sampling of the summarised revenue and expenditure of
the different categories of local authorities. Table 3-4 shows the average value and
percentage of revenue collected by local government classification.
Table 3-1: Sampling of City Council Revenue
11.1
MB Petaling Jaya
2013
MB Kuantan
2011
Perbadanan PPj
2013
Tax Income 200,933,542 64.91% 51,568,488 56.21% 118,272,856 28.22%
Non tax 96,699,630 31.24% 31,809,063 34.67% 46,635,036 11.13%
Page | 39
income
Licences,
registration &
permits
20,176,130 6.52% 8,970,675 9.78% 1,754,100 0.42%
Non tax
receipts
11,919,355 3.85% 8,368,335 9.12% 254,267,142 60.66%
Total 309,552,527
11.1.1
91,745,886
11.1.2
419,175,034
11.1.3
Expenditure 281,869,791
11.1.4
96,904,371
11.1.5
431,422,202
11.1.6
Deficit/Surplus 27,682,736
11.1.7
(5,158,485
) 11.1.8
(9,254,841)
11.1.9
(Source: Local Government Annual Report/Financial Statement)
Table 3-2: Sampling of Municipal Council Revenue
11.2
MP Selayang
2011
MP Seberang Perai
2011
MP Kulai
2011
Tax Income 88,050,050 66.05% 126,984,353 73.12% 45,545,824 78.70%
Non tax income 29,680,829 22.27% 38,298,205 22.05% 6,615,952 11.43%
Licences,
registration &
permits
9,684,642 7.26% 11,656,599 6.71% 2,566,552 4.44%
Non tax receipts 15,575,216 11.68% 8,372,142 4.82% 5,708,088 9.86%
Total 133,306,095
11.2.1
173,654,700
11.2.2
57,869,864
11.2.3
Expenditure 125,304,365
11.2.4
160,057,042
11.2.5
38,262,891
11.2.6
Deficit/Surplus 8,001,730
11.2.7
13,597,658
11.2.8
19,606,973
11.2.9
(Source: Local Government Annual Report/Financial Statement)
Table 3-3: Sampling of District Council Revenue
MD Jerantut 2012
MD Batu Gajah 2011
MD Pekan 2012
MD Hulu Selangor 2012
Tax Income 3,370,974
34.52%
6,656,448.12
52.08%
5,357,536
47.05%
43,224,224
70.89%
Non tax income 2,523,273
25.84%
3,512,184.70
27.48%
3,872,138
34.01%
8,175,888
13.41%
Licences, registration & permits
797,447 8.17% 665,383.10 5.21% 653,459 5.74% 1,316,565
2.16%
Page | 40
Non tax receipts
3,869,751 39.63%
2,611,483.58
20.43%
2,156,673
18.94%
9,575,178
15.70%
Total 9,763,998
12,780,116
11,386,347
60,975,290
Expenditure 11,481,869
12,644,984.20
11,518,663
55,224,540
Deficit/Surplus
(1,717,871)
135,132
(132,316)
5,750,750
(Source: Local Government Annual Report/Financial Statement)
Table 3-4: Average Value and Percentage of Revenue by Type of Local Authority
City Council Municipal Council District Council Average
# of local authority 2 13 24 39
Tax Receipts 209.51 54.99% 461.76 56.44% 123.16 40.04% 50.49%
Receipts from Government
40.48 10.62% 158.85 19.42% 106.6 34.65% 21.57%
Others 71.21 18.69% 136.85 16.73% 52.16 16.96% 17.46%
Licence 41.91 11.00% 47.18 5.77% 19.51 6.34% 7.70%
Investment Interest 17.88 4.69% 13.49 1.65% 6.18 2.01% 2.78%
Total 380.99 818.13 307.61
(Source: Local Government Annual Reports/Financial Statements)
From Table 3-4 it is shown that the average percentage of revenue collected from
licences constitute only 7.70%. Given that the revenue collected from licensing
activities is relatively small, perhaps it is not justified given how burdensome licences
are on businesses.
It has been reported in the media that local authorities in Malaysia do use business
licensing as a means to raise revenue. One report acknowledges that one of the
sources for revenue is business licences (Licence fee hike too high 2014).In another
report, the Mayor of the Petaling Jaya City stated that the City Council depends on
business licences fees, charges for putting up billboards and compounds among
others as major revenue raising instrument to administer the city (PJ mayor with
positive outlook 2015).
Local Government Revenue of other Countries
Kenya
Kenyan Local Authorities have a number of sources for their revenue. These include
:Local Authority Transfer Fund (LATF), Roads Maintenance Levy Fund (RMLF),
Contribution in Lieu of Rates (CILOR), property rates, single business permit, vehicle
Page | 41
parking, plot rents, water and sewerage fees, cess receipts, game park fees, and
house rents(Mboga 2009). The LATF, RMLF, and CILOR are grants provided by the
central government. The others are the local authorities’ own-source revenue. LATF
is the main source of Local Authorities revenue.
Australia
In Australia, the local government revenue mainly consists of own-source revenue
which includes rates, sales of goods and services, interest rates, and other revenue
sources which include various contributions, including developer charges, donations
and fines.Grants are also provided mainly by the Australian Government’s general
purpose grants and a share of identified road grants. The local government’s own-
source revenue accounts to more than 70% of the total revenue. (Productivity
Commission 2008)
3.2 LICENCES AND REGULATORY OBJECTIVES
From the economic point of view, government regulations if designed transparently
and implemented and administered effectively would be a good intervention
mechanism in overcoming market failures which preserves and promotes community
health, safety, and welfare and the upkeep of the environment. Kelly and Devas
have suggested that licensing as a local government regulatory instrument can be
advantageous under the following conditions: (Kelly and Devas 1999)
(1) “There must be a significant market failure related to an activity which is
essentially of a local nature,
(2) The benefits from regulating the activity should outweigh the costs of
regulation, and
(3) the regulatory licensing should be the most effective form of government
intervention.”
The World Bank further emphasises the benefits of licensing as a regulatory
instrument as the following:(World Bank 2010)
“the application and notification component of the licensing process allows
governments to identify, verify and contact businesses;
Page | 42
prior approval allows governments to test businesses and exclude those
unlikely to meet minimum standards, such as businesses or business
activities which generate significant health, safety, security, environmental or
other costs and/or risks;
licenses can allow the controlled use of valuable and scarce community
resources, such as telecommunications spectrum, forests or fisheries; and
licensing conditions can often be modified relatively easily resulting in
adaptable and responsive regulation (including for sectors such as
telecommunications where technologies are changing and evolving rapidly).”
In Malaysia, the objectives of licensing businesses by the local authorities are rarely
clearly identified and communicated.
3.3 NOT EFFICIENT TO TRY TO HAVE LICENCES SERVE BOTH
SOCIAL/ECONOMIC OBJECTIVES AND RAISE REVENUE
Kelly and Devas in their paper - Regulation or Revenue? Implementing Local
Government Business License Reform in Kenya – published by Harvard Institute for
International Development –state that:
“Local governments in most countries license private sector activities whether
for regulatory purposes or to generate revenue, or both. Local government
regulatory control is justified in order to overcome market failures and to
protect public safety, while revenue raising is justified to finance the provision
of local public services. These differing objectives inherently cause friction in
designing and implementing business licence fee policy. For example,
licences for regulatory purposes should be limited to cover the cost of
regulation: setting fees too high will lead to evasion, undermining the
regulatory objectives. Licences for revenue purposes, on the other hand,
should be structured so as to mobilize revenues equitably and efficiently
within specific administrative and political constraints.”(Kelly and Devas 1999)
Kelly and Devas further noted that:
“Licensing can be used both for regulatory and revenue purposes. This is
especially true in developing countries where effective regulatory control is
Page | 43
weak, the need for local revenue is high, and the tax instruments given to
local authorities are restricted by the central government or constrained by
administrative limitations. In these cases, licensing tends to be used for both
regulatory and revenue objectives—often designed and administered in a
manner that tends to regulate ineffectively, while at the same time collecting
revenue inefficiently and inequitably.”
In principle, licensing for regulation and for revenue should be clearly differentiated
for they correspond to different powers of the local government. Licensing as a
regulatory instrument falls within the regulatory or enforcement authority of local
governments. Whereas, licensing as a revenue mechanism is within their taxation
authority. However, in practice, it is often difficult to differentiate between using
licensing as a regulatory instrument or as revenue mechanism. To differentiate the
two forms of licensing systems, Kelly and Devas in their report quoted Mikesell:
“A licence ordinance which does not require inspection of the business or the
articles sold or fails to regulate the conduct of business in any matter is a pure
revenue licence, particularly if the licence applications are never denied. If
such controls apply or if licences are difficult to obtain (not just expensive), the
licence is of regulatory variant” (Kelly and Devas 1999)
Local governments may adopt regulatory measures under their enforcement
authority that also incidentally raise revenues. This is especially true with regards to
fines and compounds imposed in the contravention of any regulations, such as late
renewal of business premise licences and not adhering to the provisions of the
licence. It can create a conflict of interest for the local government, particularly where
more frequent renewals and fines for non-compliance would raise more revenue but
may not be the best way to manage the risks being regulated. And as such a case
whereby a local authority has reported that its enforcement department’s client
charter includes “to target an issuance of 2,000 compound slips to business
premises per year”. This indicates that the local authority may be using licensing as
a means to raise revenue.
Either directly or indirectly, local governments have used business licensing as a
means to raise revenue. As a direct revenue raising instrument, the licence fees are
set specifically to raise revenue without much consideration on regulatory
requirements or compliance. And as such, licensing should be considered and
deliberated in the wider context of taxation whereby revenue yield, efficiency, equity,
Page | 44
administrative feasibility and political acceptability should be taken into
consideration.
Indirectly, local government can raise revenue by setting the licence fees higher than
the administrative cost of the licensing activities. If the main purpose of licensing is
regulatory, revenues should not exceed the costs of administering licences but,
determining the actual cost of the licensing administration is quite difficult. Thus,
whether the licence fees are used as cost recovery for regulation or as a revenue
raising instrument is often difficult to determine.
It is inefficient to use business licences both as a regulatory instrument and as a
revenue raising tool. Businesses will feel that they have to bear the cost of providing
local community services of the local government. Perhaps some of the revenue
raised from the new GST could be given to local governments if they rationalise their
licensing systems.
Page | 45
4 OPTIONS FOR REDUCING THE UNNECESSARY
BURDENS FROM TOO MUCH LICENSING
This section looks at options for reducing unnecessary burdens from licensing.
4.1 THREE BROAD APPROACHES TO REDUCING BURDENS
The following options look at the overall licensing system and could be implemented
with due risk assessment and impact analysis. These following options would have a
forceful impact on the revenue of the local government.
4.1.1 OPTION ONE: LOCAL GOVERNMENT ONLY USES LICENCES TO
REGULATE AND NOT TO RAISE REVENUE
As stated in Section 107 (1) of the Local Government Act 1976 (Act 171) (refer to
Box 2-1), local authorities are allowed to prescribed fees for granting licences. Under
this option, licences would only be used as regulatory instruments to achieve the
policy objectives mostly to ensure the health, safety and well-being of the residents
of local government precincts. In this case, licence fees imposed would not be used
to raise extra revenue, so they would only be sufficient to cover the cost of
administering and enforcing the licence.
Some countries have removed licences for most types of businesses. Only
businesses that may have a detrimental effect on public health and safety are
required to be licensed or registered. As an example, licence requirements in the UK
(refer Table 2-9) are aimed at ensuring that under-age employees are not exploited,
and at maintaining the public’s safety and convenience. Licensing of a business itself
is not required.
4.1.2 OPTION TWO: LOCAL GOVERNMENT ONLY USES LICENCES TO
RAISE REVENUE RATIONALLY
Under this option, it would be made explicit that local governments only use licences
to raise revenue and not to achieve policy goals. Burdens on business would be
Page | 46
lowered by setting the licence fee to a fixed value and by simplifying licensing
procedures. This would relieve businesses of the burdens of the administrative
procedures of applying for and renewing licences. Each business would only need to
pay one fee rather than a range of fees for different business activities. Any
increases of the licence fee should be made transparently and predictably such as
by being based on the inflation rate or explicit explanations of revenue to fund local
government budgets. It would provide local governments with more certainty about
revenue collection, as the amount of licence fees collected as revenue can be easily
determined and fees could be adjusted to ensure the provision of public services.
This would also relieve businesses of the uncertainty of getting licence renewal.
If local governments no longer used licences as regulatory instruments, then state
and national governments could use them for this purpose or they would not be used
at all. In general, this would allow the higher level governments to regulate public
risks rationally and to provide greater regulatory consistency across jurisdictions.
4.1.3 OPTION THREE: ABOLISH ALL BUSINESS LICENSING BY LOCAL
GOVERNMENT
Under this option, local government would not use licences for revenue raising nor
for regulating. Since they would no longer receive revenue from licence fees and
penalties, the federal and/or state governments would probably need to supplement
local government revenue on condition they no longer use licences to raise revenue
or regulate business.
Abolishing local government licences would adversely impact on their revenue
especially the bigger local authorities (refer to Table 3.4). Even though the average
percentage of revenue from licences is about 7.7%, the value amount is quite huge.
As shown in Table 3-4, the average total value derived from licences amount to
RM41.91 million for city councils, RM41.18 million for municipal councils, and
RM19.51 million for district councils. It is unlikely that this option could be
implemented, unless the federal government and/or state governments are willing to
fund local governments to cover the shortfall in revenue.
Page | 47
4.2 WILL MALAYSIA USE LICENSING FOR REVENUE RAISING
OR REGULATION?
In order to choose among these three options, would first require all levels of
government to agree whether licences should primarily serve a regulatory or a
revenue raising function. It is not desirable to use licensing for both functions:
“This is especially true in developing countries where effective regulatory
control is weak, the need for local revenue is high, and the tax instruments
given to local authorities are restricted by the central government or
constrained by administrative limitations. In these cases, licensing tends to be
used for both regulatory and revenue objectives—often designed and
administered in a manner that tends to regulate ineffectively, while at the
same time collecting revenue inefficiently and inequitably. The key is how to
design the business licensing system to effectively enable the local
governments to effectively regulate the private sector where necessary while
mobilizing important local government revenues.(Kelly and Devas 1999)”
4.2.1 LICENSING FOR REGULATORY PURPOSES ONLY
Licensing as a regulatory instrument is desirable where the health, safety and
welfare of the general public and the preservation of the environment are affected:
“Licences used solely for regulatory purposes should be narrowly targeted to
achieve the specific regulatory objective, with the fees set only to cover the
cost of administration and regulation(Kelly and Devas 1999).”
There is no definitive list of activities that should or should not be licensed. The
World Bank’s Policy Framework Paper on Business Licensing Reform and
Simplification(World Bank 2010) has noted that many developed and developing
countries officially limit licensing to business activities affecting the following areas:
provision of services and goods relating to human and animal health,
including the manner of sale of particular goods and services;
safety or specific risks to human life, such as the sale of pharmaceuticals,
medicines and fireworks. This can also include the production, transport,
storage, handling and inspections of dangerous goods;
Page | 48
networked services, such as telecommunications, energy and the financial
sector;
gambling and related activities;
specified financial services;
security, businesses involved in provision of law and order services, internal
security and national security;
use of scarce resources, such as natural resources and radio frequencies;
and
environment, including protection of specific environmental amenity (such as
use of national parks and reservations).
This reflects those areas which pose the greatest risk to: the health, safety or
wellbeing of individuals; the environment; or are affected by significant market
failures.
It would be possible to interpret Section 102 (s) of the Local Government Act (Act
171), which states that local government can supervise and control any trade,
business or industry which is of an obnoxious nature and/or which can be a source
of nuisance to public, as consistent with regulating for risk and covering the areas
identified by the World Bank.
However, to date, Malaysian local governments license a far broader range of
businesses than indicated by the above criteria. For local governments to use
licences as regulatory instruments rather than to raise revenue, they would need to
cease licensing a large number of businesses. Instead, local governments would
need to apply comprehensive risk assessment to determine the risks that the types
of businesses that may pose the greatest risks to society, the economy and the
environment. The list provided above could be used as a guideline in determining
these.
Compared to other types of regulations, for example competition law and accounting
standards (which apply broadly and impact businesses while they are conducting
business), whereas satisfying the conditions attached to business licences impact
before they commence practising and can prevent them from conducting business.
The guidance provided in MPC’s A Guide to Reducing Unnecessary Regulatory
Burdens: Core Concepts, should be adopted by local governments if they continue to
use licences, registration, approvals, etc. as regulatory instruments. Section 5.6 of
Page | 49
the Guide which emphasizes the approaches to minimise the adverse impacts of
licensing and approvals on business is reproduced in Box 4-1.
Page | 50
Box 4-1: Minimising Adverse Impacts of Licensing and Approvals on Business
11.3
While inspectors check whether businesses are compliant with particular
regulatory requirements, licensing and approvals provide a form of gateway
approval where the regulator plays the role of gatekeeper and provides a business
with:
a licence to operate in a particular area if it meets certain requirements, and/or
approval to conduct a particular activity if the proposal meets certain
requirements.
In order for licensing and approvals to minimise adverse impacts on business, they
should meet the following criteria:
the benefits justify the costs
the social/economic/environmental objectives being pursued by each type of
licence and approval are clearly stated
it is clearly established that each requirement which needs to be fulfilled to gain
a licence or approval, contributes to establishing the capacity or likelihood that
the business will contribute to achieving the social/economic/environmental
objectives of the licence or the business approval
licensing and approvals are not used to reduce competition by preventing some
businesses from operating in particular industries nor from providing certain
products or services
criteria for being granted each licence or approval are proportionate to the risk
or objective being addressed by the licence or approval. For example, in
Australia there are different development approval ‘tracks’ (exempt, prohibited,
self assess, code assess, merit assess and impact assess) that correspond
with the possible level of adverse impact of purposed and thus the level of
assessment required to make development an appropriately informed decision.
This speeds up most development assessments and releases assessment
resources to focus on those proposals which are technically complex or might
have significant impacts on others
where the risks are low, establish negative licensing whereby businesses are
automatically licensed to operate unless they fail to meet pre-determined
Page | 51
requirements
facilitate the timely assessment and granting of licences and approvals
► meet with applicants to explain all criteria they must meet
► provide in one place and make public a full list of all criteria which
outlines the conditions which must be met in order to qualify for the
licence or approval
► make all requirements clear and concise
► adopt an electronic development assessment system to reduce costs for
businesses and to improve consistency, accountability, public reporting
and information collection/benchmarking
► limit the information requirements that must accompany an application to
those essential to meeting the licence or approval requirements
ensure the skills of those working in regulatory agencies include a good
understanding of the commercial implications of requests and the capacity to
assess whether applications indicate whether businesses will deliver on
regulatory objectives rather than judging them against detailed prescriptive
requirements
fees charged (if any) are only sufficient to cover the cost of processing and
assessing each application for a licence or approval.
(Source: (Malaysia Productivity Corporation 2014))
Local governments would need to find other sources of revenue. This could come
from federal or state governments, or local authoritiescould use other more efficient
and fairer ways to raise revenue.
4.2.2 LICENSING FOR REVENUE RAISING ONLY
Business licence fees that are set higher than to cover the cost of administering the
licence raise revenue for the government. Where this is the case, business licences
should be considered within the wider context of business taxation. And this would
require the local government to consider taxation features such as revenue yield,
efficiency, equity, and administrative feasibility in the business licensing system.
Some countries especially in the US (refer Table 4-1), implement local business tax
Page | 52
as the privilege of being able to conduct business within its jurisdiction. Business
licences can also be considered as a benefit tax for the local government to provide
local government services to business or more generally.
If it were made explicit that business licences are only used to as a tax mechanism
then this goal could be pursued more rationally and effectively, while also reducing
administration costs for local governments and compliance costs for businesses.
This is because businesses would only have to pay for one licence and not having
to demonstrate compliance with any regulatory requirements. Most likely each
business in a jurisdiction would be required to pay an annual fee. The fee could be
based on an indicator of size or capacity to pay, such as profits, land, turnover,
property, sales, number of employees. Or all business could pay the same set fee,
however this would discourage small businesses. The licence fees would be a flat
charge - a fixed amount based on type of business, size of business or the location
where the business is sited - or the fees could be a percentage of turnover, sales or
income. However, income or turnover-based local taxes can overlap with federal
taxes which are based on turnover or profits. This may cause problems of
administrative and compliance coordination, inconsistencies and political
jurisdictional problems.
If licences were no longer used to regulate business, then regulatory objectives
would need to be addressed with other instruments. It might be appropriate to
minimise local government’s regulatory role. In this case, state and federal
governments could be the main regulators.
Revenue Raising Alternatives
Kelly and Devas noted that;
“Taxation of business activity is normally within the purview of central
government (i.e., levied through sales tax, GST or corporate profits taxation),
many countries also allow local governments to tax business in one way or
another. Local business taxation can be justified as a payment for the
privilege of conducting business in a locality and as a form of benefit tax to
pay for local government services. Compared to the property tax—the other
common tax base for local government—business taxation generally offers
greater buoyancy if linked to some indicator of turnover or income. As an
Page | 53
indirect tax, the burden from business taxation can be shifted, wholly or in
part, to the final consumer, disguised in the prices charged, reducing the
political sensitivity of the tax. Local level business taxation can be levied in a
variety of ways—as a flat lump sum charge ,as a fixed amount varied by type,
size or location, or as a percentage of turnover, sales, or income.”(Kelly and
Devas 1999).
Table 4-1 below shows examples of countries that impose business taxes in lieu of
licences and these are used as raising revenues instruments for the local
government.
Table 4-1: International Experience with Local Business Taxation and Licensing
No. Country Experience
1. United States Many states levy a corporate income tax on
businesses in addition to a franchise tax or a
privilege tax for being allowed to conduct a business
within their jurisdiction.
Many local governments use a system of business
privilege taxes or licences to mobilize revenue from
the business community.
2. Europe Germany
Gewerberbesteuer (local business taxation)
based on a combination of business capital
and profits.
N.B. in recent years has become virtually a surcharge on
the corporate profit tax.
3. Austria, Belgium, Switzerland and Norway
local business taxes on profits,
N.B. importance is relatively small.
4. France
All subnational government levels tax local businesses
through a Taxe Professionelle
levied on payroll and business capital (land,
buildings and equipment).
5. Brazil Local Services Tax (ISS),
percentage of the cost of the service supplied
(gross turnover).
For individual professionals (including those employing
Page | 54
one or two people) and the self-employed,
ISS is levied as a fixed annual rates for different
types of activity which are set by the
municipalities
6. Venezuela Local governments levy a Municipal Business Tax,
percentage of gross receipts or as a flat fee
depending on the class of business.
also a minimum annual tax for those firms which do not
record a sales or gross income figure for a given fiscal
period and there are a wide range of tax rates
7. Philippines Local Business License Tax (BLT)
gross sales or receipts
tax rate varies from about 0.6% to about 4.0% based
on established tariff schedules differentiated by
business type.
8. Anglophone
Africa
Issuance of business licenses
annual fee
(Source: (Kelly and Devas 1999))
Other mechanisms that local governments in other countries raise revenue besides
the common business taxes and business licences are special taxes on tourism and
entertainment. Among these mechanisms as noted by Kelly and Devas are shown
in Table 4-2 below.
Table 4-2: Example of Tax on Tourism and Entertainment
Tax Description Country
Charges per visitor night common in Western and Eastern Europe and the United States
Taxes on hotel and restaurant turnover Indonesia
Taxes on theatres, cinemas, sporting events and other forms of public entertainment
Philippines and Indonesia
(Source: (Kelly and Devas 1999))
The tax mechanism on tourism and entertainment would only benefit those local
governments which have the highest number of tourists and had extensive tourism
and entertainment facilities. In Malaysia, two states have imposed this type of tax,
known as heritage tax. This tax is levied on hotels based on per room basis and is a
flat rate. However, this tax is collected on behalf of the state government and the
local authority does not benefit from this directly.
Page | 55
In the Malaysian context, a comprehensive licensing reform would greatly help in
determining the best solution in assisting business to move forward in providing
goods and services which also is not detrimental to the local authorities in providing
its community services.
4.3 SINGLE ACTIONS TO REDUCE THE BURDENS OF
LICENSING IRRESPECTIVE OF WHETHER USE LICENSING
FOR REGULATION OR REVENUE RAISING OR BOTH
Even if governments do not agree to reform licensing and revenue raising by
adopting one of the three main options outlined above, there are single
improvements which could be adopted. Each could be implemented singularly as
each would reduce unnecessary burdens on business. However, it would be better
to carry out all of the improvements albeit progressively and according to importance
and readiness.
4.3.1 EXTEND THE PERIOD OF LICENCES
The period of renewing licences should be extended to three years as allowed in the
Local Government Act 1976. Section 107 Subsection 4 of the Local Government Act
states: “A licence shall be valid for a period not exceeding three years”. Also, the
Licensing of Premises for Trades, Businesses and Industries By-Laws of a City
Council states: “The Council may issue a licence for any period not exceeding three
years and is renewable,…”
The Ministry of Urban Wellbeing, Housing and Local Government’s circular
“Guideline for the Improvement of the Issuance of Business Premise Licence and
Hotel Composite Licence (Amendment 2011)” has recommended that a business be
able to choose the validity period for its’ business licence but not exceeding three
years. The Ministry says the local authority should provide this choice.
The guideline also recommends that the business licence validity should be from the
date of the licence issuance and not within one calendar year. The circular and
guideline is shown in Appendix D. A few local authorities have followed the
Page | 56
recommendations of the Ministry’s circular. These local authorities provide the option
of between one and three years for a licence’s validity and also provide for renewal
of business licences according to the annual anniversary of the initial business
licence. A few local authorities have also simplified the licence renewal process
whereby businesses need only bring along their existing business licences for
renewal. As well, some local authorities provide an online system for renewing
business licences and paying the licence fees. This greatly helps businesses as the
time and hassle of going to the local authority office is reduced considerably.
Where licensing is used to reduce identified risks, such as food poisoning, then it
may be inappropriate to increase the term of the licence to three years. Terms
should generally be increased but not where risk assessment indicates they should
be kept shorter.
Those local authorities ,who do not provide the option for businesses to renew
licences for up to three years, say this is because they would have difficulty in
balancing their annual budgets. It is inefficient for the local authorities to rely on fees
from licence renewal where this does not serve an important policy objective. More
neutral ways of raising revenue such as rates on residents or grants from the
Federal Government may be more efficient and less burdensome on business.
4.3.2 PROVIDE EXPLANATIONS WHEN A LICENCE IS REFUSED
Local authorities in Malaysia are not obliged to provide any reasons for the
conditions attached to a licence and nor revoking a licence. Sub-section 2(A) of
Section 107 of the Local Government Act 1976 (Act 171) states:
“Every licence or permit granted shall be subject to such conditions and
restrictions as the local authority may think fit and shall be revocable by the
local authority at any time without assigning any reason therefor.”
Subsection 3 of Section 107 of the same Act further emphasises:
“The local authority may at its discretion refuse to grant or renew any licence
without assigning any reason therefor.”
In this time and age, it is inappropriate for authorities to operate under these
regulations, as they undermine and are inconsistent with the Government’s policy of
accountability and transparency. And to ensure that businesses retain respect for the
Page | 57
law and government, and comply with regulatory requirements, it is imperative that
the authorities provide reasonable and justifiable reasons for assessing a business
as non-compliant and provide ways by which the business can become compliant. It
is suggested that both subsection (2A) and Subsection 3 of Section 107 of the Local
Government 1976 (Act 171) be reviewed and amended appropriately.
In addition, local authorities should be required to provide written explanations to
businesses when they are refused a licence. This would be in line with the
Government’s Transformation Programmes of transparency and accountability.
4.3.3 REGULATORY AND LICENSING REQUIREMENTS MUST BE
PUBLICLY AVAILABLE
Businesses have lamented that obtaining the relevant regulatory information is at
times tedious and time consuming. All government agencies in Malaysia have their
own website or portal providing some regulatory information. At times, this
information is inadequate and too simplistic and crawling through the website to
obtain the relevant information is time consuming. There are some government
websites that do provide good and comprehensive information that assists
businesses in finding relevant procedures and requirements.
Businesses also rely on the help-desk or customer services in obtaining relevant
information. But often this is also a disappointment to businesses as the customer
service representative at times does not have a grasp of the procedures and
requirements. Unclear and inconsistent information does not help businesses. As an
example, where it is not made clear which documents are required to apply for a
licence this delays the approval, as relevant documents need to submitted later.
If regulatory procedures and requirements are written and described in clear
language that is easily understandable this significantly reduces uncertainty and
misunderstanding between businesses and local governments. Providing pictorial
guides and describing explicitly the procedures and relevant documents greatly
helps understanding. It is also important to facilitate access to such guides by
publishing them in booklets or handbooks and made readily available at the local
government’s offices; and by enabling them to be downloaded from the local
governments’ websites or portals.
Page | 58
4.3.4 A REGISTER OF REGULATIONS
The Malaysian Federal Government under the purview of the Attorney-General’s
Chamber has provided access to the Government’s Acts which have \ been passed
by Parliament. Other regulations of the Federal Government are accessible from the
Federal Gazette portal (http://www.federalgazette.agc.gov.my). But this accessibility
of regulations has not been followed by the local authorities. All local governments
only have a listing of the Acts and corresponding By-laws displayed on their websites
or portal. And only very few of these regulations are accessible and these are
probably outdated.
Local authorities having an electronic register of regulations can promote
transparency and check and balance between the regulators and businesses. The
register can include the procedures and requirements of a business licence and the
links between the licences and the relevant regulations. This can provide a better
understanding of the licences and its corresponding regulations and assist
businesses in complying with the regulations. The register may also provide positive
legal security which means that licenses must be in the register in order to apply to
business and only then can the licence be legally enforceable. The register can also
ensure consistency in the interpretation and administrative implementation of the
regulations amongst the local authorities. In summary the electronic register should
provide a comprehensive list of all regulated licences and its vital information. The
World Bank in its handbook “Business Licensing Reform: A Toolkit for Development
Practitioners” has suggested that the information within an electronic register may
include: (World Bank November 2006)
1. “The law that makes the licence legal.
2. The activities the licence applies to.
3. The documents one must complete to acquire the licence.
4. The location where one may apply for the licence.
5. Costs associated with the licence.
6. The maximum number of days for processing of licence applications.”
Page | 59
4.3.5 REVIEW THE LOCAL GOVERNMENT ACT (ACT 171)
A review of the Local Government Act 1976 should be given importance and priority
as the observations presented (albeit focus on business) are not in tandem with the
government’s current intention of transparency and accountability. With a review of
the Local Government Act 1976, all subsidiary legislations and by-laws of the local
government would also require a review.
The Local Government Act 1976 (Act 171) is cited as “An Act to revise and
consolidate the laws relating to local government.” And the main purpose of the Act
is to ensure uniformity of law and policy with respect to local government. Box 4-2
below shows an excerpt from Section 107 of the Local Government Act (Act 171)
which describes the general procedures and provisions for a local authority in the
issuance of licences.
Box 4-2: Excerpts from Section 107 of the Local Government Act 1976 (Act 171)
PART XIV
MISCELLANEOUS
Licences
107. (1) A local authority in the granting of any licence or permit may prescribe the
fees for such licence or permit and the charges for the inspection or
supervision of any trade, occupation or premises in respect of which the licence
is granted.
(1A) Any licence or permit granted under this Act may be issued jointly with any
other licence or permit.
(2) Every licence or permit granted shall be subject to such conditions and
restrictions as the local authority may think fit and shall be revocable by the
local authority at any time without assigning any reason therefor.
(2A) The revocation of any particular licence or permit issued jointly with any other
licence or permit under subsection (1A) shall not affect the validity of any other
licence or permit with which it had been jointly issued.
(3) The local authority may at its discretion refuse to grant or renew any licence
without assigning any reason therefor.
(4) A licence shall be valid for a period not exceeding three years.
Page | 60
Subsection (1)
Under the provision of Subsection (s) of Section 102 (General power to make by-
laws) (refer to Box 2-1), the local authority is allowed to make by-laws pertaining to
the specifics of controlling and supervising any businesses, trades or industries
within its jurisdiction. Furthermore, under the provision of Subsection (1) of Section
107 (refer Box 4-2), the local authority is allowed to prescribe fees pertaining to the
issuance of licences and also be able to charge businesses for the inspection or
supervision of the business. This can be interpreted that the local authority is able to
prescribe fees of any amount on any business without due assessment as to
whether the fee is burdensome to the business.
Subsection (2) and subsection (3)
Subsection 2(A) of Section 107 allows the local authority to determine the conditions
and requirements in the issuance of a licence. It further prescribes that a licence can
be revoked at any time without providing any reasons whatsoever. Subsection (3) of
Section 107 further prescribes that a local authority is allowed to reject a licence
application or the renewal of a licence without providing any reasons.
It is inappropriate for authorities to operate under these regulations, as they
undermine principles of good governance of accountability and transparency and are
inconsistent with the Government’s policy on regulation impact analysis. To ensure
that businesses retain respect for the law and government, and comply with
regulatory requirements, it is necessary that the local authorities provide written
reasonable and justifiable reasons for assessing a business as non-compliant and
advises the business the means to be compliant.
Subsection (1A)
Subsection (1A) of Section 107 states that multiple licences may be jointly issued,
implying that the local authority is empowered to issue multiple similar licences to the
proprietor of a business of a single premise . As an example, a bookshop proprietor
who also sells art equipment and provides photocopy services may require three
licences as most local authorities categorises businesses according to business
activities and not to business premises. A sampling of businesses licences which
appears to be similar but treated as separate licences is shown in Appendix B
Page | 61
A comprehensive review (employing the Regulatory Impact Analysis (RIA) of the
Local Government Act 1976 and its subsidiary by-laws should be effected as an
initial observation has found some regulations in the Act do not adhere with the
government’s current view of modernizing business regulations. The Ministry of
Urban Wellbeing, Housing and Local Government had proposed recommendation to
amend the relevant by-laws (specifically the Licensing of Premises for Trades,
Businesses and Industries by-law) of the local authorities. Among the recommended
amendment is that the local authority must provide reasons for any rejection of
business licence application. But sadly, not many of the local authorities have made
the amendments.
Page | 62
REFERENCES
Bureau of Industry Economics. June 1996b. Business licences and regulation
reform. Report 96/10, Canberra: Australian Government Publishing Service.
Bureau of Industry Economics. June 1996a. Business licenses – international
benchmarking. Report 96/9, Canberra: Australian Government Publishing
Services.
Corthay, Laurent. June 2010. How to Reform Business Licenses. Washington, D.C.:
World Bank.
http://documents.worldbank.org/curated/en/2010/06/13295808/reform-
business-licenses.
Government of Malaysia. December 2012. "Act 171 (Local Government Act 1976)."
2015. Hike in business licence fee. 2 December. Accessed 2 December, 2015.
http://www.thestar.com.my/metro/community/2015/12/02/hike-in-business-
licence-fee-hulu-selangor-traders-will-be-given-chance-to-object-to-increase/.
Jacobs, Scott, Peter Ladegaard, and Ben Musau. 2007. "Kenya’s Radical Licensing
Reforms, 2005-2007: Design, Results, and Lessons Learned." Africa Regional
Consultative Conference - “Creating Better Business Environments for
Enterprise Development: African and Global Lessons for More Effective
Donor Practices”. Accra.
Kelly, Roy, and Nick Devas. 1999. Regulation or Revenue? Implementing Local
Government Business License Reform in Kenya. Harvard Institute for
International Development, Harvard University, HIID Development Discussion
Paper no. 723.
2014. Licence fee hike too high. 25 October. Accessed 7 November, 2014.
http://www.thestar.com.my/News/Community/2014/10/25/Licence-fee-hike-
too-high/.
Malaysia Productivity Corporation. 2014. A Guide to Reducing Unnecessary
Regulatory Burdens - Core Concepts. Petaling Jaya.
—. 2013. National Policy on the Development and Implementation of Regulations.
Petaling Jaya.
Mboga, Hamisi. 2009. Understanding the Local Government System in Kenya - A
Citizen's Handbook. Nairobi: Institute of Economic Affairs (IEA).
Page | 63
2013. National Policy on the Development and Implementation of Regulations.
Petaling Jaya: Malaysia Productivity Corporation.
2015. PJ mayor with positive outlook. 12 September. Accessed 12 September, 2015.
http://www.thestar.com.my/Metro/Community/2015/09/12/PJ-mayor-with-
positive-outlook-Mohd-Azizi-has-won-the-hearts-of-the-people-after-only-five-
months-at/.
Productivity Commission. 2008. "Assessing Local Government Revenue Raising."
Research Report, Canberra.
Putrajaya Corporation. 1999. "Licensing of Premises For Trades, Businesses and
Industries (Perbadanan Putrajaya) By-Laws 1999."
The Government of Malaysia. 2010. Tenth Malaysia Plan 2011-2015. Putrajaya:
Economic Planning Unit, Prime Minister's Department.
World Bank. November 2006. Business Licensing Reform: A Toolkit for Development
Practitioners. Washington, D.C.: World Bank.
http://documents.worldbank.org/curated/en/2006/11/7469596/business-
licensing-reform-toolkit-development-practitioners.
World Bank. 2010. Policy Framework Paper on Business Licensing Reform and
Simplification. Washington, D.C.: World Bank.
http://documents.worldbank.org/curated/en/2010/05/12537007/policy-
framework-paper-business-licensing-reform-simplification.
Page | 64
APPENDIX A: CASE STUDIES – LICENSING
BURDENSOME FEATURES
A-1 BUSINESS PREMISE LICENCE
The local authorities in Malaysia prohibit any business from operating without a
business licence issued by the local authority. Thus, businesses are required to
obtain a business premise licence from the local authority. This is as stated in the by-
laws of the local authority where Box A-0-1 below shows an example of the by-law.
Box A-0-1: Excerpts from Licensing of Premises for Trades, Businesses and Industries By-Laws
….
IN exercise of the powers conferred by section 102 of the Local Government Act
1976 [Act 171], the Council makes and pursuant to section 103 of the said Act the
State Authority confirms, the following by-laws:
….
Licence
3. No person shall use any place or premises within the Council’s area for any
trade, business or industry as prescribed in the Schedule without a licence issued
by the Council.
Application for licence
4.
(1) An application for a licence under by-law 3 shall be made to the Council in such
form and manner as the Council may determine.
(2) The Council may require any applicant for the issue or renewal of a licence to
attend in person or in the case of a corporation or firm, may require an authorised
representative of that corporation or firm to attend at the time of issue or renewal.
(3) Upon approval of the application, the Council shall issue a licence subject to -
(a) payment of the fee as set out in the Schedule;
(b) such conditions and restrictions as may be specified therein; and
(c) payment of a deposit of such sum as the Council may determine;
(4) The licence shall be in such form as the Council may determine.
(5) The Council may issue a licence for any period not exceeding three years and
is renewable, subject to an application for renewal being made to the Council three
months before expiry and the payment of the fee as set out in the Schedule on or
before the date of expiry.
Page | 65
(6) Where any period of a licence is less than a year, the fee payable for such
licence shall be calculated on a month to month basis based on the rate as set out
in the Schedule, and for the purpose of this by-law, part of a month shall be
deemed to be a month.
Applying for a business premise licence is not a straight-forward process even
though it involves only the local government. For example, businesses in the
wholesale and retail sector have found difficulties in applying for a business premise
licence. These difficulties stem from unclear procedures and requirements. This has
led to businesses unable to obtain the licence in a timely manner for them to start
operating.
Certain requirements and regulations impose substantial administrative and financial
burdens on businesses. And these requirements and regulations differ from one
local authority to another even though the authorities may be from the same State.
The requirements for a business licence are at times not stated clearly. These
requirements change from time to time and the changes are not disseminated in a
timely manner. Most local authorities provide a soft copy of the application forms on
their websites, however, it is often only in the forms that the documentation
requirements are stated. Some local authorities only provide a hard copy of the
forms which must be obtained from the local authority’s office.
Chain businesses which have branches in different localities have to deal with
different requirements and comply with different regulations when opening branches.
As an example, some local authorities require a building plan - whether only the
interior of the premise is to be renovated or the renovation includes the façade of the
building premise - to be submitted for approval. No renovation work can start without
the approval of the local authority’s planning department. As the case in shopping
malls, the owner at times requires the tenant to start business within a stipulated
time. Tenants would start renovating its premise before approvals are received
especially if the interior renovation does not include changing the structure of the
premise. And only after the renovation is completed or at 90% completion is the
business able to apply for its business premise licence. The licensing department will
hold an approval meeting with relevant departments and agencies which includes
the planning department and fire services department to obtain their inputs. The
business premise licence will be only be issued preceding the approval meeting. The
Page | 66
approval meeting is usually convened once a week or once a month according to the
procedures of the local authority.
Other issues pertaining to the business premise licence is the interpretation of the
acknowledgement receipt between departments of the same local authority. In some
local authorities, the licensing department will issue an acknowledgement receipt
upon receiving an application for a business premise licence. The business has the
understanding that they are able to operate while awaiting for the approval of their
application. But this acknowledgement receipt is at times not acceptable to
enforcement officers which put the business in a quandary. This uncertainty and
different interpretation and application of procedures may increase the cost of doing
business. In some local authorities, the issuance of a business licence takes about
three months, so businesses lose out by not being able to operate. Usually
businesses still operate while waiting for the business licence to be issued even
though they could run afoul of the regulators.
In most cases, licences issued by the local authorities are temporary due to
businesses not complying with certain requirements. However, often the authorities
do not state clearly what the requirements are or what the business must do to
obtain a permanent licence. And temporary licences are valid only for six (6) months
and must be renewed thereafter.
A-2 SIGNBOARDS AND OUTDOOR ADVERTISEMENTS
By virtue of Subsection (c) of Section 102 of the Local Government Act 1976 (see
Box 2-6), local authorities are empowered to regulate the exhibition of
advertisements. The by-law of the local authority (Advertisement By-Laws)
prescribes the definitions, conditions and the licensing for the exhibition of
advertisement.
Local authorities require that appropriate wordings of signboards and advertisement
to ensure the wording does not contain inappropriate statements and the language is
correct. Local authorities also want to ensure that signboards and outdoor
advertisement are placed at appropriate locations so as not to obstruct movement
and not being an eyesore to the community.
Page | 67
Box A-0-2: Subsection (c) of Section 102 of the Local Government Act 1976 (Act
171)
General power to make by-laws
102. In addition to the powers of making by-laws expressly or impliedly conferred
upon it by any other provisions of this Act every local authority may from time to
time make, amend and revoke by-laws in respect of all such matters as are
necessary or desirable for the maintenance of the health, safety and well-being of
the inhabitants or for the good order and government of the local authority area
and in particular in respect of all or any of the following purposes:
(a) … (b)
(c) to regulate, licence, restrict, prevent or remove the exhibition of
advertisements;
(d) … (u)
A-2-1 DIFFERING STANDARDS AND REQUIREMENTS
(INCONSISTENCY)
There is a lack of clarity with regards to the size and form of the signboards and
outdoor advertisements that can be put up in a local jurisdiction. Businesses wanting
to put up a signboard are required to submit a coloured drawing or sketch of the
signboard with the dimensions stated for approval.
In one case, a business submitted its signboard for approval but was rejected as the
dimensions exceeded the maximum allowable dimensions. The issue is that the
maximum allowable dimensions were not published or advised to the proprietor of
the business before the application was made. The proprietor had to submit a new
drawing before being approved. But a few months later, another business opening its
shop near the first business put a much larger signboard which overshadows the first
business’s signboard. This shows inconsistency and a lack of clarity on the part of
the local authority.
Page | 68
A-3 RENEWING LICENCES AND PERMITS
Most licences such as business licences, signage permits, and weighing machines
licences are required to be renewed annually or for specified period as per the
regulation (as stated in Act 171 and its corresponding By-Laws). The applications for
renewal of these licences required is to be made three months prior to their
expiration date. And most of these licences are for the calendar year period even
though the initial issuance of the licences may be in any month of the year.
Within the local government, business premise licence renewal is to ensure that the
business is still operating and remain in the same type of business as initially stated.
Also, the local authority requires the renewal of the business licence to ensure that
the local authority is able to continue to provide services such as collection of
wastes. Subsection (4) of Section 107 of the Local Government Act 1976 states;“A
licence shall be valid for a period not exceeding three years.”
In the Licensing of Premises for Trades, Businesses and Industries By-Laws of the
local authorities prescribed;
Box A-0-3: Grant or Refusal for Granting Licence - Excerpts from the Licensing of Premises for Trades, Businesses and Industries By-Laws
“The Licensing Authority may issue a licence for any period not exceeding three
years and is renewable, subject to an application for renewal being made to the
Licensing Authority three months before expiry and the payment of the fee as set
out in the Schedule on or before the date of expiry.”
The duration of the licence and the requirements for the renewal of licences is also
stated in the Licensing of Premises for Trades, Businesses and Industries By-Laws
of local authorities
Box A-0-4: Duration of Licence – Excerpts from Licensing of Premises for Trades, Businesses and Industries By-Laws
Duration of licence
6. Any licence unless sooner suspended or cancelled, shall remain in force from
the date of payment of licence until 31 December of the current year.
Page | 69
A licence is only valid for a certain period as prescribed in the regulations. For
licences and permits under the jurisdiction of the local authorities, the Local
Government Act (Act 171) Section 7 subsection 4 states that a licence is valid for a
period of not exceeding 3 years. After which the licence has to be renewed. Signage
permits are also within the ambit of the local authorities and the regulations are
prescribed in the Advertisement By-Laws (principal act – Local Government Act
1976). Whereas, for measurement and weight equipment fall under the Weights and
Measures Act 1972 (under the purview of the Ministry of Domestic Trade Co-
Operatives And Consumerism).
Renewing licences annually puts a substantial administrative and financial burden on
businesses and often requires business to supply the same documents as when
initially applying for the licence. Most local authorities require businesses to start
applying for licence renewal three months prior to the licence expiration. And most
local authorities prefer the period validity of the licence to be within the calendar
year, i.e. until December 31st. Some local authorities require businesses to start
applying for their licence renewal from October and the licence would be issued by
January the following year. Whereas some local authorities would notify businesses
of their licence renewal in December and give the businesses until March 31st the
following year to pay the renewal fees. These are some of the inconsistencies that
businesses especially chain businesses have to deal with annually.
Box A-0-5: Renewal of Licence – Excerpts from Licensing of Premises for Trades, Businesses and Industries By-Laws
Renewal of Licence
7. (1) A licence may be renewed by submitting the application to the Licensing
Authority
(2) The Licensing Authority may request the applicant to submit any additional
document or information at the time of submission of the application for renewal of
licence.
(3) The Licensing Authority may renew or refuse to renew the licence and shall
inform the applicant in writing of the decision.
Page | 70
APPENDIX B: BUSINESS LICENCES OF THE LOCAL
AUTHORITIES
Table B-0-1: Example of Non-risky Businesses
No. Types of Business No. Types of Business
1. Cosmetic Shop 23. Electrical Goods Shop (TV, Refrigerator, Fan, etc.)
2. Selling Cosmetic Accessories 24. Apparels
3. Storing and Selling Paint 25. Watch Shop
4. Selling Metal and Hardware Goods
26. Plastic Flowers / Bouquet of Flowers
5. Selling and Repairing Electrical Goods
27. Selling Children Toys
6. Making Billboards 28. Hand Phone
7. Selling Livestock Food 29. Selling Computer and its accessories
8. Exhibiting / Selling Motorcycle 30. Lock and Key
9. Selling / Repairing Fire Extinguishing Equipment
31. Retail Shop /Mini Market
10. Shoe Shop 32. Furniture Shop
11. Gold / Jewellery Shop 33. Confectionery /Cake Shop
12. Selling / Exhibiting Used & New Vehicles
34. Ice Cream and/or Bottled Soft Drink Distributor or Agent
13. Computer Parts and Accessories
35. Frozen Food
14. Selling Playstation / CD-Rom 36. Fruit Shop
15. Photo Studio 37. Grocery, Retail Shop
16. Sport Equipment 38. Stall/Static Vendor Licence
17. Selling Carpet 39. Farmers Market Licence
18. Book Shop /Stationeries / Photostat
40. Selling Eggs
19. Crockery and Plastic Goods 41. Aquarium
20. Home/Kitchen Equipment 42. Mobile Night Market Licence
21. Optometric Shop (with Optometric Certificate)
43. Market
22. Leather Goods 44. Mobile Hawker with a Vehicle (Lorry for Fruit, Vegetable and Grocery, Van, Tricycle and Three Wheels Motorcycle)
Table B-0-2: Example of Businesses Deemed Risky
No. Type of Business
1 Collection, Storage and Selling of second-hand goods
2 Selling and Storage of Highly Flammable Goods
3 Storage of Dangerous Industrial Items, Petroleum, Oil,
Page | 71
Table B-0-3: Grouping of Licences According to Category of Business
Category Types of Licences
Entertainment List of technical licences
Snooker Centre Licence
Billiard Saloon Licence
Video Machine Saloon Licence
Music Hall Licence
Family Entertainment / Bowling Centre Licence
Disco Licence
Karaoke Licence
Cinema Licence
Liquor/Beer List of technical licences
Beer House Licence
Dining Hall Licence
Pub / Bar / Lounge Licence
Toddy Shop Licence
Liquor Wholesale / Storing / Selling Licence List of non-technical licences (immediate)
Beer Warehouse / Distributor Licence
Selling (Retail) Liquor Licence
Health Therapy List of technical licences
Massage Parlour Licence
Massage Parlour(Reflexology) Licence
Massage Parlour (Spa) Licence
Sauna Licence
Business Building (construction)
Temporary Building-Related Licence
Violation of Conditions Business Building Licence
Factory List of technical licences
Coal / Attap Processing / Manufacture Licence List of non-technical licences
Sawmill Licence
Furniture Factory Licence
Plastic Factory Licence
Fish Fertiliser Factory Licence
Electrical / Electronic Factory Licence
Iron / Metal Factory Licence
Washing Powder / Detergent Factory Licence
Livestock Feed Factory Licence
Zinc / Chloride Producing Factory Licence
Agricultural Fertiliser Factory Licence
Chemical Factory Licence
Cooking Oil Factory Licence
Chicken Processing Factory Licence
Vermicelli Factory Licence
Soy Sauce Factory Licence
Sauces Factory Licence
Page | 72
Bakery Factory Licence
Ice Factory Licence
Flour Factory Licence
Palm Cooking Oil Factory Licence
Sea Produce Factory Licence
Spices Factory Licence
Rice Processing / Factory Licence
Sugar Processing / Factory Licence
Sewing Factory Licence
Fibreglass Products Factory Licence
Cement / Stone Products Factory Licence
Rubber Products Factory Licence
Coal / Charcoal Processing Factory Licence
Biodiesel Factory Licence
Children Toys Factory Licence
Rattan Factory Licence
Battery Factory Licence
Spare Parts / Accessories Factory Licence
Fish / Prawns Freezing Factory Licence
Aluminium / Glass Factory Licence
Carpet / Fabric Product Factory Licence
Cosmetic / Toiletries Factory Licence
Rope (Ship) Factory Licence
Glass / Aluminium Maker Licence
Flour Mill Licence
Bricks-maker Licence
Lorry Body Making Licence
Advertisement List of technical licences
Sign Board (Billboard) Licence List of non-technical licences (immediate)
Signboards Licence
Notice board Licence
Stall/Hawkers List of non-technical licences (immediate)
Private Stall Licence
Hawkers Centre Licence
Hawker Licence (Night market only) Licence
Roadside Stall / Market table (MPM-owned only) Licence)
In-premise Stall Licence
Mobile / Static / Tricycle Bicycle / Pushcart / Hawker Vehicle / Hawker Van / Tricycle bike Hawker Licence
General business List of non-technical licences (immediate)
General Business Licence
Market List of non-technical licences (immediate)
Private Market Licence
Mini Market Licence
Public Market Licence
Page | 73
Supermarket Licence
Workshop List of non-technical licences (immediate)
Workshop Licence
Engineering Workshop Licence
Car Painting Licence
Boat List of non-technical licences (immediate)
Boat Display Licence
Boat Engine Repair Licence
Boat Making Licence
Selling Boat Engine Licence
Repair Services List of non-technical licences (immediate)
Electrician / Pipe maker Licence
Car / Lorry / Bus Repair Licence
Motorcycle Repair Licence
Air-conditioner / Electric Repair Licence
Exhaust Repair Licence
Car air-conditioner Installation / Repair Licence
Welding Licence
Electrical / Electronic Equipment Repair Licence
Cushion Repair Licence
Refrigerator Repair Licence
Shoe Repair Licence
Storage List of non-technical licences (immediate)
Rubber Storage Licence
Construction Materials Storage Licence
Wood and Planks Storage Licence
Fertiliser Storage Licence
Latex / Copra Storage Licence
Sea Produce Storage/ Selling Licence
Stone / Clay Products Storage Licence
Liquid Gas Petroleum Storage Licence
Skid Tank Storage Licence
Dangerous Oil Storage Licence
Non-dangerous Oil Storage Licence
Paints Storage Licence
Warehouse Licence
Carpet / Fabric Products Storage Licence
Cement Storage Licence
Hardware Storage Licence
Fabric / Linen Storage Licence
Cement products Storage Licence
Charcoal / Coal Storage Licence
Gas Storage Licence
Rotten Fish Storage Licence
Heavy vehicles storage (open area) Licence
Heavy vehicles storage (in building) Licence
Aluminium / Glass Products Storage Licence
Page | 74
Wood / Rattan/ Bamboo products Storage Licence
Coal / Attap Storage Licence
Storing Old / Used Things Licence
Food / Drinks Storage Warehouse Licence
Cocoa / Palm Storage Licence
Refrigerated Food Storage Licence
Food and Drink Distributor / Storage Licence
Slaughterhouse List of technical licences
Private Abattoir Licence List of non-technical licences (immediate)
Chicken Slaughter / Processing Licence
Food List of technical licences (immediate)
Coffee Processing Licence
Bean curd Processing Licence
Ice-cream Making / Distributing Licence
Salted Fish Making Licence
Food and Drink Distributor / Storage Licence
Nuts / Coconuts Processing Licence
Salted Eggs Making Licence
Animal Skin Processing Licence
Sea produce snack food Processing Licence List of non-technical licences (immediate)
Nuts / Coconuts Processing Licence
Oil Processing Licence
Sea produce snack food Processing Licence
Fish satay Making Licence
Food Colouring / Flavouring and preservative Making / Selling Licence
Tapioca Drying Licence
Food Provider Licence
Beef / Mutton / Chicken Shop Licence
Pork Shop Licence
Food Packing Licence
Preparing/ Making Fruit Pickles Licence
Cigarette List of non-technical licences (immediate)
Cigar making / Tobacco storage Licence
Tobacco Produce Selling / Storage Licence
Prayer’s Item List of non-technical licences (immediate)
Prayers’ Items Making Licence
Prayer’s Items Selling Licence
Electronics List of non-technical licences (immediate)
Electronic Items Processing Licence
Electronic Cable Workshop Licence
Vehicle Electronic Shop Licence
Drinking Water List of non-technical licences (immediate)
Drinking water processing
Swimming Pool List of non-technical licences (immediate)
Page | 75
Swimming Pool Licence
Parking List of non-technical licences (immediate)
Parking Licence
Retail List of technical licences
Coffin Shop Licence List of non-technical licences (immediate)
Soft drinks Distributor Licence
Electrical Shop Licence
Nursery / Potted Plants Shop Licence
Goods Distributor Licence
Cosmetic Items Selling Licence
Furniture Shop Licence
Food Provider Licence
Pastry Shop Licence
Bakery Shop Licence
Grocery Shop Licence
Fruit Shop Licence
Vegetable Shop Licence
Sweets / Ice-cream/ Snacks Selling Licence
Coffee Shop Licence
Sewing Items Licence
Bicycles Shop Licence
Pet shop Licence
Pesticide Shop Licence
Plastic ware Selling Licence
Rubber Shop Licence
Glass cutting / Framing Shop Licence
Hardware Shop Licence
Tyre Shop Licence
Aquarium Shop Licence
Construction Material Selling Licence
House Furnishing Selling Licence
Chemical / Fertiliser Shop Licence
Bicycle Storage / Selling Licence
Pet Food Licence
Carpet / Fabric Products Selling Licence
Cement Selling Licence
Fabric / Linen Selling / Wholesaling Licence
Horse Paddock Licence
Charcoal / Coal Selling / Wholesale Licence
Servicing and Supplying Fire Extinguisher Licence
Selling / Installing Spare Parts & Accessories Licence
Battery / Vehicle Wiring Shop Licence
Restaurant List of non-technical licences (immediate)
Restaurant (air-conditioned / Non-air-conditioned) Licence
Page | 76
Healthcare List of non-technical licences (immediate)
Medicine Shop Licence
Pharmacy Licence
Livestock Feed / Medicines Licence
Breeding List of non-technical licences (immediate)
Prawn Breeding (Wholesale / Selling) Licence
Breeding Cow /Ox / Horse Licence
Services List of technical licenses
Lodging House Licence
Kindergarten / Nursery Licence List of non-technical licences (immediate)
School Canteen / Canteen Licence
Kindergarten (Business Building) Licence
Service Station Licence
Nursery Licence
Music / Dancing School Licence
Private School Licence
Barbershop Licence
Hair Saloon Licence
Makeup Saloon Licence
Physical Exercise Centre Licence
Tailor Licence
Laundrette / Dry Cleaning Shop Licence
Unloading Cargo at Ship Licence
Carpenter Licence
Printing Licence
Cooking Oil Canning Licence
Vehicle List of non-technical licences (immediate)
New Cars Display Licence
Used Cars Display Licence
Mini Car Track Licence List of technical licences
Used Car Display Licence
Heavy Vehicles Display (Open Space) Licence
Motorcycle Display Licence
Fibreglass Display Licence
Precious Metals (gold, silver)
List of non-technical licences (immediate)
Goldsmith Shop Licence
Gold Wholesale / Sale / Goldsmith Licence
Silver Wholesale / Sale / Silversmith Licence
Animal List of technical licenses
Swiflets Nest Industry Licence
Animal / Fish Fertiliser Manufacturing / Processing Licence
List of non-technical licences (immediate)
Selling / Wholesaling Animal / Fish Fertiliser Licence
Glue List of non-technical licences (immediate)
Glue processing Licence
Page | 77
Gambling Selling Three/Four Numbers / TOTO ticket Licence
Others Roller-skates Court Licence
Ironsmith Licence
Tinker Licence
Quarry Licence
Batik / Fabric Processing (Dyeing / Printing) Licence
Animal Skin Processing Licence
Rubber Smoking House Licence
Page | 78
APPENDIX C: EXAMPLE OF LICENCES AND ITS FEES
Table C-0-1: Type of Business and its Annual Fees – excerpts from the Schedule of Licensing of Hawkers and Stalls By-Laws
Type of Business Rate / year (RM)
1. Itinerant Hawker 48.00
Static hawker for an overall:-
2. area not exceeding 1.6 square meters
3. area exceeding 1.6 square meters but not exceeding 9 square meters
21.00
4. area exceeding 9 square meters but not exceeding 18.6 square meters
42.00
5. area exceeding 18.6 square meters but not exceeding 27.9 square meters
63.00
Temporary hawker:-
6. per month per pitch 15.00
7. per day or per night per pitch 1.00
8. Replacement of licence 30.00
9. Appointment of nominee 10.00
10. Removal of stall 10.00
11. Storage of stall 10.00
Table C-0-2: Type of Business and its Annual Fees – Excerpts from the Schedule of Market By-Laws
Type of business Rate / Year (RM)
1. Lock-up stall 50.00
Market stall :-
2. fishes 50.00
3. meat 50.00
4. fruit /vegetable /eggs /tow fu 40.00
5. other goods 40.00
6. Hawkers pitches (indoor and outdoor) Fishes /Vegetables /fruits 30.00
7. Coconuts scraped coconuts 40.00
Private markets:-
8. floor area of 70 square meter or more 450.00
9. floor area of less than 70 square meter 350.00
Hypermarkets, supermarkets and minimarkets:-
10. floor area of 70 square meter or more 1,500.00
11. floor area of less than 70 square meter 700.00
Page | 79
Table C-0-3: Type of Business and its Annual Fees – Excerpts from the Schedule of Licensing of Food Establishments By-Laws
Type of business Rate / year (RM)
1. Food Catering 200.00
2. Food Stalls within Licence premises 50.00
Godown for the storage of any food:-
3. floor area not exceeding 140 sq.meter 200.00
4. floor area exceeding 140 sq.meter but not exceeding 280 sq. meter
300.00
5. Godown for the storage of any food floor area exceeding 280 sq. meter
500.00
Grocery, sundry shop or provision shop:-
6. floor area not exceeding 50 sq. meter 100.00
7. floor area exceeding 50 sq. meter but not exceeding 70 sq. meter 200.00
8. floor area exceeding 70 sq. meter 300.00
9. Ice-cream/soft drink/ice block distribution centre 200.00
10. Making of cakes, pastries or confectionery floor area not exceeding 200 sq. meter
200.00
11. Meat shop 200.00
12. Packing and storage for wholesale trade of rice and any other grain or flour
300.00
13. Preserving, pickling, packing of fruits and/ vegetables 200.00
Restaurant, coffee-shop, eating -shop, milk bar, snack bar, bar, public house, canteen and cafeteria :-
14. dining floor area not exceeding 90 sq. meter 200.00
15. dining floor area not exceeding 120 sq. meter 300.00
16. dining floor area exceeding 120 sq. meter 400.00
17. Roasting pork, duck and meat 200.00
Sale of sugar candy, sweets, biscuits or fruits:-
18. floor area not exceeding 50 sq. meter 100.00
19. floor area exceeding 50 sq. meter but not exceeding 70 sq. meter 200.00
20. floor area exceeding 70 sq. meter 300.00
School canteen:-
21. Primary school having 600 pupils or less 40.00
22. Primary school having more than 600 pupils 70.00
23. Secondary school having 600 pupils or less 100.00
24. Secondary school having more than 600 pupils 150.00
25. Storage or sale of salt fish, belacan, shrimp paste, etc. 200.00
26. Where the premises are temporary and the floor area less than 20 sq. meter and has been constructed by the Council or by any statutory body or constructed by any person and approved by the Council to be specifically Licenced under this paragraph
40.00
27. Any other food establishment not specified above 200.00
Page | 80
Table C-0-4: Type of Business and its Annual Fees – Excerpts from the Schedule of Licensing of Premises for Trades, Business and Industries By-Laws
Type of Business Rate / Year (RM)
1. Frame Maker Glass cutting/picture framing (sales/storage) 400.00
2. Furniture (assembling/storage) 1,000.00
3. Motor Repair and Services Batteries (sales/charge/repair) 400.00
4. Motor Repair and Services Boats/jet ski (sales/charge/repair) 500.00
5. Motor Repair and Services Batteries Car washing and/or polishing 500.00
6. Installation of air conditioners to motor vehicles (sales and services) 500.00
7. Motor vehicle equipment, accessories and spare parts (sales and/or installation)
1,000.00
8. Tyre service centre including wheel balancing and wheel alignment (sales, storage and service)
1,000.00
9. Workshop for car, motorcycle and machinery (repair) 1,000.00
10. Service Advertising sales and making of sign crafts and related products
500.00
11. Service Batching plant 1,500.00
12. Service Petrol station 500.00
13. Service Pest control 400.00
14. Service Plumbing 400.00
15. Service Printing press/binding 500.00
16. Warehousing and storage - Acetylene, oxygen and LPG exceeding 230
500.00
17. Warehousing and storage - Alloy and amalgam including other metal treatment
600.00
18. Warehousing and storage - Animal/Fish Manure 500.00
19. Warehousing and storage - Animal Feed 500.00
20. Warehousing and storage - Bottling of drinks (manufacture) 400.00
21. Warehousing and storage - Cables and wires 500.00
22. Warehousing and storage - Charcoal, Coal and other related material
300.00
23. Warehousing and storage - Detergent, wash products 800.00
24. Warehousing and storage - Embroidery 500.00
25. Warehousing and storage - Fiberglass products 400.00
26. Warehousing and storage - Flammable gas 500.00
27. Warehousing and storage - Godown 600.00
28. Warehousing and storage - Hardware and construction products 1,000.00
29. Warehousing and storage - Industrial and agricultural chemicals 800.00
30. Warehousing and storage - Plywood 800.00
31. Goldsmith 500.00
32. Metal materials (sales/repair) 400.00
33. Scientific instrument (sales/storage) 300.00
34. Tiles, marble slabs and other related item (sales/storage) 500.00
35. Welding works 600.00
36. Agency Exporting, shipping, news, tourism, advertising, car rental) 300.00
Page | 81
37. Antique goods (sales) 500.00
38. Artist equipment (sales) 400.00
39. Bicycle (sales/repair) 300.00
40. Book store 400.00
41. Boutique 400.00
42. Car and motor vehicle (sales) 1,000.00
43. Carpets and mats (sales) 600.00
44. Children's playing products (sales) 400.00
45. Computer products (sales) 500.00
46. Construction products (sales) 500.00
47. Electronic and electrical products (sales) 800.00
48. Embroidery (sales) 400.00
49. Fishing equipment (sales) 400.00
50. Florist 200.00
51. Furniture (sales) 300.00
52. Hair care products (sales) 400.00
53. Interior design and house furnishing (sales) 600.00
54. Jewellery (sales) 500.00
55. Leather and animal hide (sales) 400.00
56. Locksmith (sales) 400.00
57. Mobile telephone and pager (sales) 500.00
58. Pet shop/aquarium (sales) 400.00
59. Plant nursery 300.00
60. Pewter goods 400.00
61. Pharmacy, medicine shop and drug store 400.00
62. Photo processing 300.00
63. Plastic goods (sales) 300.00
64. Pottery, crockery and other earthenware (sales) 500.00
65. Rubber products (sales) 500.00
66. Shoes (sales) 300.00
67. Spectacles, optical instrument (sales/repair) 400.00
68. Sports products (Sales/repair) 300.00
69. Stationaries (sales) 300.00
70. Tailoring 400.00
71. Textiles (sales) 400.00
72. Toiletry products (sales) 300.00
73. Traditional medicine (sales) 400.00
74. Videos, CDs, Cassettes (sales/rental) 600.00
75. Watch shop (sales/repair) 400.00
76. Any business which is not included in this can be charged Max 1,000.00
Page | 82
APPENDIX D: MINISTRY OF URBAN WELLBEING, HOUSING AND LOCAL GOVERNMENT’S CIRCULAR
“GUIDELINE FOR THE IMPROVEMENT OF THE ISSUANCE
OF BUSINESS PREMISE LICENCE AND HOTEL
COMPOSITE LICENCE (AMENDMENT 2011)
Page | 83
Page | 84
Page | 85
Page | 86
Page | 87
Page | 88
Page | 89
Page | 90
Page | 91
Page | 92
APPENDIX E: PROVISIONS OF A LICENCE
Box E-0-1: Excerpts from Licensing of Premises for Trades, Businesses and Industries (Perbadanan Putrajaya) By-Laws 1999
Adequate refuse bin
9. Every licensee shall provide adequate refuse bins or receptacles.
Wet solid refuse
10. All waste shall be placed in plastic bags or other suitable containers before
they are deposited in the refuse bins or receptacles.
Disposal of refuse
11. All waste in refuse bins or receptacles shall be disposed of in such manner as
may be directed by the Perbadanan.
Water supply
12. The licensed place or premises shall be connected to the public water supply.
Toilet to be equipped with toilet-paper, detergent, etc.
13. The licensee shall ensure that every toilet shall at all times be equipped with
toilet-paper, detergent, deodorant or air freshener, refuse bin and electric hand
dryer, roller towel or clean towel and tissue paper.
Tap to be provided for cleaning
14. Every toilet shall be provided with a tap and a pail or a hose to facilitate
cleansing.
Use of toilet
15. The licensee shall ensure that the toilet is open for the use of any person
during business hours.
Cleanliness
16.
(1) The licensee of any trade, business or industry shall maintain or cause to be
maintained every part of the trade, business or industry, including toilets, fittings
and fixtures in a clean condition and in good repair at all times.
(2) The licensee of any trade, business or industry shall not
(a) place, or throw or cause or allow to be placed or thrown any dust, dirt, paper,
ashes, carcass, refuse, boxes, barrels, bales or other article or thing in any drain,
walkway or street in front, rear or sides of the premise;
(b) keep or leave any article or thing whatsoever in any place where it or particles
therefrom have passed or likely to pass into any drain, walkway or street in front,
rear or sides of the premise;
(c) dry any article of trade, business or industry or other article or thing in any drain
walkway or street in front, rear or sides of the premise;
(d) throw, place, spill or scatter any blood, brine, swill, noxious liquid or other
offensive or filthy matter of any kind in such manner as to run or fall into any drain,
walkway or street in front, rear or sides of the premise;
(e) drop, spill or scatter any dirt, sand, earth, gravel, stone, grass, straw, ashes,
trade refuse, garbage or any other thing or matter in any drain, walkway or street
Page | 93
in front, rear or sides of the premise;
(f) sieve, shake, clean, beat or otherwise agitate any lime, ashes, sand, coal, hair,
waste paper, feathers or substance in such manner that it is carried or likely to be
carried by the wind to any drain, walkway or street in front, rear or sides of the
premise;
(g) throw or leave behind any bottle, glass, can, food container, food wrapper,
particles of food or any other article or thing in any drain, walkway or street in front
, rear or sides of the premise;
Adequate lighting
17. The licensee shall take steps to ensure that adequate lighting is provided to
the satisfaction of the Perbadanan.
(a) suspend swimming and order all bathers out of the water if, in his opinion, the
condition of the water is unsatisfactory or the swimming pool is overcrowded; and
(b) close the Pool and/or suspend swimming and order all bathers out of the water
in the event of the breakdown of swimming pool floodlights and/or general lighting,
plant and equipment, or in any emergency which may arise detrimental to the
safety of bathers.
Ventilation
18. The licensee shall take steps to ensure that there is adequate ventilation in the
licensed place or premises to the satisfaction of the Perbadanan and shall cause
every means of such ventilation to be kept in good order and in efficient working
condition.
Provision of mess room
19. The Perbadanan may, by notice in writing, require any licensee to provide for
his workers suitable and sufficient facilities by way of mess rooms, rest rooms,
canteens, changing rooms and lockers and to improve upon the same if the
Perbadanan considers the existing facilities inadequate.
Prevention
20. The licensee shall ensure -
(a) that adequate fire fighting equipment and adequate staircases and exits are
provided and maintained to the satisfaction of the appropriate authority and the
Perbadanan;
(b) that all staircases, passages, landings and exits are kept clear of all
obstructions;
(c) that every door is constructed and fitted as to be readily opened.
Inflammable substances
21
(1) Inflammable substances or solutions shall be kept in proper containers with
self-closing lids of approved design.
(2) Where solvents, solutions or cements having a flash point below 23 degrees
Centigrade are kept in quantities exceeding 45 litres, a non-flammable store shall
be constructed to the requirements of the Perbadanan.
Storage
Page | 94
22. All materials shall be stored in such a manner and in such a state as to prevent
the emission of noxious or offensive effluvia therefrom.
Burning
23. The licensee shall not burn or cause to be burnt combustible materials, refuse
or waste in Kawasan Perbadanan Putrajaya.
Emission of dust
24. The licensee shall not cause, allow or permit dust, fume, vapour, gas, heat,
radiation, odour, smell, vibration, smoke or soot emission of such quantity from his
licensed place or premises which in the opinion of the Perbadanan is a nuisance
or which pollutes the atmosphere.
Nuisance
25. The licensee shall not in the course of his trade create or cause any nuisance.
Time of operation
26. The Perbadanan may direct that any particular trade, business or industry may
not be permitted to operate in a licensed place or premises except during such
time and hours as the Perbadanan shall specify or impose and the licensee shall
comply with any such direction.
From a review of these provisions, it appears that these provisions are for insuring
the welfare of the general public as well as the preservation of the environment. And
these are good provisions but may not be suitable to be prescribed in detail in the
by-laws. The detailed provisions should be published in a Code of Good Practice
handbook and the by-laws should prescribe the outcome of such a provision.
Another downside of these provisions is that they do not differentiate between types
of business or industries or types of buildings/premises. Some of these provisions
are suitable for industries but not suitable for trades. And the enforcement
department of the local authorities may misinterpret these provisions and may
wrongly compound businesses.