PUTRAJAYA: Six years and RM36 million later, a little known government initiative is facing questions of effectiveness and redundancy.

The Business Licensing Electronic Support System (BLESS) was created to promote a business-friendly system and reduce opportunities for corruption by cutting down face-to-face interaction in the application and approval process.

But with only 117,000 users and reluctance from several federal and state agencies to implement the one-stop system for business licence registration, efforts are now underway to ensure BLESS does not end up as another expensive failure.

This means the government has come to terms with its shortcomings — not making BLESS mandatory, resulting in a system that is headed for failure.

A committee supervised by Minister in the Prime Minister’s Department Datuk Dr Paul Low has been set up to ensure compliance (see accompanying story).

It seems that it is now taking a leaf out of the book of the Health Ministry, which made it compulsory for all pharmaceutical licensing issues to go through BLESS.

The result is that the health sector is the largest user of the system with a whopping 95,000.

This is followed by construction (housing — 7,000 + solid waste management — 3,000), distributive trade (4,000), manufacturing (300) and other sectors (7,700).

It is learnt that agencies that are still pussyfooting around the implementation of BLESS include local authorities in Selangor as well as Kuala Lumpur City Hall (DBKL), the Immigration Department, the Customs Department, the Road Transport Department (RTD), as well as the Police.

Ironically these are the agencies which suffer the most in public perception for corruption and ineffectiveness.

The Malaysian Corruption Barometer 2014 survey initiated by Transparency International–Malaysia revealed that police were viewed as the most corrupt agency, which was followed by registration agencies including the RTD.

The Immigration Department has seen a string of officials including a former director-general convicted of corruption.

A Malaysian Anti-Corruption Commission (MACC) 2010 report meanwhile states that RM108 billion is lost through abuse and weaknesses in systems annually through the Customs Department.

BLESS project director Datuk Rosni Abdul Malek said these agencies are insistent on maintaining their own registration systems, while in Selangor politics put a spanner in the works for the pilot project in the state in 2008.

“Initially the Selangor government was with us. It was our pilot project and we developed the system to integrate with the agencies in Selangor including local authorities.

“After the general election, the Pakatan Rakyat state government decided not to use it. They wanted to use their own system to reduce corruption, so we decided not to include them anymore,” said Rosni.

On the other hand, she said some federal agencies were already developing their licensing systems prior to the BLESS initiative and the issue facing them is more than one of integration.

“If they have started their own system, we do not want to touch it. It will be very messy if we do. It’s better that they develop it on their own first and after it is completed we can see how we can advise them to streamline their forms and integrate them with our current system,” said Rosni.

When it was pointed out that this could mean a redundant system overlap and a waste of public funds, she said the Malaysian Administrative Modernisation and Management Planning Unit (Mampu) has made a policy decision that any fund applications to develop new e-submission systems for licences will be rejected and redirected to BLESS.

Other issues plaguing the initiative also include a lack of broadband Internet penetration in rural areas, making it difficult for agencies such as the police and RTD to implement the system.

Mandatory use only way to make system successful
“Other agencies make BLESS an option and we can’t force them to use it. It must come from the top,” said Rosni.

“We are also doing great with Pahang. The state authorities said they want BLESS to be fully implemented in the state by 2015 but we can only do it in 2016. Pahang will be our showcase state, and hopefully after that more states will be interested in the system,” she said.

Federation of Malaysian Manufacturers (FMM) president and co-chairman of the Special Task Force to Facilitate Business (Pemudah) Datuk Saw Choo Boon, meanwhile, said one reason why usage of the system is still slow is because many applicants are still comfortable with the old method.

“Sometimes new things scare them,” he said, adding that the current problems of overlapping and non-integration contribute to the system’s unpopularity.

A 2013 KPMG survey revealed that a whopping 71% of respondents believe that bribery is an inevitable cost of doing business in Malaysia.

Saw said cutting the cost of doing business should be the impetus for companies to adopt a scheme like BLESS, warts and all.

“We in the private sector are encouraging our members to use BLESS. At the end of the day, it reduces the cost of doing business and saves a lot of time.

“What is best about it is that it reduces opportunities for corruption as there is limited face-to-face interaction. It removes discretionary powers and the rules are in black and white. That should be motivation for the industry to support an initiative like BLESS,” he told The Edge Financial Daily.

Not a perfect system for now
There could be other reasons why BLESS is not getting the traction it needs — the user-friendliness of the system itself.

Based on its own data, of the 9,337 polled by BLESS, 63% said the process is “very complicated”, with only 5% saying it is “simple” to use.

This is also illustrative of the fact that some applications take a lot longer than the 10-day standard BLESS had set for itself.

Admitting the shortcomings, BLESS manager Musalmiah Asli said this is because the system is not fully integrated.

She said the system is still under development and will be fully completed and simplified by 2015. It also requires integration with the licensing systems currently in place with other federal, state, and local agencies.

But here is where the real problem with BLESS rears its head — the reluctance of several federal and state agencies to participate in the system.

A system meant to cut corruption
IN 2007 the Special Task Force to Facilitate Business (Pemudah) directed the Implementation Coordination Unit (ICU) which falls under the Prime Minister’s Department to develop BLESS.

A total of 101 licences in three sectors — manufacturing, hotels and construction — were identified to be parked under BLESS.

“We focused on the three sectors that have the highest economic contribution of 2007. Our pilot project was focused in the Klang Valley, Selangor and the Federal Territories,” said BLESS manager Musalmiah Asli.

Should everything go as planned, BLESS will become an online, one-stop portal for businesses and commercial licensing for the entire country, cutting across multiple levels of bureaucratic red tape and a ridiculous amount of form filling.

As an example, a foreign company needs to apply to at least 27 agencies to set up a factory in Malaysia.

Under Phases 2 and 3, which kicked off in 2011, BLESS expanded its portfolio to include seven other sectors: tourism, health, education and training, logistics, trading, agriculture and services.

It has also expanded its applicant types from companies registered with The Companies Commission of Malaysia, Registrar of Societies, the Cooperatives Commission, individuals, government agencies and institutions.

From an involvement of only 28 federal agencies and 101 licences available for application via BLESS, it has grown to 51 federal agencies and 208 licences, permits and approvals.

In the final tally, BLESS is expected to cater to around 350 licences.

“What we plan to do with BLESS is ease of access for anyone who wants to do business in Malaysia regardless of if you’re Malaysian or a foreigner. It makes licence application a lot easier and faster. For instance, if a foreign manufacturer wants to open a factory here, he has to see at least 20 different agencies,” said Musalmiah.

“With BLESS, he only needs to fill in one form which will be replicated to all relevant agencies. If he does not utilise this system, he will have to go to each and every agency for his licence applications. If he uses BLESS, this might cut down his application time by 50%.

“Better yet, the applicant can also track his submission and see in real time at which stage or where his application has gone to. He can also know if his application has gone beyond the promised client charter of an agency.

“If an agency promised to finish processing his application after 10 working days, he will know about it beforehand and if his application exceeds 10 working days, it will be red flagged. This makes it far more transparent compared with the current system,” Musalmiah said.

The red flag alert will also be sent to the respective agencies’ head of department so an immediate investigation can be conducted, allowing the agency to improve its services real time.

“Needless to say this cuts off a lot of human interaction [and] the temptation to abuse power and the potential for corruption is mitigated.”


This article first appeared in The Edge Financial Daily, on September 30, 2014.