Business chamber warns permanent work-from-home arrangement for civil servants could affect SME operations while proposing AI-powered reforms to improve Malaysia’s public service efficiency
The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) has urged the government to review its decision to implement a permanent Hybrid Working Day (HWD) policy for civil servants, warning that the move could unintentionally affect business operations, particularly for small and medium enterprises (SMEs) that rely heavily on efficient government services.
The chamber also welcomed Prime Minister Datuk Seri Anwar Ibrahim’s recent call to streamline approval processes at local authorities, describing public sector reform as a critical driver of Malaysia’s competitiveness and investment attractiveness.
ACCCIM Raises Concerns Over Permanent Hybrid Working Policy
The Cabinet recently announced that eligible civil servants may work from home for two days each week beginning 1 August 2026. The Hybrid Working Day policy replaces the temporary work-from-home arrangement introduced earlier this year during the West Asia conflict to reduce commuting and fuel consumption.
While counter services and functions requiring physical attendance including security, defence, education, healthcare and the judiciary will continue operating as usual, ACCCIM believes the broader implementation of hybrid work deserves further review.
According to the chamber, the business community understood that the earlier work-from-home initiative was a temporary response to global oil price pressures. Therefore, it questioned the rationale for introducing a permanent framework when geopolitical tensions have begun to ease.
SMEs Depend on Efficient Public Services
ACCCIM stressed that the federal government, as Malaysia’s largest employer, plays a central role in shaping the country’s overall business environment.
The chamber noted that many businesses, especially SMEs, depend on government agencies for licensing, customs clearance, inspections, permits and regulatory approvals. Consequently, any reduction in processing efficiency could increase operating costs, delay projects and weaken business competitiveness.
Although the Public Service Department has assured the public that essential services will remain unaffected, ACCCIM believes businesses remain concerned about potential operational disruptions if hybrid working arrangements are implemented before supporting systems are fully prepared.
Digitalisation Still Faces Operational Challenges
While acknowledging the government’s efforts to digitise public services, ACCCIM argued that many online systems have yet to deliver genuine end-to-end digital processes.
According to the chamber, businesses often submit applications online only to face additional requirements to provide identical physical documents. Furthermore, several departments now limit in-person visits or require online appointments before businesses can access government services.
The chamber also highlighted the absence of comprehensive application tracking systems. Without the ability to monitor the status of submissions, businesses experience unnecessary uncertainty and delays.
To address these issues, ACCCIM recommended overhauling existing digital systems so agencies can process applications entirely online. The chamber also proposed automatic escalation mechanisms whenever applications exceed established processing deadlines.
In addition, ACCCIM suggested that the government should fully integrate office systems with secure remote-working infrastructure before expanding hybrid working arrangements across the civil service. It noted that existing paper-based workflows already experience delays because of document transfers, staff leave and administrative bottlenecks.
Chamber Supports Faster Local Authority Approvals
Beyond the hybrid work policy, ACCCIM strongly endorsed the Prime Minister’s call for local authorities to speed up approval processes and reduce regulatory delays.
The chamber congratulated Malaysia on climbing to 15th place in the 2026 IMD World Competitiveness Ranking, an improvement of eight positions from the previous year, but said further reforms remain necessary if Malaysia hopes to achieve its goal of becoming one of the world’s 12 most competitive economies by 2033.
According to ACCCIM, efficient public services directly strengthen investor confidence, reduce the cost of doing business and improve Malaysia’s attractiveness as an investment destination.
The chamber emphasised that better coordination between federal, state and local governments would improve approval certainty and shorten processing times, both of which businesses consider essential when making investment decisions.
AI-Powered Regulatory Reform Among Key Proposals
To improve efficiency, ACCCIM proposed a national reform of approval systems using artificial intelligence-assisted regulatory tools.
The chamber recommended several measures, including:
- Automatic renewal for selected low-risk business licences.
- Three-year licence renewals for eligible non-critical sectors instead of annual renewals.
- Strict processing timelines with remedies for administrative delays.
- Harmonised licensing requirements across local authorities nationwide.
- A centralised digital licensing platform featuring licence tracking and automated renewal reminders.
- A single business portal that consolidates licence information and application status.
- A deemed approval mechanism after 14 days for licence renewals submitted on time, preventing businesses from facing operational disruptions while waiting for approvals.
According to ACCCIM, these reforms would reduce bureaucracy, improve transparency and create greater certainty for businesses operating across Malaysia.
Building a More Competitive Business Environment
The chamber concluded that policy reforms should focus not only on introducing new digital systems but also on ensuring agencies fully embrace and consistently implement them.
ACCCIM said efficient public service delivery ultimately benefits businesses, investors and the wider economy by improving productivity, lowering compliance costs and strengthening Malaysia’s long-term competitiveness. It added that successful implementation depends on securing genuine commitment from all parties involved rather than treating new initiatives as administrative exercises.
