Investors Can’t Wait: Fast-tracking Construction Permits and Operating License Approvals for Industrial Projects

Case study on business regulatory environment reforms in Malaysia

Malaysia has made significant progress in improving its business environment to attract investment and boost productivity and competitiveness. This case study examines two pioneering initiatives-the E10 in Kulim, Kedah, and the Kulai Fast Lane (KFL) in Johor-that have streamlined the processing of construction permits and operating license approvals for industrial projects.

Launched in response to longstanding regulatory bottlenecks and accelerated by the COVID-19 pandemic, these reforms were spearheaded by the Malaysia Productivity Corporation (MPC) in collaboration with state and local authorities and the private sector. Both initiatives introduced innovative practices, including initial project briefings, special permissions for early site work, concurrent reviews by technical agencies, and digital innovations.

READ CASE STUDY

These reforms have enhanced predictability and transparency in regulatory processes. The results have been transformative:

• Time savings: Approval times dropped significantly (e.g., from up to 36 months to 10-14 months) without compromising regulatory standards. Notable improvements include up to an 80% reduction in land conversion processing time and faster issuance of construction permits and operating licenses.

• Cost savings: Businesses reported millions in savings and earlier revenue generation. For example, in Kulai, a survey revealed that over half of investors achieved savings of 20% or more.

• Investment growth: While direct attribution cannot be established, both locations have experienced a surge in investment. Cumulative investment in Kulim's Industrial Corridor increased fourfold, from RM 50 billion in 2020 to RM 200 billion by June 2025. In Kulai, the KFL has brought in RM 55 billion in new investment between 2021 and May 2025.

• More and better jobs: 38 approved projects in the Kulim Industrial Corridor between 2020 and mid-2025 are expected to create over 10,000 jobs. In Kulai, the 10 projects completed under the KFL by May 2025 are expected to create 5,000 jobs, most of which require skilled workers.

• Local revenue gains: Local council revenue grew by 61% in Kulim, from RM 41 million in 2020 to RM 66 million in 2024. In Kulai, projects approved by the KFL contributed RM 56 million to municipal revenue between 2021 and April 2025, equivalent to almost 50% of the council's 2021 revenue.

Key success factors included a mindset shift toward outcome-focused governance, driven by committed leadership and collaboration between the public and private sectors. A focus on innovation-including investments in digital technology and, more recently, artificial intelligence (AI)-also contributed to efficiency gains. The success of these pilots has led to the Industrial Green Lane initiative, signaling a scalable model for nationwide reform.

READ CASE STUDY