The role of regulatory impact analysis in reforming laws
Saturday, 3 July 2010
Ferdaus Ara Begum
Primary aim of regulations is to promote economic development and growth of a country. Regulations help market function and operate properly by enabling proper allocation of physical and technical resources. Transparency and adequate implementation of regulations reduce opportunities of rent seeking, increase strengths and incentives for formal participation in the economy. They reduce costs and risks of business, promote investment, helps economy grow and create new jobs.
In order to conduct regulatory impact analysis (RIA) an articulated policy mechanism is required. Initially it is obligatory to do a detailed diagnosis of the policy meaning and defining the policy problems. You need to identify the policy objectives and then do a detailed assessment i.e. a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis. Consultation with the stakeholders and assessing its contribution to the economy and finally reviewing the whole process are important for a practical RIA.
The present government has announced its Vision 2021 with a target to be graduated to a middle income country(MIC) by 2021. The government has already fixed several indicators, which will require policy reforms. In the meantime, several globally reputed investment companies rated Bangladesh as a country of potentials and predicted that it can emerge as a powerful economic actor if policy implementation strategies are guided in right direction. If we cannot set our goal in right direction to translate our potentials into realities, we will have to miss the train. In that respect good policies are the prerequisites.
Regulations add some costs to businesses of entrepreneurs, who have to follow them. Policy reforms should be a continual process to cater to the needs of the private sector. At this crossroads of changing world of business, the role of regulators are very important. Private sector has shown its resilience and ready to take risks for investing in new and diversified business sectors. Now it needs an enabling environment to make them competitive.
South Korea is an example. The country has done a great job in reforming its regulatory regime. To deal with mounting inefficiencies and distortion, regulatory reforms have become an official policy of Korea since 1980s. As per a Presidential order Korea eliminated 50% of their existing 11,125 regulations by the end of April 1998. Each ministry had to submit a full inventory of its regulations and must propose elimination of more than 50% of its regulations. By 1999, the total number of regulations in Korea decreased to 7,127. Government formulated policies to enhance quality of regulations. Initially, there were some problems because of lack of cooperation among ministries but eventually they had been able to overcome. Korea established Regulatory Reform Committee, Regulatory Reform Task Force, Ministries Self Regulatory Reforms and Regulatory Ombudsman centre.
Major sectoral reforms they identified are; financial sector, labour market, corporate sector, public sector etc. In 1997 the Basic Act on Administrative Regulations(BAAR) was enacted. BAAR requires establishment of Presidential Regulatory Reform Committee(RRC), registration of all regulations, mandatory regulatory impact analysis(RIA) on all new and existing important regulations. It also started a comprehensive process for regulatory improvement plan by each ministry every year. In order to make a permanent system of reforms within the government, they devised a system called bureaucrats against bureaucrats model. They fixed specific timeframe for reviewing each rules and regulations. They defined important regulations which have an annual effect on the economy of $10 million or more, have an effect on 1 million people, apparently undermine competitiveness.
Vietnam is another example. The country has been able to discard about 2,268 policies out of 5,275 policies through RIA. Vietnam had 52,627 provincial rules and regulations, discarded most of them and reduced to 3,000 finally. Many OECD countries have been practicing RIA for getting better result form the policy impact.
Bangladesh Enterprise Institute (BEI) initiated a project for civil service training programme on Private Sector Development (PSD), supported by BICF and managed by IFC in partnership with the U.K. Department for International Development and EU. IFC-BICF started the project in 2006 and progressed through formulating a core group format, with this efforts they are trying to establish a community feed back from which it tried to create the basis for developing strategies for regulatory impact analysis and have been able to improve quality of regulations.
In case of Bangladesh there are a lot of debating policies for which cost benefit analysis is very important, for an example, whether importing reconditioned car or new car is beneficial for Bangladesh, RIA can reply the questions. Smoking is one of the problems in Bangladesh being a very small country, whether banning cigarettes is effective in the context of Bangladesh can be seen by having a RIA. Paper presenter in the programme mentioned about the guillotine approach, before doing it one should analyse whether it is necessary, legal or business friendly, based on the importance of the nature of the policy it can be revised, retained or eliminated.
In the present age of private-sector led economy the government's role as a facilitator through promulgation of supportive regulation is very vital. Today's competitive business arena requires flexibility in terms of resource allocation, global supply and logistics chain competitiveness, input and market access, scalable economies, rapid physical transfer of merchandise etc. otherwise private sector will not be able to compete. For all these supportive ingredients persistent government's presence is important.
The programme aims to effectively transform 20 potential government officers into champions within the government bureaucracy to facilitate in achieving the government's goal to private sector development.
Through this programme some tools are planned to be developed for administrative barriers review and reform impact analysis. The project initiated its first programme with the PM's office, secondly they continued a programme with RRC core group and the present programme they are implementing in cooperation with the ministry of establishment.
Through private-public dialogue some amendment will be suggested. As a successful example they mentioned about the postal law amendment in which courier service was not lawfully allowed; the policy is now in the process of amendment. The project will be a vehicle to get a feedback from the concerned and even concerned ministries can propose small projects which will help private sector development (PSD).
The programme will create some champions, who will be able to identify and initiate potential reforms required for developing a conducive business environment for growth.
Main objective of the programme is to create a critical mass of civil servants, who will eventually support Bangladesh's commitment to improved social and economic development and ultimately contribute to reduce poverty. It will inculcate to infuse a positive mind set among government officials for effective services to the business community. The programme will enhance the incentives for government officials to seek new learning and to apply new lessons to enhance job performance.
Business entrepreneur will like to put emphasis on building positive mindset of bureaucrats, which is very much required to help and guide business entrepreneurs to generate and create new businesses.
In order to lower business costs government should ensure transparency in the decision-making procedures so that entrepreneurs can easily comment on existing and draft laws or propose new ones. There is a need for a policy formulation strategy where the role of both private and public will be defined clearly.
Mechanism for implementing RIA needs several procedure and research. We are not sure whether the ministries are capable to do impact analysis of regulation. RRC has been established in Bangladesh as an interim measure on ad-hoc basis. If RRC is the implementing body it should be established by law.
Transparency and political decision is important to get benefits from regulations. E-governance is another answer to get better result from policy impact analysis. Information is the basic tool for reforms and creation of awareness among people and stakeholders. Appropriate public-private partnership government (PPPG) is the key to the success.
The writer is a former ED, SCCI and additional secretary (R&P), DCCI. She can be
reached at E-mail: nothing_man2000@yahoo.com
Primary aim of regulations is to promote economic development and growth of a country. Regulations help market function and operate properly by enabling proper allocation of physical and technical resources. Transparency and adequate implementation of regulations reduce opportunities of rent seeking, increase strengths and incentives for formal participation in the economy. They reduce costs and risks of business, promote investment, helps economy grow and create new jobs.
In order to conduct regulatory impact analysis (RIA) an articulated policy mechanism is required. Initially it is obligatory to do a detailed diagnosis of the policy meaning and defining the policy problems. You need to identify the policy objectives and then do a detailed assessment i.e. a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis. Consultation with the stakeholders and assessing its contribution to the economy and finally reviewing the whole process are important for a practical RIA.
The present government has announced its Vision 2021 with a target to be graduated to a middle income country(MIC) by 2021. The government has already fixed several indicators, which will require policy reforms. In the meantime, several globally reputed investment companies rated Bangladesh as a country of potentials and predicted that it can emerge as a powerful economic actor if policy implementation strategies are guided in right direction. If we cannot set our goal in right direction to translate our potentials into realities, we will have to miss the train. In that respect good policies are the prerequisites.
Regulations add some costs to businesses of entrepreneurs, who have to follow them. Policy reforms should be a continual process to cater to the needs of the private sector. At this crossroads of changing world of business, the role of regulators are very important. Private sector has shown its resilience and ready to take risks for investing in new and diversified business sectors. Now it needs an enabling environment to make them competitive.
South Korea is an example. The country has done a great job in reforming its regulatory regime. To deal with mounting inefficiencies and distortion, regulatory reforms have become an official policy of Korea since 1980s. As per a Presidential order Korea eliminated 50% of their existing 11,125 regulations by the end of April 1998. Each ministry had to submit a full inventory of its regulations and must propose elimination of more than 50% of its regulations. By 1999, the total number of regulations in Korea decreased to 7,127. Government formulated policies to enhance quality of regulations. Initially, there were some problems because of lack of cooperation among ministries but eventually they had been able to overcome. Korea established Regulatory Reform Committee, Regulatory Reform Task Force, Ministries Self Regulatory Reforms and Regulatory Ombudsman centre.
Major sectoral reforms they identified are; financial sector, labour market, corporate sector, public sector etc. In 1997 the Basic Act on Administrative Regulations(BAAR) was enacted. BAAR requires establishment of Presidential Regulatory Reform Committee(RRC), registration of all regulations, mandatory regulatory impact analysis(RIA) on all new and existing important regulations. It also started a comprehensive process for regulatory improvement plan by each ministry every year. In order to make a permanent system of reforms within the government, they devised a system called bureaucrats against bureaucrats model. They fixed specific timeframe for reviewing each rules and regulations. They defined important regulations which have an annual effect on the economy of $10 million or more, have an effect on 1 million people, apparently undermine competitiveness.
Vietnam is another example. The country has been able to discard about 2,268 policies out of 5,275 policies through RIA. Vietnam had 52,627 provincial rules and regulations, discarded most of them and reduced to 3,000 finally. Many OECD countries have been practicing RIA for getting better result form the policy impact.
Bangladesh Enterprise Institute (BEI) initiated a project for civil service training programme on Private Sector Development (PSD), supported by BICF and managed by IFC in partnership with the U.K. Department for International Development and EU. IFC-BICF started the project in 2006 and progressed through formulating a core group format, with this efforts they are trying to establish a community feed back from which it tried to create the basis for developing strategies for regulatory impact analysis and have been able to improve quality of regulations.
In case of Bangladesh there are a lot of debating policies for which cost benefit analysis is very important, for an example, whether importing reconditioned car or new car is beneficial for Bangladesh, RIA can reply the questions. Smoking is one of the problems in Bangladesh being a very small country, whether banning cigarettes is effective in the context of Bangladesh can be seen by having a RIA. Paper presenter in the programme mentioned about the guillotine approach, before doing it one should analyse whether it is necessary, legal or business friendly, based on the importance of the nature of the policy it can be revised, retained or eliminated.
In the present age of private-sector led economy the government's role as a facilitator through promulgation of supportive regulation is very vital. Today's competitive business arena requires flexibility in terms of resource allocation, global supply and logistics chain competitiveness, input and market access, scalable economies, rapid physical transfer of merchandise etc. otherwise private sector will not be able to compete. For all these supportive ingredients persistent government's presence is important.
The programme aims to effectively transform 20 potential government officers into champions within the government bureaucracy to facilitate in achieving the government's goal to private sector development.
Through this programme some tools are planned to be developed for administrative barriers review and reform impact analysis. The project initiated its first programme with the PM's office, secondly they continued a programme with RRC core group and the present programme they are implementing in cooperation with the ministry of establishment.
Through private-public dialogue some amendment will be suggested. As a successful example they mentioned about the postal law amendment in which courier service was not lawfully allowed; the policy is now in the process of amendment. The project will be a vehicle to get a feedback from the concerned and even concerned ministries can propose small projects which will help private sector development (PSD).
The programme will create some champions, who will be able to identify and initiate potential reforms required for developing a conducive business environment for growth.
Main objective of the programme is to create a critical mass of civil servants, who will eventually support Bangladesh's commitment to improved social and economic development and ultimately contribute to reduce poverty. It will inculcate to infuse a positive mind set among government officials for effective services to the business community. The programme will enhance the incentives for government officials to seek new learning and to apply new lessons to enhance job performance.
Business entrepreneur will like to put emphasis on building positive mindset of bureaucrats, which is very much required to help and guide business entrepreneurs to generate and create new businesses.
In order to lower business costs government should ensure transparency in the decision-making procedures so that entrepreneurs can easily comment on existing and draft laws or propose new ones. There is a need for a policy formulation strategy where the role of both private and public will be defined clearly.
Mechanism for implementing RIA needs several procedure and research. We are not sure whether the ministries are capable to do impact analysis of regulation. RRC has been established in Bangladesh as an interim measure on ad-hoc basis. If RRC is the implementing body it should be established by law.
Transparency and political decision is important to get benefits from regulations. E-governance is another answer to get better result from policy impact analysis. Information is the basic tool for reforms and creation of awareness among people and stakeholders. Appropriate public-private partnership government (PPPG) is the key to the success.
The writer is a former ED, SCCI and additional secretary (R&P), DCCI. She can be
reached at E-mail: nothing_man2000@yahoo.com