China continues to reduced number of licenses

According to the Wall Street Journal (online) the Chinese government has renewed its commitment, already announced in December 2013 (see previous post) to reducing the number of license procedures that need state approval. The effort will be focused on areas like telecommunications, water, transport and online education, the State Council said in a statement after its first meeting of 2014. "Doing away with administrative snarls and giving a bigger role to market forces are priorities for Premier Li Keqiang. He pledged to cut by a third the things demanding state stamps of approval by the end of his first five years in power. The council will publish a list of things still needing an administrative OK from all government agencies, it said in a statement."

A December article in Reuters reported the sweeping reforms published in November 2013 by China's ruling Communist Party which promised to free up the market by simplifying administration and "restrict central government management of microeconomic issues to the greatest possible extent". "Sources have said the policy document is likely to pave the way for a long-anticipated restructuring of government departments next March, which could result in the creation of new energy and environment "superministries" and a scaling back of the roles and responsibilities of the National Development and Reform Commission (NDRC). The NDRC, a sprawling superministry with a huge swathe of duties ranging from cutting greenhouse gases to deciding energy prices, has long been under fire for resisting reform and for making heavy-handed interventions in the economy."

Empowering and overseing economic regulators (India)

An interesting update on regulatory reform in India is provided by an article by the India Times dated 13 Dec. (extract) "The government has given its go ahead to the proposed Draft Regulatory Reform Bill, 2013 which aims to make regulators across key infrastructure sectors accountable to the Parliament besides giving them power of licensing."The Prime Minister's Office gave its go-ahead to the bill last week. The bill is now up for consultation with various stakeholders and once it is finalised it may be taken up in Parliament during the budget session," a senior official told ET, requesting anonymity. The bill aims to fill a lacuna since India does not have a law to monitor the functioning of a large number of regulatory authorities existing in the country. The draft bill will apply to key sectors such as electricity, oil and gas, coal, telecommunications and internet, broadcasting and cable television, posts, airports, ports, waterways, railways, mass rapid transit system, highways and water supply, and sanitation." The overall operation of the regulator will be subject to scrutiny by the Parliament on a yearly basis. 

Three days later, the Indian Express makes a unenthusiastic assessment of this development: "Given that the government hasn't been able to muster the courage to bring its regulatory reform bill to Parliament for the last four years, it is difficult to see how it will happen this time around, though the bill is now to be circulated among ministries for their comments. At its heart, the bill seeks to take away from ministries the discretionary powers to award and cancel licenses, and plans to give them to professionally run regulatory commissions which, as is the case today, will have appellate tribunals to ensure that those unhappy with the decisions get a chance to appeal them."

China reduces State intervention in the economy

According to a newswire story dated 11 Dec. reported by The BRICS Post, China's cabinet has decided to further limit the approval role of the central government as part of its efforts to reduce intervention in the economy.
"China's cabinet released a statement outlining the removal of 82 powers from a number of central government ministries, including the powerful National Development and Reform Commission (NDRC) and the Ministry of Environmental Protection.
The list released on Tuesday includes the cancelling or dissolving of power to lower levels on coal production approvals, permission of setting up foreign commerce chambers and checks on returning imported cargoes.
Facing a domestic economic slowdown and a still fragile world economy, the Chinese leadership has made transforming government functions a top priority to spearhead broader reforms.
The latest decision followed similar steps earlier this year that saw the removal of more than 300 administrative approval items, which the government claims helped to drive a notable rise in the number of business registrations."

Two BR events on 5 December

1/ - Paris: OECD/French Senate workshop on the role of parliaments in better regulation (by invitation from Registration).

"A key task of Parliament is to vote on the law. It is also necessary that the law is clear and enforceable. However, the increasing complexity of contemporary societies has led to a proliferation of bad quality and complex normative texts. To stop this tendency is a government objective taking various routes : codification , simplification laws , legistics, evaluation of the quality and the normativity of the law, etc. In the context of globalization , the challenge is not just legislative drafting and legal quality, public authorities must also ensure effective implementation of the effects of laws passed , and preserve the economic competitiveness and attractiveness of the country.

There are international instruments to promote these goals, especially at the OECD, which has set up a committee on regulatory policy and adopted in 2012 a Recommendation of the Council on Regulatory Policy and Governance . Similarly, parliaments, sharing the objectives of good governance and the quality of legislation, are becoming more attentive to the way laws are implemented and achieve their results, as shown by the development of boards or units providing assessment of bills and laws and the increasing use of assessment tools like CBA and RIA.

This symposium , organized by the Senate Committee for the control of implementation of laws, in partnership with OECD, aims to better identify the role that Parliaments can play in assessing the quality of legislation . Based on testimonies and an exchange of best practices between French institutions and foreign parliamentary assemblies , it will discuss the role of parliaments in the processes and the tools they use for this purpose" (from the organisers' leaflet.)

2/ - The Hague: International Seminar on "Executive discretion and regulatory decision making – Issues and challenges in making regulation more effective" organised by the NL Academy for Legislation (by invitation). 

"The question of the appropriate amount of discretion that the executive branch should wield, and within it in particular regulatory bodies, is central to the understanding of how regulation and enforcement work, and to efforts to make them both more effective and efficient.

Proponents of regulatory discretion consider that it is the only way to escape the conundrum of writing exceedingly specific rules that end up being unwieldy and rapidly obsolete – and lend themselves to “gaming the system” by rogue operators. Critics point towards the risk of abuse, be it regulatory capture or corruption, abuse of power, and breakdown of the rule of law. One of the questions may be if it is at all possible to have enforcement of any type of rule without some sort of discretion." For more information, contact Florentin Blanc.

Red tape cutting in Ethiopia

According to Addis Fortune, an online paper, the Ethiopian government is seeking to reduce the number of licenses and speed up official response times in an effort to improve the business environment. The method to achieve this seems orthodox: the ministry of trade signs "cooperation agreements" with "professional competence certificate issuing government offices" to enlist their support in achieving the red tape reduction objectives. This method seems to fall short, however, of true liberalisation that would really stimulate private initiative.

Enactment of major Act on regulatory reform (UK)

On 25 April, BIS Department announced that following adoption in Parliament the Enterprise and Regulatory Reform Act had received Royal Assent. This text aims to support long term growth through a range of legal, managerial and institutional measures:

• company law reforms to make sure there is a link between directors’ pay and long-term company performance by giving shareholders of UK quoted companies binding votes on directors’ pay;
• a better employment tribunal system encouraging parties to come together to settle their dispute before an employment tribunal claim is lodged;
• improved whistleblowing protection for company employees;
• new Competition and Markets Authority, bringing together the competition functions of the Office of Fair Trading and the Competition Commission; strengthened legal basis for the UK Green Investment Bank;
• implementing ideas collected via the Red Tape Challenge;
• modernise the UK’s copyright regime while strengthening copyright protections. New possibility to license orphan works; new system for extended collective licensing of copyright works;
• improve consumer protection: right to view and download the data businesses hold on them in an electronic format;
• simplify regulation through reduced inspection burdens; repeal unnecessary laws and time-limit new laws so that there are only ever relevant and necessary laws in place and extend the Primary Authority Scheme to provide consistent regulatory advice to thousands more small firms.

See the Gov site for details.

Ireland leads EU red tape effort

Since January 1st, Ireland holds the rotating presidency of the EU. Its commitment to smart regulation was confirmed in its 9 January 2013 statement already reported on this blog. From the chair, Ireland will be responsible for securing new developments in the next European Council conclusions. In a speech delivered in Brussels in January, the minister in charge indicated that the chair would "work towards agreement on new approaches to tackling 'red tape' and assess further methodologies and mechanisms for delivering smart regulation. The Irish Presidency will build on the progress already made in reducing business costs by the administrative burden reduction programmes carried out by the Commission and Member States." Meanwhile, on the home front, according to The Independent, the Department of Jobs, Enterprise and Innovation estimates that the cost of doing business has fallen by €200m through savings introduced following the streamlining of companies office and health and safety regulations. The rationalisation of State employment agencies will also bring "significant" savings. The main simplification effort will be directed at reducing the cost of licences in the retail sector by 33 per cent by setting up a single portal for agencies.

Smart enforcement tackles chemical industry (UK)

After the food industry (see previous post), the chemicals industry is benefitting from the Focus on Enforcement campaign, with more effective, less burdensome enforcement of regulation. Following a government-led consultation with the sector, new measures are announced in a press release dated 6 Feb. "Reforms include plans to integrate inspection regimes, provide greater support to companies who are considering growing their business, and to set out more transparent appeals mechanisms. This will help provide firms with greater certainty and more efficient regulation, enabling them to plan more effectively and concentrate on meeting business objectives."

Spain addresses fragmentation of its internal market

On Friday the Spanish Council of Minister approved a report on draft legislation set to improve the unity of the internal (national) market, for an estimated gain of 0.15% of GDP (€1,500m) per year for 10 years.
The scheme calls for a single license to allow a firm to trade in all autonomous communities (regions) throughout the country, instead of up to 17 procedures. A new dedicated body will bring together central and regional governments to monitor implementation, which will also use a common electronic database to support control and supervision functions. Conflict resolution procedures will be simplified, under the future National Commission for markets and competition. The report offers some detail on each of these points. Our correspondent (Prof. Gamero, Seville) estimates that the new legislation, which was negotiated with the autonomous communties, will be passed by Parliament before the summer, once the RIA has been drafted and endorsed by Governement.

UK Gvt streamlines inspections on food outlets

Just published, a very good summary on the official Government site on how to improve enforcement of legislation by introducing risk-based inspections and publishing better guidance to manufacturers on how to comply. In this Better Regulation approach, more efficient enforcement of regulation serves higher standards of protection by way of less bureaucracy.

"The Government's Focus on Enforcement campaign asked small food manufacturers with up to fifty employees to report on their experiences of working with national regulators and local authorities.

Acting on the feedback received, the Food Standards Agency (FSA) will:

• Allow businesses with a good record of compliance fewer inspections
• Deliver enhanced training for enforcement officers, helping them understand the law and the businesses they are regulating – including an innovative e-learning package that will also benefit business
• Work with local authorities to improve consistency in the quality of enforcement, creating a level playing field for businesses and a dependable level of protection for consumers
• Explore alternate appeals mechanisms in cases of disagreement between the business and the enforcing officer
• Ensure guidance for the food industry on food safety management is clear and concise. FSA will continue to review the guidance on control of cross-contamination of E.coli O157, and engage one of the leading food science laboratories and research centres in the UK to test independently the alternative controls to cross-contamination proposed by stakeholders. This will ensure any unnecessary burdens on businesses can be removed while strengthening the effectiveness of public health protection.
• Working with industry stakeholders, the FSA will assess what guidance is currently available, whether this is accessible and used by industry, and what the FSA can do to help small manufacturers."

Red tape "blitz" (UK)

Yesterday a press release from BIS (the Business Innovation and Skills department) announced new plans by the British Government to "slash the burden of regulation". "From April 2013, the Government intends to introduce binding new rules on both the Health & Safety Executive and on local authorities, that will exempt hundreds of thousands of businesses from burdensome health & safety inspections. In future, businesses will only be inspected if they are operating in high risk areas, such as construction, or if they have a poor record. The Government will also change the law next month so companies will only be liable for civil damages in health and safety cases if they can be shown to have acted negligently."

Conference on Inspection Reform (London, 21-23 November)

BR experts worldwide have been receiving an invitation to a (free) conference in London on 21-23 November on Inspection Reform, run by the UK government's Better Regulation Delivery Office (BRDO) with the support of IFC. A leaflet from BRDO " Inspection Reform: the change that matters" provides more background. From the invitation:
"The UK government's "Better Regulation" movement is now taking a very serious interest in this aspect of regulatory reform, as illustrated by creating BRDO at a senior level in the Business Ministry. BRDO (and LBRO as its predecessor) has been working along with IFC on inspection reform projects in the Former Soviet Union and East Africa and both are now trying to bring together the inspection reform community for three days in London. The first day is traditional conference style, with keynote speakers, but the second day is intended to gather case studies and experience from many countries. The third day provides a study tour of some UK institutions, so that international delegations can see this trip as a serious investment in learning. It is more an enhanced study tour than a one day conference." We are invited to suggest case studies.

Austalian government simplifies licenses

The Australian governement announced last week plans to streamline a number of licensing schemes for plumbing and gas fitting, property, refrigeration and air-conditioning occupational licensing thereby providing an estimated annual benefit of more than $86 million to the national economy and boosting labour mobility.
The minister in charge released Consultation Regulation Impact Statements for each of the occupational areas saying the proposal offered benefits to licence holders and delivers on a key plank of the Council of Australian Governments' commitment to regulatory reform.
The introduction of one set of national licences for key occupations will make it easier for businesses and individuals to operate across state and territory borders and improve business productivity. A central licensing body will administer one set of requirements for each of the licensed occupations.

Italian simplification decreto legge

In a move widely reported on news media (examples Reuters or Italia Oggi) the Italian government announced measures to reduce bureaucracy last Friday 27 to help boost productivity and growth. Prime Minister Mario Monti wants to convince markets the sluggish economy can be reformed and that the quality of life of citizens can be improved by simplifying regulation. The decreto legge package aims to make it easier to set up businesses and simplify Italy's inefficient public administration, partly by allowing citizens to take steps such as residency changes or electoral registration over the Internet. The new measures cut the number of controls, administrative procedures and documentation necessary to set up a company or hire staff from outside the European Union. They also aim to develop broadband internet access across the country. The package was the latest effort to trim a 1.8-trillion-euro debt and restore competitiveness. It follows an austerity plan passed in December and a reforms approved by the cabinet last week to deregulate some service sectors and professions.

Ethiopia: trade to be boosted by RR

According to an Ethiopia Press Agency report, the Ethiopian Government is launching a business and trade reform to attract foreign investment. The new policy is based on the idea that the Ethiopian trade system has failed to modernized and operate within the legal framework. The reforms that the trade ministry is undertaking will enforce existing policies and eliminate various loopholes. They include simpler and more rapid licensing procedures, more transparent competition and wider use of identification systems. To reduce the informal economy, all businesses are now required to obtain licensing although in the past businesses with a capital of less than 5000 Ethiopian birr (225 euros) were not required to register.

Delivery: the new challenge for smart regulators?

Not really but there is news on the topic.  The new term ("delivery") is being brought in to focus the issue of "enforcement and compliance of regulation" on outcomes, especially in the business world. Regulation is perceived as a service authorities deliver to society. Local Better Regulation Office (LBRO) members posted on the Smart Regulation LinkedIn group news of the publication of an interesting report by the Department of Business, Innovation and Skills (BIS) on "Delivering Better Regulation." This report, well worth reading, summarizes the responses to a consultation on the future of the LBRO, especially in relation to its transfer into BIS, "to make greater use of its experience and expertise as part of the core policy-making of the Department."

The UK experience with LBRO was quite unique in providing this delivery and service role for regulation, which will be preserved in the new structure.

Among the comments received on LinkedIn: Oscar F. reminds us that "NNR ( www.nnr.se  ) presented a study on the need for Better Regulation on the local level in Sweden a few months ago. Next step towards Better/Smarter Regulation needs to focus more attention to regulations on local level as well as the use of "Goldplating " within the EU."

Smart Regulation in its EU version equally places emphasis on the full cycle of regulation, including implementation, and emphasises the transposition and application of EU law.

OECD did some gathering of good practices some years back: chapter 5 of "Regulatory policies in OECD countries" (2002) defines "tools to improve implementation of regulations." (only on a WB site.) More recently, it included an indicator in Government at a glance 2011, (see page 162 indicator "preparing for effective compliance and enforcement of regulations) which contains an interesting table showing which member states have an enforcement policy.) Now a new stream of projects on enforcement and compliance has been launched.

The World Bank, in keeping with its development of business approach, focuses on modernising and making more effective inspections. A kind of manual is offered by "How to reform business inspections: design, implementation, challenges" (main author Florentin Blanc, see his March 2011 ppt for an introduction.)

 

Ukraine needs to reform inspections (IFC)

A study by IFC published last week found that the system of permits, inspections, and technical regulations in Ukraine remains a burden for businesses, costing them nearly $900 million last year and hampering their efforts to grow and create jobs.
The IFC study, “Investment Climate in Ukraine as Seen by Private Businesses 2011,” surveyed approximately 2,000 businesses and found that 46 percent of them resorted to unofficial means to resolve issues with state officials. Ukrainian companies surveyed spent an average of 10 percent of company revenue in 2010 to comply with official regulations.
“Less regulation and a transparent economic environment will help promote growth and enable Ukrainian businesses to attract more investments,” said Elena Voloshina, IFC Head of Operations for Ukraine. “Ukraine has made some positive steps forward to ease the regulatory burden for private businesses over the past year. However, poor implementation and the slow pace of reforms remain among the key barriers to private sector growth.”
Since 2009, Ukraine has made some progress, particularly in the reform of technical regulations. However, the IFC study found that local entrepreneurs have not fully benefitted from the regulatory changes due to the low level of implementation, which significantly undermines the reform process.
The study also recommended steps to improve the investment climate. These steps include decreasing the number of permits and the number of businesses subject to licensing; extending the scope for self-certification; enforcing the use of inspections checklists; and streamlining norms and requirements.
IFC’s Ukraine Investment Climate Advisory Services Project is supported by the Canadian International Development Agency; the Dutch Agency for International Business and Cooperation; the Swedish International Development Cooperation Agency; and Switzerland’s State Secretariat for Economic Affairs, SECO.

Hungary publishes simplification results

On Friday 15, the minister of public administration and justice, in a press interview (AmCham), released details about how the government is proceeding to cut red tape. Recent measures rely mainly on restructuring administrative services and the introduction of one-stop-shops. The minister also hopes to bring about a culture change among officials: "In the second half of this year a new public servant career model will be introduced. The main concept is that by making the performance of public servants measurable, a new more dynamic work ethic will be introduced to public administration. Also this year, a new code of ethics will be created, which will regulate the behavior and attitude of public servants beyond the law." Business will also be eased by the removal of some 30% of all mandatory permits and amalgamated licenses to speed up procedures, in a bid to boost national competitiveness. The article gives interesting examples.

Great expectations (US)

Cutting red tape and simplification are often seen as fertile ground for political promises, but delivery can be tricky, as it can be quite complex to simplify regulation. This seems to be borne out by recent experience in the US following President Obama's executive order (already reported on this blog, see "US" category). The President’s Jobs and Competitiveness Council has recently released its initial recommendations after three months of work (in an article by its chairman for the Wall Street Journal, not on the official website). Commentators seem unimpressed:

• Acccording to a Bostom Globe columnist: "The ideas ranged from woefully uninspiring to unhelpfully vague."
• Another comment, under the title "the Council's fairy tale" is equally critical: "Part of this council’s problem is the inherent limit on the effectiveness of all government commissions and blue-ribbon panels. To start with, they are heavily staff-driven. Immelt and Chenault are busy people with limited experience in government. They rely heavily on a staff, assembled mostly from inside the White House. The staff puts a few ideas on the table, the council approves, and the staff fleshes out the details."

From our own experience, we BR experts know how difficult it can be to implement, in measures taking effect on the ground, such attractive ideas as "make it easier to visit the US through improved visa processes,” “put construction workers back to work.” or “streamline permitting.” In general, it is advisable to wait, before announcing them, till details of the legal changes have been finalised, and if possible checked for realism and applicability in field enquires.

Doing Business in Kosovo to take leap forward

An update on state-of-the-art methods to raise a country's ranking in the Doing Business indicator is provided by the Kosovo Government plan made public earlier this month. The package of measures, influenced by best practice as promoted by the World Bank, includes the simplification of the administrative procedures, the abolition of half of the permits and licenses, the improvement of the legal framework and the creation of a database for legal acts in order to provide transparency and protect investors, the further digitalization of the municipal services, the improvement of inspection capacities and the increased voluntary formalisation of the economic activities (for more see article in Balkan Chronicle 8 May.) These reforms seem necessary, given a recent report of the World Bank which ranks Kosovo in 119th position following an unfortunate recent reform. More information about the business regulatory environment is given on a dedicated website of the Investment Promotion Ageny of Kosovo.