From Policy to Implementation: Malaysia’s Regulatory Reform Journey National Convention on Good Regulatory Practice 2017: Accelerating National Transformation through GRP Faris Hadad-Zervos Country Manager for Malaysia October, 5, 2017
Outline The World Bank Group in Malaysia Regulatory quality as a key enabler of sustained growth and productivity Malaysia’s regulatory reform journey WBG’s work on Good Regulatory Practices WBG-Government of Malaysia collaboration on regulatory reform Opportunities for regulatory reform in Malaysia in the coming years 1
WBG in Malaysia: Why and Who We Are Hub Work Programs Pre-Launch Hub Launch 2016 - 2020 2015 – March 2016 28 Mar 2016 • Establishment and Facilities • Provides analytical and advisory services to Agreement, 27 Jan 2015 Malaysian institutions in support of the country’s • OSA, 1 Oct 2015 economic development goals Three Agreements Establishment Agreement (Jan 27, 2015) sets out the broad relationship between Malaysia and • the World Bank Group (IBRD, IFC, MIGA) through the Malaysia Office. • Facilities Agreement (Jan 27 2015) specifies parameters of WBG Office facilities, use, etc. Office Support Agreement , OSA (Oct 1, 2015) objectives of the Country Office, financing • parameters, reporting and interaction with the Government. Annexes outline access to information, WBG flexibility in use of resources, etc. OSA • Five year agreement, with annual consultations and a mid-term review. Covers all Hub operations (including DEC). Signed by WBG, MOF and Bank Negara Malaysia. • 100% Funded on Semi-Annual Reimbursable Basis. • Two Strategic Govt-WBG Reviews in May 2016 and June 2017- Full Endorsement of Program. • 2
Regulatory Quality: A Key Enabler of Sustainable Growth and Productivity 3
Lots of research with almost similar stories: Regulation impacts growth, informality, governance… 4
The “macro” impacts are reflected in impacts attributed to specific regulatory management tools… Improvements in regulatory Mandatory online public governance quality leads to consultation on regulatory drafts significant economic provides net benefits equaling 0.25% of Vietnamese GDP. benefits. (Jacobzone S., F.Steiner, E. Ponton and E. Job, (Ministry of Justice of the Socialist Republic of 2010) Viet Nam, 2008) Systematic use of Regulatory Regulatory Quality and Impact Assessment result in Governance has significant large monetary savings, boosts impact on Foreign Direct investments, job creation and Investment growth (Abusah and Pingario, 2011, Ministry of Justice (Anis et al 2013, Daude & Stein, 2007) of the Socialist Republic of Viet Nam, 2008) 5
Malaysia’s Regulatory Reform Journey 6
Malaysia’s regulatory reform journey SELECTED HIGHLIGHTS MPC’s Regulatory Review Department Annual Report on Modernisation of Reducing Unnecessary Regulatory Burden (RURB); Regulations Privatization, sector regulation, Doing Business reforms; Business licensing Continued rollout of NPDIR across deregulation, administrative reforms reforms; Service sector deregulation; quality government; GRP to also include states and streamlining of procedures standards for regulation and local governments 2007- 2013- 1970s- 2010- 2016- 2000s National Policy on the Development and PEMUDAH Implementation of Regulations (NPDIR) Public-private partnership to enhance Promoting a regulatory process that is public service delivery and improve the effective, efficient and accountable, and business environment; Doing Business that achieves greater coherence among reforms; delivery reforms and the policy objectives of government. streamlining of processes. Malaysia’s regulatory reform journey from privatization, deregulation, and ad hoc initiatives to • streamline regulation, to a systematic whole-of-government application of regulatory governance practices makes up a foundation for great improvements and indicates strong commitment. • Similar routes have been taken by most developed countries, and is in line with global best practices as recommended by international organizations. 7
0 1 2 3 4 5 6 Australia Austria Canada Croatia Estonia European Union Greece globa Good regulatory polices are reflected in Malaysia’s Hong Kong SAR,China Korea, Rep. Macedonia, FYR Mexico Serbia Switzerland United Kingdom United States Belgium Moldova bal ranking Spain France Italy Taiwan, China Colombia Malaysia New Zealand Sweden Germany Kenya Poland Ukraine Bulgaria Costa Rica Czech Republic Denmark Finland Hungary Lao PDR Malta Netherlands Norway Vietnam Israel Kyrgyz Republic South Africa Iceland ing Ireland Kazakhstan Kosovo Montenegro Romania Albania Brazil Georgia Slovenia Bhutan Japan Latvia Lithuania Luxembourg Mozambique Russian Federation among the top-15% globally Governance, Malaysia is Indicators of Regulatory maximum of 6.0 in Global With a score of 5.4 out of a Rwanda Singapore Slovak Republic Armenia Cyprus Nigeria Panama Bosnia and Herzegovina Chile India Portugal United Arab Emirates Zambia Azerbaijan Bolivia Morocco Thailand Tunisia Uganda Uzbekistan Barbados Belarus Peru Indonesia El Salvador Myanmar St. Vincent and the Grenadines Bahrain San Marino China Comoros Madagascar Togo Jamaica Jordan Nicaragua Burundi Congo, Rep. Pakistan Philippines Malawi Namibia Niger Papua New Guinea Solomon Islands St. Lucia Timor-Leste Antigua and Barbuda Bahamas, The Dominica Mauritius Mongolia Paraguay Senegal Swaziland Tanzania Tonga Belize Côte d'Ivoire Dominican Republic Gambia, The Ghana Guatemala Iraq Impact assessment made public assessment Specialized body for impact Conduct impact assessment results Report on results of the consultation Conduct consultation Publication of proposed text Samoa Sierra Leone Sri Lanka Trinidad and Tobago Turkey Afghanistan Argentina Benin Egypt, Arab Rep. Marshall Islands Micronesia, Fed. Sts. West Bank and Gaza Fiji Guinea-Bissau Cambodia Cameroon Kuwait Palau Zimbabwe Algeria Djibouti Guyana Angola Bangladesh Botswana Brunei Darussalam Burkina Faso Cabo Verde Central African Republic Chad Congo, Dem. Rep. Ecuador Eritrea Ethiopia Gabon Grenada Guinea Haiti Honduras Iran, Islamic Rep. Kiribati Lebanon Lesotho Liberia Libya Mali Mauritania Nepal Oman Qatar São Tomé and Príncipe Saudi Arabia Seychelles South Sudan St. Kitts and Nevis Sudan Suriname Syrian Arab Republic Tajikistan Uruguay 8 Vanuatu Yemen, Rep.
…however significant implementation issues remain RIAs are not consistently carried out, and sometimes lack the analytical depth • required to fully leverage their potential; • RIAs are sometimes carried out after decision to regulate, or after regulation has been developed; Monitoring and evaluation of GRP compliance has only recently started, and • could be strengthened with quality indicators (such as number of RIAs complying with standards); • Perception by some stakeholders of consultation practices as being pro-forma and too late to have any impact on final rules; Lack of published medium-term strategy with milestones and results indicators • for further rollout of NPDIR; Scattered awareness across government of the full requirements of NPDIR, and • of procedural requirements for good regulatory practices. 9
WBG’s work on Good Regulatory Practices 10
The he drivers vers Good od Regulat latory ory Practi ctice ces Increased attention to systemic issues is in response to new drivers of regulatory reform and reform support experience o Many countries experience a large discrepancy between regulations “on the books” and actual regulatory practice. o Broader calls for accountability and transparency from international and domestic players. o Various GRP requirements becoming mandatory in international agreements, including Bilateral Investment Treaties (BITs), Preferential Trade Agreements (PTAs) and several WTO protocols. 11
The World Bank’s “Good Regulatory Practice” Program: Seven components delivering on three objectives Program Components Cross-country Indicators on Program Create reform Rule-making momentum and help identify priority reform Launched in October 2015; initially as a 4- areas Regulatory Policy and year program Delivery Review WBG Partners Evidence-based Policy-making • Improve quality of Trade and Competitiveness GP • DEC (Global Indicators Group) regulatory design • Governance GP Notice and Comment Systems Feedback Loops on Goal implementation gap Help governments enhance the quality of Ensure good regulatory regimes and their outcomes Systemic Investor Response implementation of and put in place effective, transparent, Mechanism regulatory reforms accountable and consultative reform processes that assist in reform Closing the Implementation prioritization, design, and implementation Gap and Uncertainty of G2B Services 12
An integr egrated ated approa oach ch to Good d Regulat lator ory Practi tices es 13
WBG-GoM Collaboration on Regulatory Reform 14
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