REGULATORY IMPACT STATEMENT (RIS) EVALUATION Good Regulatory Practices Project Kuala Lumpur, 3-4 March 2014 Training objectives • Consolidate RC understanding of the role of RIA in supporting high quality regulation and requirements under the NPDIR • Develop RC capacity to evaluate RIS documents in order to prepare them to develop good quality RIS through practical case study Agenda 14:00 – 14:45 14:45 – 15:00 15:00 – 15:15 15:15 – 15:45 16:45 – 17:00 Presentation by OECD on RIA Introduction of case study Case study (working groups) Discussion by working groups Lessons Learnt What is the rationale for RIA/RIS? • Support better regulation through – Sound analysis of the case for government intervention in response to a perceived problem and the rationale for a regulatory action – Informed decision making of the likely impact of the available options, giving specific attention to impact on business (including SMEs) and society – Support transparency in decision making by providing a process and instrument for engaging stakeholders and explaining the case for government action Making use of NPDIR and guidance • • Government Circular on National Policy on the Development and Implementation of Regulations issued by the Chief Secretary to the Government of Malaysia on 15 July 2013 (Pekeliling Am Bilangan 1 Tahun 2013) Government Circular on Online Public Consultation issued by the Chief Secretary to the Government of Malaysia on 25 April 2013 (Pekeliling Am Bilangan 2 Tahun 2012) National Policy on the Development and Implementation of Regulations Provides a systematic guideline based on best practices adopted from other countries Best Practice Regulation Handbook Tool to facilitate the implementation of Best Practice Regulation system and provides detailed guidance for the implementation. Quick Reference Best Practice Regulation Handbook Summarised version of Best Practice Regulation RIA Process Flow • Phone Call • Email • Walk-in • RIS Portal Regulator Notifies MPC Regulator fill in ‘RIS Notification Form’ and submit to MPC Need to Undertak e RIA NO YE S Regulator carry out Regulatory Impact Analysis (RIA) and consultation Regulator submit Regulatory Impact Statement (RIS) to MPC RIS Preparation Process 1. Identify the Problem 2. Explain the Objectives 3. Identify a Range of Alternative Options 4. Provide Adequate Impact Analysis – Cost, Benefits and Risks 5. Describe How Consultation was Conducted 6. Clearly State Conclusion and Recommendations 7. Provide Information on Implementation and Review 7 Who is responsible for RIA? Oversight bodies NDPC  Regulators MPC Examining RIS for  adequacy & making appropriate  recommendations   Assisting NDPC in assessing RIS Developing guidelines & programmes for implementation of NPDIR (incl. RIA) Ensuring that capacity building programmes for regulators are available Providing guidance & assistance to regulators in RIA & preparation of RIS  Regulatory Coordinators Serving as focal point for regulator to communicate with MPC Regulatory staff • Conducting RIA and preparing RIS Problem definition • Problem definition is the most important part of a RIA in order to be effectively targeted by the preferred option • The problem should be narrowly defined in terms of the affected parties/stakeholders, nature and source of the problem • Evidence should be presented on the problem’s magnitude and risk associated with non-intervention • A variety of evidence can be presented to demonstrate the existence of a problem and its magnitude – though quantitative data should be used, if available Defining objectives • Objective refers to the intended outcome or effect of government intervention (or lack of it) • The aim is to specify the goals against which options can be evaluated, and not to pre-justify a preferred solution • There may be more than one objective that the government wishes to achieve • Objectives should be SMART Examining options • Ensures the chosen option is the ‘best’ one to address the identified problem and meet the objectives • Highlights the relative strengths and weaknesses of options (some that may be popular but less effective) • Increases the chance of identifying unintended consequences • Makes government decision making more open and transparent Types of options • Do nothing/maintain status quo (set baseline for benchmarking other options) • Non-regulatory options, e.g. information and education campaigns, self regulation and codes of practice, etc. • Regulatory options, e.g. – explicit regulation, – co-regulation (industry self-developed and administered arrangements with government legislative backing); and – quasi-regulation (rules or arrangements when government influence business to comply but do not form explicit government regulation) Assessing impacts • To understand the costs and benefits, especially indirect effects associated with each option • To decide whether the benefits justify the costs of new regulatory proposals • To select the best option based on rational, sound analysis 2 Methods to assess impacts • Compliance costs • Multi-criteria analysis • Cost-effectiveness analysis • Cost-benefit analysis Distributional issues … • The distributional effect of each option (i.e. who actually pays) is important in determining the overall outcome for the community. For example: While a particular option may generate net benefits in aggregate terms (overall community), significant benefits may go to only a small number of people who bear no costs, with the costs being borne by a large number or by those who can least afford it. Quantitative assessment of impacts RIA is designed to support ‘Evidence Based Decision Making’ Assessing Impacts involves: 1. Gathering the evidence 2. Analysing the evidence (what does it tell us about the impacts of the regulation?) 3. Presenting the evidence Importance of consultation • Fosters transparency and build trust in the regulatory decision making process • Supports the collection of evidence to assess problems, as well as identify and assess options • Supports validation of the information and analysis contained in RIS • Reduces the risk of unintended consequences / impacts of regulation • Supports communication of policies to the public and improves compliance with regulation Challenges of consultation • Articulating the issues under discussion clearly to civil society and the private sector • Proportionality of consultation to the identified problem • Lowering the barriers to consultation for the willing but unable; increasing incentives for able but unwilling • Determining the best methods for consultation throughout the regulatory decision-making process • Balancing interests of various stakeholders; as well as the desire of policy makers to influence consultation • Linking challenges raised in consultation to regulations