Andrey Sorokin: 60% cost reduction in guillotine recommendations

15.04.2014 | 13:38 Home / News / Interviews /

Regulatory Guillotine project implemented by the National Center for Legislative Regulation (NCLR) was launched in November 2011. It is involved in reviewing and streamlining the national regulatory frameworks affecting business activity and the daily lives of people in the country. OSCE Office in Yerevan invited a leading international expert in regulatory reform to carry out a rapid assessment of Armenia’s business environment and tools for creating better state regulatory management system.

Alongside the OSCE Office in Yerevan and the Armenian Government, there are other organizations who contribute to the project, such as the Austrian Development Agency, the operational unit of the Austrian Development Cooperation (ADA), USAID, World Bank and UNDP.  

Banks.am talked to Head of OSCE Office in Yerevan, Ambassador Andrey Sorokin on “Guillotine” project.

-Mr. Sorokin, what is your assessment of the activities implemented in the field of regulatory reforms in Armenia?

-Legislation itself has a tendency to grow over time, and Armenia, like any other country, needs a periodic review and “cleaning” of its legal system. As times change, so do the challenges. Regulations that were useful 10 years ago are now superfluous and can create bureaucratic barriers for citizens and businesses. In this context, the OSCE supports the Government of Armenia review and reform the country’s regulatory framework. It is our hope that this initiative will translate directly into a tangible contribution to people’s lives, making the business environment more friendly and open to economic development.

How does it work in practice? The National Center for Legislative Regulation (hereafter NCLR) established by the Government examines the regulatory framework of specific sectors, reviews business processes, compares current procedures with the international best practices, and prepares proposals for consideration by the Government. I believe Armenia is committed to realizing this reform agenda. Up until this point, I am encouraged by the involvement of the Government, impressed with the professional level of local and international experts engaged in the project and thankful for the support provided by the international community – for these reasons, I think we shall anticipate positive changes.

- There are already a number of fields in which the reviews have been completed. When will the results be visible for the public?

- Any reform process takes time and this one is not an exception. The whole procedure is time-consuming. Based on a Presidential Decree, there are 17 sectors to be reviewed. As of today, the Public Utilities sector has been fully reviewed. This includes regulations in gas, energy, water supply and telecommunication spheres. All proposals suggested by NCLR experts have been accepted and have already come into force. Transportation and public health sectors were also reviewed. Here we are at the stage when the legislative proposals are still with the National Assembly for final adoption. Today six other sectors are being analyzed: Tax, Customs, Culture, Social Services, Entrepreneurship, as well as Foreign Affairs and International Relations. Once the review is completed and the proposals are transformed into legislation and regulation, we will be able to talk about the actual impact on the public.

In practical terms, for example, the state fee for any license can be paid during 5 working days after the decision has been made to grant a license. Previously, it was required to pay the state fee prior to receipt of the license. The periods for issuing/rejecting a license for establishing and exploiting electronic communication networks have been shortened: from 6 months to 23 working days. Another practical example is in the area of child birth grants provided in Armenia to boost fertility. The amount of the benefit depends on the number of children in the family. Yet, there are several restrictions on defining the number of children, such as all children should reside in the same place, they should be taken care of by the same guardians, etc. The Center has made a proposal to remove these restrictions and define the number of children based on the number of children the mother actually gave birth to. One more example is in the taxi service regulations which are simplified a lot. Thus, according to the NCLR proposal the procedure of providing taxi license has been shortened from 30 days to 7 working days. Requirements for daily technical inspection of taxis and medical examination of drivers have been removed. As well, in the past only companies were able to provide taxi services. Now, according to new proposals, individuals can also provide those services.

-As an organization coordinating donor assistance to the project, how do you assess the effectiveness of the project and what challenges do you see in the course of implementation of reforms?

- It is important to have tools to evaluate the project’s efficiency. We have such tool: this is the cost assessment being carried out across all sectors.

The author of the Regulatory Guillotine exercise is Mr. Scott Jacobs who has worked with over 75 developing and industrialized countries in Europe, Asia, Africa, and the America and designed and implemented projects on regulatory reform. The main goal is to produce low-cost and low-risk regulatory regimes that support private sector development and good governance. The Armenian Regulatory Guillotine project seeks to reduce regulatory costs in review sectors by 50%, which is an exceptionally high target in comparison to similar projects in other countries. As of today, the recommendations produced have had a higher result – more than 60% cost reduction in the reviewed sectors. We are satisfied with these results.

At the same time, there is a room for improvement. We would like to see that the entire review process is more inclusive, that private businesses are engaged in the process and that their advice/contribution is taken into account. This is extremely important because the changes will have a direct effect on the business environment, and at the end of the day businesses are the primary beneficiaries of these improvements. To my knowledge, increased consultation, specifically with entrepreneurial community was raised and is now being considered by the Center, which plans to introduce new tools for receiving feedback and suggestions from private businesses.

-Taking into consideration the fact that Armenia is the first country in the region where this project is implemented, is it possible to compare it with the regulatory guillotine implemented in other countries and if yes where does Armenia fit in this context?

-It is very hard to draw comparisons as each country has its own peculiarities. The regulatory guillotine project has been implemented in different countries. And each of them had their own experiences. One important feature in Armenia worth mentioning, though, is the broad mandate of the Center, which not only examines the legal system and points out to the issues, but also drafts new legal acts and presents the recommendations to the Government and the Parliament. It is encouraging to see that the majority of the suggestions proposed by the Center (about 90%) are accepted by the Government and the National Assembly.

It is important to underline the strong support the Guillotine reform process receives from the international community. This unified effort is an important factor to consider when launching such a costly and long-term exercise.

-In which areas will you work in the future?

- The sustainability of the Guillotine Reform is critical for all of us – for the Armenian Government and for the donor community. That’s why in 2015 after the completion of the Regulatory Guillotine project, when all 17 priority areas will be reviewed and legislation and regulation streamlined, the Regulatory Impact Assessment (RIA) – will be launched. As a result, the Center for Legislative Regulation will be transformed into the Regulatory Impact Assessment (RIA) Central Unit to implement RIA on all new regulatory legal norms before they are adopted. It will serve as a kind of “filter” permanently in place to prevent “re-contamination” of the legislative base by legal acts that could undermine the reform’s achievements. The RIA Unit will provide methodological support to the Ministries and State Agencies and will be responsible for the quality and content of the RIA documents developed by the Ministries and State Agencies.

Siranush Yeghiazaryan talked to Andrey Sorokin.

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