introduction to regulatory impact analysis

8/10/2019 Introduction to Regulatory Impact Analysis

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Regulatory Impact Analysis 2 3

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Shamsul Ridzuan Idris

Cluster for Governance andPublic Policy StudiesINTAN Bukit Kiara

[email protected]


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Long Term Effect of Policy Making


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3

Source:Fertility and Population Policy: the Singapore Experience (2003),

Mui Teng Yap, Institute of Public Policy, Singapore


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Government Intervention in Population Policy

Source: Singapores Population Policy, Slideshare, Scaree-w


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Singapores Population Policy

Control population

growth

Stop at 2 policy

Financial disincentives

Other measures

Encourage Populationgrowth

Graduate MothersScheme

Three or More if You can

afford itPro-family measures

Attracting Foreign talent

Prepare for an ageing

populationSenior citizens as

assets

Many Helping Handsapproach

Reasons for decline in birthrate:- Success of govt policies- Social factors

- Economic factorsImpact of decline in birthrate- Unattractive to MNCs- Defence

- Ageing population

Reasons for ageingpopulation- Post-war baby boom- Declining birth rate- Longer lifespans

Impact of ageing population:- Strain on working population- Reduction in competitiveness- Increased demand for healthcare

& social services- Smaller security forces

Source: Sin a ores Po ulation Polic Slideshare Scaree-w


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Public Feedback on Marriage andParenthood Survey


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Policy identification

Policy

Formulation

Policy

Evaluation

Policy

Implementation7

POLICY CYCLE


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What is Regulation?

Key instrument used by theGovernment to achieve various policyobjectives

Compliance is mandatorySets out principles, rules or conditionsthat govern the behavior of citizens and

organizationExample: law, permit, licence, tax,administrative procedures etc.

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Reference should be made to the government circular onNational Policy on the Development and Implementation of

Regulations issued by the Chief Secretary to theGovernment of Malaysia on 15 July 2013 (Pekel i l ing AmBilang an 1 Tahun 2013)

National Policy on theDevelopment andImplementation of

Regulations

Provides a systematic

guideline based on best practices adopted from othercountries

Best Practice RegulationHandbook

Tool to facilitate the implementation ofBest Practice Regulation system and

provides detailed guidance for theimplementation.

Quick ReferenceBest Practice Regulation

Handbook

Summarised version of Best

Practice Regulation

Documents on Best Practice Regulation

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h t t p : / / r i s . m p c . g o v . m y


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Trend in RIA adoption across OECDcountries (1974-2012)

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Ministry AGC Cabinet Parliament Ministry BusinessR

Design orReview

ReviewLegislation

Decision-making

Decision-making Enforce Comply

Flow

Advocacy Role(PEMUDAH)Provide recommendations &

monitoring implementation

Provide feedback on recommendations

Improvement in the Rule-making Process(Existing Rule-making Process in Malaysia)

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MPC task in the ecosystem is to provide servicefor collaborative innovation

Analyse existing regulations

AGC: Attorney- Generals Chambers ; R: Rules and Regulations;


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Improvement in the Rule-making ProcessQuality Regulatory Management System)

Ministry AGC Cabinet Parliament Ministry BusinessR

Flow

Advocacy Role(PEMUDAH) Analyse existing regulationsProvide recommendations &

monitoring implementation

Provide feedback on recommendations

Facilitate toensure

regulatorsfulfill adequacy

criteriaDesign orAutomatic

ReviewDraft Law

Decision-making

Decision-making Enforce Comply

Train the regulators& assessor

Accountability audit ofquality assurance

Guidance material, benchmarks& best practices repository

JPPN - Advisory Role

AGC: Attorney- Generals Chambers ; R: Rules and Regulations; Proposed new role by NDPC (Secretariat: MPC)

MPC to continue providing service forcollaborative innovation

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Policy Formulation Using RIA

Step 1: Problem definition the issues that give riseto the need for action.

Step 2: Objectives desired policy objectivesStep 3: Options regulatory and non-regulatory

options that may feasibly achieve theobjectives

Step 4: Impact assessment costs and benefits ofthe options for consumers, businesses,

government and the communityStep 5: Consultation statementStep 6: Conclusion and recommended optionStep 7: Implementation and review strategy

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Why is identifying the problem

important?Identifying the nature and extent of theproblem is a threshold question in the

policy processIf the nature and extent of the problem arecorrectly identified, you can focus on:

What needs to change The magnitude of required changes Potential feasible solutions

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How do we see

a problem

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A real example continued Children being poisoned

by eating pills from bottles they find in their homes

Real problem How can we reduce access to medicines by

children?Better solutions Change behavior and technology. Label bottles with child warnings.

Put bottles on higher shelves. Design caps with directions so that people who can

read can open them easily.

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Presenting the problemIs the problem correctly defined? The problem to be solved should be precisely stated,

giving clear evidence of its nature and magnitude, andexplaining why it has arisen (identifying the incentivesof affected entities) (OECD Recommendation)

Key requirements :Present evidence on the magnitude (scale and scope) ofthe problemIdentify affected parties and stakeholdersIdentify the relevant rationale for government intervention

Assess the risks associated with non-intervention18


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Problem Definition Participants role:

Identify various causes of the problem (from ownunderstanding or based on existing policy papers/literature)

Agree on a definition of the ultimate problem

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The magic formula:

Problem X occurs because of Y


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Ishikawa Cause and Effect Diagram

Dr. Kaoru Ishikawa (1915-89) of Tokyo's Mushasi Institute


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The M'sMachine (Equipment)Method (Process)Man Power (People / physical

labor)MaterialMother Nature (Environment)Management (Policies)Measurement (Inspection)MaintenanceMarketing (Promotion)

The P's (Service Industry)Plant/PlaceProcessPeoplePoliciesProceduresPricePromotionProduct

The S's (Service Industry)SurroundingsSuppliesSystems

Skills


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Common pitfallsStating the solution rather than the problemSymptom vs. Problem

Too broadly defined problem that does notdirectly link with preferred optionLack of quantification or evidence that a

problem existsLack of transparencyNot explaining the residual problem

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Training Case Study

Read the case study providedDiscuss with person next to you and record yourresponses to the prompt questions (5 minutes)

Obesity: Disease of the newmillennium

ACCORDING to Prof Dr Mohd Ismail Noor,

president of the Malaysian Association for the Studyof Obesity (MASO), obesity, dubbed as the diseaseof the new millennium, constitutes the mostimportant public health problem we face today.

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Prof Dr Mohd Ismail has revealed that the epidemiology of obesity in developing societies based onpopulation estimates of BMI is very disturbing, judging from the rapid increase in prevalence ofoverweight and obesity in both adult and children (both in developed and developing Asian countries)

in the last two or more decades.The latest figures from WHO has revealed some 1.6 billion adults are overweight and 400 millionobese. In Malaysia, about 43% adults, some 20% adolescents and 26% of primary school childrenare either overweight or obese.

According to him, rapid and sustained economic growth, modernisation, urbanisation plus theglobalisation of food markets, and significantly less physical activity in all sectors have fuelled theobesity epidemic.

At the total population level, a high prevalence of obesity results from a complex interaction betweenan inherited metabolic predisposition to fatness and changes in the populations lifestyle, ie higherenergy intake and reduced physical activity, that tend to accompany economic development.From an individuals perspective, obesity can result from a minor energy imbalance between energyintake and expenditure, leading to a gradual, but persistent, weight gain over a considerable period.Prof Mohd Ismail says that based on recent findings, links between under nutrition and obesityappear to be strong, both occurring together and in the same low income households in many partsof Asia, including Malaysia. These reports have enormous significance to developing societiesemerging from poverty and continuing to bear the double burden of both forms of malnutrition intheir populations.It has often been argued that prevention rather than treatment is the way to go in combating the risingobesity epidemic. However, it is becoming more apparent that the traditional approach appears tohave failed in producing the desired effect, judging from the increasing trend in prevalence of obesity

within the last decades. 25

Training Case Study


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Unfortunately, obesity has not been high on the public health agenda in developing countries as theprevalence, defined as BMI>30, appeared very low while governments focused on eradicating under-nutrition.Furthermore, actions to act decisively to help combat the increasing prevalence of obesity globallyand in Malaysia has been few and overall rather uncoordinated.

According to Prof Dr Mohd Ismail, unless we can make policy makers and professionals alikeunderstand the threat obesity poses and the urgency to implement possible solutions now, thenatural course would be an obesity epidemic among Malaysians that will continue to grow beyondcontrol in the coming decades.The Malaysian Association for the Study of Obesity (MASO) is a healthcare professional organisationestablished in 1994, whose members comprise mainly of Nutritionists, dieticians, clinicalpsychologists, endocrinologists, medical doctors and other related health professionals.

MASO strives to enhance the understanding of obesity, including causes, manifestations, preventionand management principles through various local and international collaborative studies.So, the early years will be appropriate for young adults, parents-to-be, and parents with infants andyoung children. The aim is to help create awareness on infant and childcare so that the experiencewill not be too traumatic. There will also be activities that encourage younger adults to look after their health, such as healthyand balanced meals for a healthier life, looking after the body, and even family health and planning.The middle years explore issues that are becoming more prevalent in modern society. So beprepared for tips on how to eat healthy and stay in shape, or how to get back into shape. There willalso be a deluge of information on the modern scourges of society, such as heart disease, diabetes,high blood pressure and so on.The golden years will look at ageing issues, and how we can cope and prepare better for sucheventualities. The Star, Wednesday March 28, 2012

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Problem: Poor health outcomes due to increasing obesity inMalaysia

PrimaryReason Secondary Reason Tertiary Reason

1 Highercalorie

intakeMore frequent eating

People eat too heavily at night

Culture' - socialising in the evening focuses onfood (football and food outlet)

Increasing stress levels

Heavy workload - increased working hours

Family conflict 27


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Problem: Poor health outcomes due to increasing obesity inMalaysia

PrimaryReason Secondary Reason Tertiary Reason

2 Not EnoughExercise

Lack of time toexercise

Too much time spend in traffic jam

Lack of awareness on benefit of exercise

Technology savvy

Stay indoors / spending too much time usingtech gadget

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Specify desired objectivesThe objectives should state the intent of the proposedregulatory action in concrete terms and relate this to the

broader policy of the agency or government(Best Practice Regulation Handbook)

Specify objectives in relation to the identified problemState the outcomes (goals) to be achieved rather thanthe means of achievement (the strategy)Consistent with, or contribute to the Governmentsstrategic policy aimsObjectives should be SMART : specific, measurable,achievable, realistic/relevant, time dependant

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Why options are importantWhat are the benefits of discussing andevaluating options in a RIA process?

Assessing Option

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Range of OptionsA range of options that may constitute feasible means forachieving the desired objectives must be analyzed to ensure themost effective and efficient option is chosen.Range of options include :

Regulatory Explicit regulation Co-regulation Quasi regulation

Non Regulatory Self regulation No regulation No regulation

No action (relying on market based on existing laws)

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Regulatory

Regulation spelled out in existing legislative instrumentsExplicit

regulation Examples: Primary legislation : Price control and anti profiteering Act, 2011 to set fair prices Subordinate legislation: EIA under Environmental Quality Act 1974

Industry self-developed and administered arrangementswith government legislative backingCo-regulation

Examples: Certification of Completion and Compliance (CCC) for building permits issued byprofessionals (architect/engineer)

Rules or arrangements where government influence businessesto comply but do not form explicit government regulation

Quasiregulation

Examples: Codes of practice developed, Guidance notes (e.g Schedule plan for fuel transportation toservice stations), Industry government agreements , Accreditation schemes

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Non RegulatoryIndustry rules & codes of conduct with enforcement solely by

industry; Should be one of the first options considered within RIAframeworkSelfregulation

Examples: Standard (e.g ISO, GMP, IMP) , market-based instruments taxes, subsidies,tradable permits, Pre-market assessment schemes, Others - Service charters, performanceaudits, quality assurance schemes (licensing, listing, QCC)

No regulation issued but actions are based on proactiveinitiative of interested parties

Noregulation

Examples: Information and education campaigns on global warming- Earth Hour

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Option/s for further


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Option/s for furtheranalysis Components

Option 0: Do Nothing

Option 1: Tax Tax junk foods

Option 2: Regulateproduction

Limit fat/sugar content in foods - regulateproduction

Increase the import duty on fats and oils

Option 3: Campaign National exercise campaign / competition 36


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Malaysias Best Practice RegulationHandbook on RIA requires . . .

Both the costs and benefits of regulatory and nonregulatory options are describedPotential positive and negative economic, environmental,and social impacts of the options are summarisedThe likely distribution of impacts across various affectedparties, sectors of the economy, and regions of Malaysia,is discussed.

A cost-benefit statement summarising the quantifiable andnon-quantifiable costs and benefits is included

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Impact Assessment


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COSTS BENEFITS ANALYSISBENEFITS

The total ofquantifiable and non-quantifiable benefits

Quantifiable benefitsCost Savings

Cost Avoidances

Non-quantifiablebenefits

Greater capabilityFaster availability

Better qualityImproved moraleOther?

BENEFITS MUST BALANCE OR OUTWEIGH COSTS

COSTS

Quantifiable costsDirectIndirectInitial/Start upSustainmentProcurement

Non Quantifiablecosts

Life/Safety/HealthPerception/ImageOpportunityRisk/UncertaintyPolitical

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Example Of CommonRegulatory Costs

AFFECTED GROUP EXAMPLES OF COSTS

Business Paper burden or administrative costs tobusinesses associated with complying with and/ orreporting on particular regulatory requirements; Licence fees or other charges levied by

government; Changes likely to be required in production,transportation and marketing procedures; Shifts to alternative sources of supply of inputs; Higher input prices; and Restricted access to markets.

Consumers Higher prices for goods and services resulting fromrestrictions on competition; Reduced utility (quality, choice etc) of goods andservices; and Delays in the introduction of goods to themarketplace and/or restrictions in product availability.

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Example Of CommonRegulatory Benefits

Improvements in product and service quality; Availability of a wider range of products and services;Reductions in costs or prices of products and services;

Reductions in accidents and improvements in publichealth and safety;Improvements in environment;Reductions in compliance costs for business andadministrative costs for government; andImprovements in the information available to business,the workforce, consumers or the government.

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Alternate assessment approaches

Cost beneft analyss total benefits less

costs over life ofregulation

FullCBA

break-even analysis benefits required

for the option tobreak-even.

BEA

multi-criteria analysis non-monetizedassessment ofcosts and benefits

MCA

Good data Costs valued Benefits valued

Good data Costs valued Benefits valued

Good data Costs valued ?Benefits valued ?

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THE GENERAL CRITERIA FOREVALUATING POLICY

Adapted from European Commission "Impact Assessment Guidelines" 46

Effectiveness

The extent to whichoptions achieve theobjectives of theproposal

Efficiency

The extent to whichobjectives can be

achieved for a givenlevel of resources/atleast cost (cost-effectiveness)

Coherence

The extent to whichoptions are coherentwith the overarchingobjectives of policy,and the extent towhich they are likely tolimit trade-offs acrossthe economic, social,and environmentaldomain.

Option/s for further C


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panalysis Components

Option 0: Do Nothing

Option 1: Tax Tax junk foods

Option 2: Regulateproduction

Limit fat/sugar content in foods - regulateproduction

Increase the import duty on fats and oils

Option 3: Campaign

National exercise campaign / competition

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Consultation Tool Appropriateness & Approaches

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Policy that involve large scale of people (wide spectrum) Used mainstream communication media

PUBLIC NOTICE ANDCOMMENT

Policy that affect certain identified stakeholders Circular send to selected identified stakeholders Normally in written feedback but oral feedback also being considered

CIRCULAR OFREGULATORY

PROPOSAL

Policy that affect certain geographical stakeholders Forum arranged to get verbal comments from selected stakeholders Complemented by public notice and comment

PUBLIC HEARING

Commonly used to gather professional and expert advice and information Commonly used at early stage of the regulatory process

ADVISORY BODIES

All forms of discretionary, ad hoc, and non-standardised contacts betweenregulators and interest groups to gather information

Normally occurred prior to formal consultation

INFORMALCONSULTATION OF

FOCUS GROUP

Source : Modified from The Evaluation of Regulatory Policy in OECD Countries, Nick Malyshev, 2002, Pg14-16.*Surat Pekeliling Am Bil.2 Thn. 2012 - Seranta Awam Atas Talian Bagi Sebarang Cadangan Atau Pindaan Undang-undang

Meeting withinterested parties

Seminars

Web forums

Public Survey

Interviews

Online PublicEngagement

A P P R O A C H E

S

TOOLS&APPROPRIATENESS

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Technique: Stakeholder Mapping

Step 1: Start with a "long list" of stakeholdersKnowledge of differences allows you to targetinformation & validation needs

Step 2: Prepare an Influence -Impact Matrix totarget stakeholders bydegree impacted by proposal (concerned orimplicated)degree of influence over proposal

Step3: Identify where capacity building is neededfor effective stakeholder participation.Highlight "gaps" in identified stakeholders.

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Long list" of stakeholders

http://www.professionalacademy.com/

Dalaman

Mempunyai Hubungan

Luaran


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Stakeholder Influence Impact Matrix

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Influential(useful fordecision &

opinionformulation)

Mandatory(most critical

group)

Limited (least

prioritystakeholder)

Adequately

informed (needempowerment)

More Influence

Low Influence

Less Impact More Impact


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Active vs Passive Consultation

ACTIVECONSULTATION Advisory groups,

committees, publichearings,

Informal consultation Panel & focus tests Peer reviews Surveys

PASSIVECONSULTATION Circulation for

comment, notice andcomment,

Notice andComments (Pre-publication)

Internet publication


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Other aspects: Consultation Tactics

Targeted consultation Structured to link information needs with

particular stakeholders

Multilayered consultation Minimum and consistent standards Allow flexible adaptation for more detailed

information

Mixed consultation Combination of mixed consultation

methods

Inter agencies Consultation


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Inter-agencies Consultation

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If the proposed regulation affects other agencies,inter-agencies consultation should be carried out.

Example 1:The abolishment of VISA ON ARRIVAL, KDN is the

implementing agency, MOHE, MITI, MOTour, MOHRwill be affected. Inter-agencies consultation should becarried out

Example 2: All agencies involved (Local Authorities, BOMBA,JKR, TNB, JPS, SYABAS, IWK etc.) in issuance ofconstruction permits will be consulted with setting up

of One Stop Centre 56


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Surat Pekeliling AmBilangan 2 Tahun 2012

Seranta Awam Atas

Talian(Online Pub l icEngagement)

bagi Sebarang

Cadangan Baru atauPindaan Undang-Undang

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What are Conclusion &


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What are Conclusion &Recommendations?

Conclusion & Recommendations are prepared byRegulators for the Overseeing Body to evaluatequality of assessment prior to final decision by theDecision Makers

Conclusion: available options based on evidence andimpact analysis

Recommendation: the best option supported by thepreceding analysis and comparison with other options

providedRationale To allow the decision maker to choose the best

option that best suits the objectives

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This section should include a clear statement identifying the preferred option basedon the impact analysis.

The recommendation for the selection of this option must be supported by thepreceding analysis and a comparison with other options provided.

It must be demonstrated that the selected option adequately meets the objectives forthe proposed action in the best overall manner and is consistent with the NationalPolicy on the Development and Implementation of Regulations .

The costs and benefits of this option for all the affected groups should be identified.

Impact A. Quantified Impacts (RM per year)

Benefits by stakeholder group

Costs by stakeholder groupNet BenefitsB. Quantified Impacts (Non-monetary, per year)

Positive Impacts stakeholder groupNegative Impacts stakeholder group

C. Qualitative Impacts

List of qualitative impacts (positive and negative) by stakeholder.

Conclusion & Recommendation

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What are Implementation andReview Strategy?

A coordinated and effective mechanism or actionplan to ensure the regulation could beimplemented and enforced.

A proper plans and strategies are crucially importantto ensure the planned regulation success

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Example of action plan to implement the regulation:

Capacity building for parties involved inimplementation, including enforcement.

Retain and train personnel with expertise oreducational qualifications for conducting trainingand awareness program

Communicate with effected parties.

Awareness programs to explain the importance ofthe respective regulation.

Educate the effected groups of how to comply withthe regulation.

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Strategy to detect and handle non-compliance (review)

Set effective mechanism of how to detect andenforce the non-compliances: Register the effected groups Licensing to perform activities

Establish steps to be taken for non-compliance: Advice (or warning) penalty (e.g. fine, imprisonment) sanction

Make sure that all required resources, especiallyhuman resource are sufficient. Coordination and networking with the relevant

parties (e.g. police in the case of enforcement) 62


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No. Stage Strategy / Program Responsible 1 Promote this new policy Road Show/Awareness Ministry of Finance (MOF);


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1 Promote this new policy tax junk foods

o Road Show/AwarenessMinistries/AgenciesNGOsManufacturers/Importers

o

Flyerso Advertisemento Readiness - Grace period of

one year

Ministry of Finance (MOF);MOH, MOE, KBS, KPWKMand KPDNKK

FOMCA, CAP

2 Implement tax junk foods o Flat 5% tax imposed MOF, IRB

3 Enforce the tax junk foods o Clear labeling at packagingo Clear guidelines and price

monitoring exercise on allgoods

o Standard of Procedures(SOP) for manufacturers

and supplierso Check for non-compliance-

sanction, ban or fine

Ministry of Domestic Trade,Cooperatives andConsumerism (KPDNKK)

4 Monitor the effectivenessand impact of the tax junkfoods

o Reviewing process to beheld quarterly

MOF, MOH, MOE, KBS,KPWKM and KPDNKK

FOMCA, CAP

Example: Regulatory Impact Analysis


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Masalah: Kemalangan di tempat kerja berlaku disebabkan oleh penggunaan jenteraberbahaya yang tidak selamat

Objektif: 1. Mencegah kemalangan yang disebabkan oleh penggunaan jentera berbahaya

yang tidak selamat 2. Meningkatkan kesedaran di kalangan majikan dan pekerja termasuk orang awam

di dalam penggunaan jentera berbahaya

3. Meningkatkan pengeluaran industri dan menyumbang kepada produkviti negara 4. Mengurangkan bayaran pampasan akibat kemalangan yang disebabkan jentera

berbahaya 5. Memastikan keselamatan, kesihatan dan persekitaran terjamin

Option1 Do Nothing

2 Mengadakan program pendidikan dan kesedaran.

3 Menggalakan peraturan kendiri dikalangan majikan.

4 Mengawal selia rekabentuk, pembinaan, pengubahsuaian,baik pulih, penyelenggaraan dan pengendalian jenteraberbahaya.

Example: Regulatory Impact Analysis

P li C l


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Policy identification

Policy

Formulation

Policy

Evaluation

Policy

Implementation

Policy Cycle

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ProblemIdentification

Setting Objective

Consultation

Assessing Option

Impact Assessment

ImplementationStrategy

Review


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www.vcec.vic.gov.au

R I S P o r t a l


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Shamsul Ridzuan IdrisCluster for Public Policy and Governance

INTAN Bukit Kiara

[email protected] DL: 0320847290H/P: 0193337600

Thank You
mailto:[email protected]:[email protected]