CUTS
C-CIER is a Centre of CUTS International, an international civil society
organisation, working over the last two decades on international trade,
competition, and consumer protection issues in various parts of the
developing world with an emphasis on activities in Asia and Africa.
I.
Background
1.1
In the past most developing countries were characterised by significant
government involvement in their economies marked by dominance of large
state-owned enterprises. Economic liberalisation process started in
several of these countries during 1980s and 1990s and most of them
adopted policies of deregulation, privatisation and trade liberalisation.
1.2
Despite these developments, there are certain sectors, where for a
variety of reasons competitive markets may not exist or yield desired
results. Typically these sectors are: telecommunications, energy (electricity,
oil & gas), transport (seaports, civil aviation, roads & highways,
railways), water, and financial sector (banking, capital market, insurance).
1.3
Because of market failure in these sectors, some form of intervention
is required. Traditionally, governments intervened to correct market
failures in these sectors. It has been realised that the manner in
which governments intervened proved to be ineffective. With this realisation,
emerged a new form of economic governance characterised by the setting
up of specialised agencies, seeking to ensure competitive outcomes
by making decision in a transparent, consultative and participatory
manner.
1.4
While in some sectors, Government continues to perform the regulatory
function, in others a specialised agency has been set up to perform
the regulatory functions. Hence, in a country we may find the presence
of both the forms of intervention. India is a case in point. In railways,
the relevant ministry performs regulatory functions, while in telecommunications,
we have a specialised regulatory agency, the Telecom Regulatory Authority
of India. Another case is that of Vietnam. In Banking, there is the
State Bank of Vietnam which performs regulatory functions, while in
other sectors, relevant ministries perform regulatory functions.
1.5
Under the circumstances where both the forms of intervention exist,
it would be interesting to do a comparative analysis of their effectiveness.
Effectiveness of a regulatory regime depends on how it works i.e.
on factors such as its transparency, participation, accountability
and predictability.
1.6
In general, intervention by government has failed on account of these
factors, as rules are framed in an opaque manner without any participation/consultation
from stakeholders. This gets compounded by the fact that, often the
same ministry performs the conflicting roles of a regulator, policy
maker, and service provider/operator. Furthermore, if the government
continues to perform regulatory function, even after a sector is opened
to private participation, it may lead to violation of the principle
of competitive neutrality, which seeks to ensure equal treatment to
both the private sector and state-owned enterprises.
1.7
Regulation being a new area of governance there is not much understanding
or capacity on the issue. People often fail to distinguish between
‘control’ and ‘regulation’. Regulation here refers not to the mesh
of complicated and opaque rules, which stifled entrepreneurship and
innovation in the past. The regulation referred to here is a set of
transparent, consistent, and non-discriminatory rules that creates
a competitive, dynamic environment in which firms can thrive.
II.
Objectives
-
Identify sectors where regulatory functions are performed either
by the Government or a specialised agency (henceforth, sectoral
regulatory body) and reasons thereof
-
Analyse
how the transition from a regime characterised by dominance of
public sector to one marked by privatisation is being/has been
managed
-
Analyse the regulatory framework in these sector with regard to
institutional and governance aspects, such as regulatory objectives,
mandate, independence, accountability, interface with other agencies,
decision making process, capacity, selection and staffing.
-
Draw lessons for strengthening sectoral regulatory framework and
establish benchmarks relevant for developing countries.
III.
Outline of Country Paper
3.1
The country paper will evaluate the sectoral regulatory framework
with regard to institutional and governance aspects in the selected
country and identifying key lessons (good and bad) in sectoral regulation.
It would be based on the following two broad issues:
-
Identification
of sectors where regulatory functions are performed either by
the Government or a specialised agency (henceforth, sectoral regulatory
body) and the reasons thereof. Typically these sectors are telecommunications,
energy (electricity, oil & gas), transport (seaports, civil
aviation, roads & highways, railways), water, and financial
sector (banking, capital market, insurance).
-
For
these sectors, study the regulatory process i.e. how regulatory
regime works
3.2 Sections
proposed for the country paper are as follows:
-
Socio-Economic
Profile of the country in terms of the following indicators
GDP, per-capita income, economic structure, population, adult
literacy, poverty, unemployment, FDI inflow, export/import,
level of development)
-
Evolution of policy regime in the country (e.g. earlier characterized
by government monopoly, public sector enterprises; now economic
reforms characterized by privatisation, opening up of the economy)
3.2.2
Deregulation, Privatisation and Setting up of Sectoral Agencies
-
Identify
sectors where regulatory functions are performed by the Ministry;
sectors where a specialised agency (henceforth, sectoral
regulatory body) has been established
-
In case where regulatory functions are performed by Ministry,
identify government’s policy towards adopting this approach.
In case where sectoral regulatory bodies have been established,
identify government’s policy towards establishment of sectoral
regulatory bodies (SRBs) i.e. why SRBs are established
-
For these sectors, identify ones which have been opened for
private participation.
-
For these sectors, identify if there has been any change in
the manner of regulatory intervention (e.g. restructuring in
the ministry or a specialised agency set up). If there has been
a change, identify its sequencing relative to opening up of
the sector to private participation i.e. whether change in regulatory
intervention preceded or succeeded the opening up process. In
case where a sectoral regulatory body was established, identify
the sequencing of privatisation and establishment of sectoral
regulator
-
Is privatisation leading to replacement of public monopolies
with private monopolies?
3.2.3
Working of Sectoral Regulators
Institutional
framework…
-
For these sectors identify the institutional framework (i.e.
mention about the role played by various agencies in regulating
a sector – Legislature, Minister, government department, sectoral
regulatory body (where applicable)
-
Is the setting up of the regulatory body (where applicable) backed
by appropriate legislation?
-
Selection and removal process of sectoral regulators, where applicable
-
In case where the minister performs regulatory function, is there
any sectoral legislation that gives this power to the minister?
-
Role,
power, functions, objectives of Ministry which performs the
regulatory function or of the sectoral regulatory body, where
applicable
-
Do the Ministry or sectoral regulatory bodies deal with competition
issues? Give examples
Resource
Availability and Regulatory Capacity…
-
Financial
autonomy (how are funds provided to the Ministry which performs
regulatory functions or the sectoral regulatory body; who decides
the budget in both the cases)
-
Infrastructure and human resources (staffing pattern)
-
Is there any training provided to Ministry officials/staff of
sectoral regulatory body before induction on the job, and during
the job
-
Can the Ministry concerned or sectoral regulatory body appoint
staff and engage consultants on its own?
Interface
with other agencies …
-
Interface of Ministry performing regulatory function with other
government agencies, judiciary, competition authority
-
Interface of sectoral regulatory body with Ministry, judiciary,
appellate body, competition authority
-
Interface of Ministry or sectoral regulatory body with service providers/operator
(public sector as well as private sector)
Decision-making
process …
-
How does the Ministry/sectoral regulatory body arrive at a decision?
Is there any consultation process with various stakeholders (service
providers, consumer groups)?
-
In case where a sectoral regulatory body exists, examine the role
played by the Minister/government department in decision-making?
-
Is the decision-making process transparent and participatory?
-
In sector, where regulatory functions are performed by the ministry,
assess the conflicts of interest that may arise due to overlap of
roles as a regulator, policy maker and operator/service provider
Accountability
mechanism and performance evaluation …
-
How
is the ministry, that performs regulatory functions made accountable?
Is it made accountable to the legislature or some other Ministry?
-
In case of a sectoral regulatory body, how is it made accountable?
Is it made accountable to the relevant Ministry/department? Is it
made accountable to the legislature?
-
What mechanisms exist to judge the performance of the ministry/sectoral
regulatory body?
-
Is there any external evaluation of minister’s or sectoral regulatory
body’s performance?
IV.
Methodology
The
research primarily focuses on preparing a situation report of regulatory
process/practice in the country. This is to be done by analysing available
information based on review of literature. i.e. annual reports of
Ministries, relevant government websites, reports brought out by the
sectoral regulatory body, relevant Acts/legislations, and other relevant
official documents.
V.
Sectoral Coverage
Since
the primary objective for undertaking this research work is to study
the regulatory process, the paper would cover those sectors where
there is a regulatory intervention i.e. either the Government is performing
the regulatory function or a specialised agency (sectoral regulatory
body) has been established to perform the regulatory functions. The
likely sectors are: telecommunications, energy (electricity, oil &
gas), transport (seaports, civil aviation, railways), water, and financial
sector (banking).
VI.
Country Researchers
| S.No. |
Country |
Country
Researcher |
Coordinates |
| 1 |
India |
Manish
Agarwal (Mr)
CUTS
Centre for Competition, Investment & Economic Regulation,
Jaipur,
India |
Ph: +91-141-228
2821
Fx: +91-141-228 2733
Em: c-cier@cuts.org
ma@cuts.org |
| 2 |
Indonesia |
Indah
Suksmanigsigh (Ms)
Chairperson,
YLKI
JL
Panoran Barat VII No.1, Duren Tiga,
Jakarta
12760
Indonesia |
Ph:
62-21-796 1858
Fx:
62-21-798 1038
Em:
konsumen@rad.net.id |
| 3 |
Vietnam |
Nguyen
Dinh Cung (Mr)
Director
Department for Macroeconomic Policy
Central Institute for Economic Management (CIEM)
68
Phan Dinh Phung, Ba Dinh, Hanoi
Vietnam |
Ph:
84-80-44929 (O)
84-784
4381 (R)
Fx:
84-80-43670
Em:
cung@ciem.org.vn |
| 4 |
Cambodia |
Sieng Deline (Mr)
Researcher, Economic institute of Cambodia
#234, Phnom Penh Centre
Corner st. 274 & 3, Tonle Bassac,
Phnom Penh |
Ph: 855-23 987 941
Mob: 855-12-934 822
Email: deline.sieng@eicambodia.org
|
| 5 |
South
Africa |
Trudi
Hartzenberg (Ms)
Executive
Director
TRALAC
PO
Box 224
Clnarais
Building
Stellenbosch
7599
Crozier Street
Stellenbosch
South
Africa |
Ph:
27-21-883 2208
Fx:
27-21-883 8292
Em:
trudi@tralac.org |
| 6 |
Zambia |
Sajeev Nair (Mr)
CUTS Africa Resource Centre
Suite 411, 4th FloorMain Post Office Building Cairo Road,
P.O. Box: 37113
Lusaka, Zambia |
Ph:
260 1 224 992
Fx:
260 1 225 220
Em:
lusaka@cuts.org
cutsarc@zamnet.zm
|
| 7 |
Kenya |
John
Ochola (Mr)
CUTS
Nairobi Resource Centre
Lower Hill Road, Upper Hill,
P.O. Box: 8188, 00200
Nairobi, Kenya |
Ph:
254-20-273 4925-6
Fx:
254-20-273 4925
Em:
cuts-nairobi@cuts.org |
|
