How the regulatory environment will be “cleaned” in the ministers: why and who needs it?

16-08-2016

The Government started to put state regulatory acts to the rights. The First Vice-Prime Minister of Ukraine Stepan Kubiv signed an order to conduct a system review of regulations. Website “24” journalists found out how it would happen and what benefits it would bring.

The regulatory environment in Ukraine is “littered”: it has a lot of illegal, irrelevant and ineffective acts – there are more than 35% of them now. It complicates the work of business and repels investors.

honcharukHaving commented the Government’s intentions to conduct the planned inventory for the website “24”, the Head of Better Regulation Delivery Office (BRDO) Oleksiy Honcharuk compared the government machine with the computer: laws, norms and documents are like files. And just as it is periodically needed to launch an antivirus to ensure the computer system working properly, it is also necessary to launch such regulatory framework system cleaning in the state every few years – firstly, to throw out all the “garbage”, secondly, everything that would remain could be measured in terms of its efficiency.

“The trouble of Ukraine is that the efficiency of the decisions is not measured. For example, some permit or inspection is being implemented – all these things affect the business, limit it in some way. And we cannot say exactly whether the use of these tools for achieving goals would be efficient, whether we would obtain expected results or whether this document provides something – as a rule, there is no such estimation,” Honcharuk said.

In civilized countries, the decisions are made in such a manner: the problem is defined, a problem solution changing the problem indicators most adequately, is chosen from the possible options, after the decision was implemented they collect the information about consequences of this decision, and after the analysis of this information, they make a conclusion about the reconsidering the problem. This “problem-solution-information collection-analysis-reconsidering the decision” cycle is actually called the Deming Cycle, and it is a classics model of making decisions in the world. It allows countries to see an efficiency of decisions they make in the perspective and improve this efficiency. The necessity to improve the decisions and mechanisms appears as a result of a system approach.

In Ukraine, it happens on a chance basis.

“Someone stumbled upon an idea to reduce the amount of licenses – they were reduced. It seems like the pressure on businesses decreased. However, in fact, sometimes it is even increased, because if there is no official procedure, officials usually start to create their own schemes at the local level,” the expert explained.

That is why the idea of the regulatory acts review, Honcharuk says, is to analyze the quality of decisions made in 5 important sectors of the economy (agriculture, construction, energy, transport and infrastructure and IT). And as a result, some documents will be removed if they are not needed, or predicted in terms of their expected efficiency and can be reviewed again, for example, in a year. Then we can speak about the improvement of the regulation.

Who will check

The First Vice Prime Minister Stepan Kubiv instructed relevant ministries to organize this work. Kubiv and the Ministry of Economy will coordinate it. So, the review will be organized at the highest level.

In the ministries, working groups will be created by August 16. Their task is the next: to define the framework to be cleaned. Every ministry has to determine that it is responsible for 28 markets nominally, where 54 regulatory tools are used. This is being regulated, for example, by 400 documents.

“These cases of applying regulatory acts to the markets must be reviewed. An idea for the beginning is to understand how many such “stuff” we have, what we have to work with,” Honcharuk stated.

Preliminary analysis

The Better Regulation Delivery Office (BRDO) specialists made preliminary system review of regulatory acts. According to their preliminary estimates, about a third of regulations must be removed.

“This analysis process has no sense without the ministries and business involvement, as in this case the process itself is a value. It is really important to use it for creating a new standard of a conversation between business and state to increase the level of trust between them. It is also important not to “flounder” to estimation of the documents on formal grounds because it is important not only to estimate the quality of the documents, but the quality of regulatory decisions as well,” Honcharuk stated.

For example, if we take a decision to use a licensing of concrete market, then it is necessary to estimate the decision on the tool use but not the efficiency of the document had been implemented it. Then we can make a conclusion whether we chose and used the tool adequately, whether we used it in time or what result it led to.

Time limits

According to Better Regulation Delivery Office (BRDO) specialists, one year will be enough to conduct the analysis of the state regulatory framework.

“But we will see. We can complete “a five-year industrial plan/pyatiletka” during the year, but there is a question of quality. Such large-scale analysis will be held in Ukraine first time. And this estimation must pass not just for the “tick” near the every regulatory act, but to reinstall the rules of doing business in many markets.  It is important because real people, real businesses will make these decisions and this is what the economy consists of,” Honcharuk explained.

According to expert, interim results of the planned review will be known in some months, because it will be completed for different markets in different time. So, we can learn about it soon.

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