FINAL PROJECT REPORT

Transcription

1 National Centre for Legislative Regulation Project Implementation Unit at the Staff of Government of the Republic of Armenia National Centre for Legislative Regulation Project Implementation Unit at the Government Staff of the Republic of Armenia FINAL PROJECT REPORT PROMOTING GOOD GOVERNANCE IN THE REPUBLIC OF ARMENIA THROUGH SUPPORTING THE IMPLEMENTATION OF A RAPID REGULATORY SIMPLIFICATION (REGULATORY GUILLOTINE) EXERSICE Reporting period: 01 January, December, 2013

2 List of acronyms used RA GoA NCLR ADA WB OSCE USAID UNDP CIA LA BP AMD PSA Republic of Armenia Government of Armenia National Center of Legislative Regulation Austrian Development Agency World Bank Organization for Security and Co-operation in Europe U.S. Agency for International Development United Nations Development Programme Cost Impact Assessment Legal Act Business Process Armenian Drams Public Service Announcement 2

3 I.PROMOTING GOOD GOVERNANCE IN THE REPUBLIC OF ARMENIA THROUGH SUPPORTING THE IMPLEMENTATION OF A RAPID REGULATORY SIMPLIFICATION (REGULATORY GUILLOTINE) EXERSICE The Government of Armenia (hereinafter GoA) provided its full commitment and initiated implementation of the cross-governmental regulatory Reform with primary objective to improve Armenian business environment and increase competitiveness of Armenian socio-market economy. The Reform is relying on regulatory guillotine Methodology and its broad international experiences that will ensure Inventory and review of Armenian regulatory stock of about 3000 rules and regulations. This Reform engages 17 ministries and 10 regulatory bodies at national level in Armenia. The goal of the Reform is to cut the costs of doing business and public services provided in Armenia by at least 50%. The GoA has presented the regulatory Reform to Donor community in Armenia who recognized high importance of this Reform for development of Armenia. Led by OSCE Office in Yerevan, multi-donor consortium was organized to support the Reform and to secure financial resources for implementation of Rapid Regulatory Simplification (Guillotine) Project (hereinafter Project). Financial and/or in kind Contribution: The Government of Armenia and the Donors contributed with the following: GoA: 100,000 USD (financial contribution) and 130,000 EURO (in kind contribution) ADA: 500,200 EURO (financial contribution) OSCE: 80,000 EURO (financial contribution) World Bank: USD (financial contribution) UNDP: 50,000 USD (financial contribution) USAID: 400,000 USD financial and in-kind contributions EU delegation to Armenia: In kind contribution II. PROJECT INSTITUTIONAL STRUCTURE The following bodies have been installed to assure the success of the Project: 2.1. Council of Legal Acts Reforms Regulating the Economic Sphere of the Republic of Armenia (hereinafter "Reform Council"); 2.2. State Agency National Centre for Legislative Regulation at the Staff of GoA; 2.3. Joint Dialogue Forum; 2.4. Business Advisory Council. Decision making body Reform Council: To implement the Regulatory Reform in Armenia, the Council of Legal Acts Reforms Regulating the Economic Sphere of the Republic of Armenia was established by the President Decree NH-246-N dated 17 September 2011, led by the Prime Minister of RA. The Reform Council is comprised of five members: the Prime Minister of RA (Chairman of the Reform Council), Chief Advisor to the President of RA, Minister of Economy of RA, Minister of Finance of RA and Minister of Justice of RA. Operating body National Centre of Legislative Regulation: Establishment of the NCLR under the Staff of GoA as a body mandated to execute the decisions of the Reform Council, October 2011 under the President Decree NH-246-N dated 17 September 2011 Monitoring/Advisory body Joint Dialgue Forum: According to the 3 rd Section of the Letter of Intent as of , Joint Dialogue Forum comprised of representatives from GoA and Donors is installed. The Joint Dialogue Forum aims at exchanging all relevant information concerning the Project implementation and convenes at least every two months. The Dialogue Forum is chaired by the Chief Advisor to the President of RA, member of the Reform Council who also convenes the Joint Dialogue Forum meetings. Advisory body Business Advisory Council: Advisory body that participates expertly and intensively in the review of legal acts and development of the recommendations to reduce the business costs. 3

4 Monitoring and Reporting: According to the 4 th Section of the Letter of Intent as of , the Head of the State Agency National Centre for Legislative Regulation Project implementation unit at the Staff of GoA (hereinafter NCLR) submits quarterly Progress Reports on the implementation of the Project to the Donors through the Joint Dialogue Forum (Six Project Progress Reports were submitted to the Donors so far). Institutions in the scope of the guillotine 1) 16 ministries at national level. 2) 10 regulatory bodies at national level. 3) The city government of Yerevan. III. THE ACTIVITIES OF THE NCLR FROM 01 JANUARY DECEMBER 2013 The Project activities are divided into four periods: 3.1. Inception period; 3.2. Operational period; 3.3. Transition period; 3.4. Full operational period Inception period: from October 2011 to May 2012 The Project was designed for 24 months. The establishment of the NCLR in October 2011 was followed by the periods required for signing the grant agreements, funds disbursement, providing and preparing of the office premises, and purchasing of the office supplies and equipment. Only by April 2012 the NCLR office got fully equipped whereas the staff recruitment took place during January-May Competitions for vacancies for key positions were announced and the vacancies were filled by May, After the renovations and installation of the technical facilities were completed and set the then already appointed staff moved to the office Operational period 01 May February 2013 The Reform Council Session held on 6 April, 2012 approved the Working Plan with the review sectors for 2012: Public Utility Sector Regulation. Transport Sector Regulation. Public Health Sector Regulation. The reviews in the above mentioned priority sectors were based on the Methodology designed by the NCLR (including Inventory Method, Review and Cost Assessment Methodology) A. Status of the legal packages for Public Utilities/ Transport/ Health Sectors Table 1. Submission of the legal packages to the Reform Council, Government of Armenia and National Assembly of RA as of 10 December, 2013 N Sector Intended dates of submission of the legal packages to the Reform Council Date of the submission of the legal packages to the Reform Council Date of the Reform Council Session 1 Public Utilities September September, October, October, Transport October November, November, December December, 2012 Date of the GoA Session Date of the National Assembly Session 15 November, 29 April, June, March, October, Submitted to the National Assembly; 3 Health November December, January, November Legal package on the carriage of passengers by Taxis- Approved by the Financial-Economic Commission of the National Assembly 12 February, August, 2013 N/A 4

5 3.2. B. Cost Impact Assessment in Public Utility, Transport and Health Sectors Table 2. Reform Impact on the Public Utility, Transport and Health Sectors based on the NCLR Review and Cost Assessment Methodology PUBLIC UTILITY SECTOR TRANSPORT SECTOR HELTH SECTOR Legal acts Current legal acts Quantity Percent Quantity Percent Quantity Percent Documents required COSTS 1 (drams) Current Business % % % Process Documents Remained % % % TOTAL-Number of cut documents % % % Current Business Process Costs % % % Remained % % % TOTAL-Reduced costs % % % 3.3. Transition period from 01 March, 2013 to 08 May, 2013 After arrival of international experts (Vedran Antoljak, Sense Consulting Ltd, Croatia, (first visit on November 2012) and Scott Jacobs, Jacobs and Associates, USA (first visit on 30 January-7 February, 2013) and comprehensive examination and assessment of the already started Project a mid-course correction was recommended. Correction, based on already achieved results and the best international practice was aimed to increase the economic results of the Reform by Methodology change and introduction of new components The following actions were undertaken during the Transition period to build up the capacities of the Reform: Installation of the e-guillotine software and training of the users on the application to complete the regulations Inventory database; Development of the Inventory and Review Checklists for legal acts and business processes and trainings of the NCLR staff, Regulators and Private sector representatives on using Checklists during the reviews; Development of the Methodology on Cost Impact Assessment and trainings of the NCLR staff on use of new Cost Impact Assessment Method; Development of the Revised Work 2 plan through 30 November, 2013; Pre-finalization of Inventory by the NCLR staff and posting the legal acts and business procedures on-line in the specialized Website: e-guillotine Transition plan for the Project by the NCLR On March 19, 2013 the Reform Council Session approved the Transition Plan for the Armenia Guillotine Reform implemented by the NCLR. It recommended a series of concrete steps based on the best international experience to be taken from March, 2013 to May, 2013 to increase the capacities of the NCLR, Ministries and Stakeholders and put the Regulatory Reform on full operational status by 8 May, Inventory Phase completed 08 May, The main objectives of the Inventory phase for the NCLR were as follows: Create centralized Inventory of all Legal Acts laws, regulations, resolutions etc. relevant for Regulatory Guillotine; Identify relevant Business Processes processes of interactions between citizens/business and state/municipal administration; Ensure full transparency of the Regulatory Guillotine by publishing centralized database of Legal Acts and Business Processes Communicate with private sector and public in the Inventory and Review processes. 1 Indicated costs are only the direct costs. The costs were calculated by the NCLR Cost Assessment Methodology (before the application of the Cost Impact Assessment Methodology by Scott Jacobs) 2 Revised after no cost extension of the Project by 31 December,

6 Table 3 below indicates the number of the Legal Acts, Business Processes and Review Checklists in the e-guillotine as of 10 December, 2013 Table 3. Number of Legal Acts, Review Checklists and Business Processes in the e-guillotine as of 10 December, 2013 NAME OF ITEM Number of Legal Acts Legal Acts Review Checklists Business Processes Full operational period from 09 May, 2013 to 10 December, 2013 On 8 May, 2013 the reviews started in the following sectors: Tax, Customs, Entrepreneurship, Culture and Social Issues A. Application of the Cost Impact Assessment Methodology The Cost Impact Assessment Method was developed by Scott Jacobs and approved by the Reform Council. Cost Impact Assessment team of 5 experts was hired by OSCE. The NCLR experts and Cost Impact Assessment team were trained on the new CIA Method. Cost Impact Assessment in 6 Review Sectors (Work period: July 1 December 10, 2013, costs per year calculated on 2012 data) Table 4. Cost Impact Assessment in 6 Review Sectors after the Methodology change Sectors # of Business Processes Reviewed by 10 Dec. Total # of Business Processes in Inventory # of Legal Acts Reviewed by 10 Dec Total # of Legal Acts in Inventory Percent of LAs & BPs Reviewed by 10 Dec. Current (baseline) Costs (aggregate, in thousands of Armenian Drams) Costs remained after Reform (aggregate, in thousands of Armenian Drams) % of Reduce Costs Tax % 7,337, ,157 87% Customs % 1,121, ,653 56% Entrepreneurship % 11,865,481 7,568,761 36% Culture % 485, ,770 17% Social Services % 1,679, ,044 68% Foreign Affairs % 299, ,548 59% Grand Total % 22,788,802 10,101,933 56% Calculations in 6 sectors-tax, Customs, Entrepreneurship, Culture, Social Issues, Foreign Affairs were based on the New CIA Method developed by Scott Jacobs Calculations- in 3 sectors-public Utilities, Transport, Health-were based on the NCLR Methodology IV. PROJECT OUTPUTS Project main results as of 10 December 2013 and Economic Efficiency Estimates Table 5 Project Economic Efficiency in 9 Review sectors reviewed by the NCLR as of 10 December, 2013 N Number of the legal Number of legal acts Baseline transaction Sector acts reviewed amended/ abolished costs to meet the regulations requirements (Million AMD) Cost savings after the suggested regulatory Reforms (Million AMD) Cost savings in % to the baseline cost 1 Tax % 2 Customs % 3 Entrepreneurship % 4 Culture % 5 Social issues % 3 Updating of the Inventory in the e-guillotine is ongoing. 4 Review Checklists are completed by both NCLR /State Agencies; NCLR team completed Review Checklists for 6 sectors under review Tax, Customs, Social Issues, Entrepreneurship, Culture and Foreign Affairs and International Relations sectors. 6

7 6 Foreign affairs & % international relations 7 Public Utility % 8 Transport % 9 Public Health % Total % Table 6. Economic Efficiency Estimates for one legal act reviewed by the NCLR in the current and proposed Project Number of Legal acts Cost Savings after review AMD/Million EURO/Million 6 Legal Acts reviewed under the current Project Legal Acts to be reviewed under the proposed Project Total For one legal act thousand EURO Project budget as of 10 December EURO V. MONITORING, PROJECT MANAGEMENT (DIFFICULTIES ENCOUNTERED/LESSONS LEARNED FOR FUTURE ACTION) Project behind the schedule The main reasons that the current Project could not meet the intended deadlines were as follows: 1. Methodology change: During the Inception period the NCLR team started the reviews in three priority sectors based on its own Methodology. After the arrival of the international consultants the Project Methodology was changed, and 10 additional weeks were needed to complete the installation of the e-guillotine software and trainings the NCLR/CIA teams and Regulators/Stakeholders on the new Methodology. 2. Participation in the Decision making process: According to the Project design, reflected in Proposal, the NCLR should accompany the legal packages only to the Reform Council. However, according to the GoA decisionmaking procedures and the Reform Council decision the NCLR started to accompany the legal packages throughout the entire process which substantially increased the duration of the Project - starting from the submission to the Reform Council and ending up to the adoption of the legal packages at the National Assembly and consequent adoption of the Governmental Decisions in the GA Government. 3. Interagency discussions: According to the Prime Minister decision the NCLR should organize interagency discussions with the Ministries/State Agencies after the submission of the legal proposals to them trying to maximize the level of consent between the NCLR and State Agencies. The interagency discussions also delay the whole process to finalize the legal packages and submit them to the Reform Council. Lessons Learned In order to avoid delays in the proposed continuation of the Project the following issues are taken into account in the Project Proposal sent to the ADA: 1. Review circle for each sector should include the full decision making time; 2. Sector reviews and Cost Impact Assessments should be done in parallel; 3. Planning of the review activities depending on the intensity of the ongoing review sector Reforms, review sectors with less ongoing Reform activities should be considered a priority Difficulties encountered during the Project Inception Period 1. Because the legal acts Inventory was developed for each sector independently only when the reviews in the particular sector began, mostly because the specialized software was not available to the NCLR team until International experts arrival, it was impossible to prioritize sectors based on workload. Decisions made and Actions performed The National Inventory Database Developed: 1A. e-guillotine software Customized and installed; 1B. NCLR/Ministries/Business were trained on Inventory: 1C. After completion of the Inventory the workload is taken into account in NCLR operational planning process. 2. Almost all of the review is carried out by the NCLR team. Very little participation of the ministries and the business sector in assessing problems and developing solutions. Decisions made and 2A.The review process to improve participation by Ministries and Stakeholders was restructured; 6 Exchange rate used is 557,4 AMD per Euro as of 10 December, Estimates based on the number of the Legal Acts to be reviewed and the average savings cost of 14.2 Million AMD 7

8 Actions performed 2B. Checklist was used as the basis for reviews developed. 3. The checklist that has been developed by the NCLR team (before the Change of the Methodology based on Scott Jacobs recommendations) was too general to be used for the Regulators/Stakeholders and was not used as the main review tool by the Regulators/Stakeholders. Decisions made and Actions performed 3A. New Review Checklist was developed to be filled by Regulators/Stakeholders and NCLR; 3B. NCLR/ Regulators /Businesses were trained on the new Review checklists. 4. The Reform needed more relevant and clear indicators for cost impact measurement purposes. Decisions made and 4A. Practical Method of impact assessment was developed; Actions performed 4B. Cost Impact Assessment team of 5 experts was hired by OSCE; 4C. NCLR /Cost Impact Assessment experts were trained on the new CIA Method Difficulties encountered during the Reviews 1. Lack of the business involvement and necessity of their more active engagement in the review process. Lessons learned The assistance should mostly be provided by hiring short-term experts to work with businesses and deliver their views and opinions on the regulatory Reform priorities in particular sectors under review as well as filling the corresponding Review Checklists. Ad hoc working groups of business representatives should be formed specialized for discussion of outstanding regulatory issues in particular sectors under review and broadly used. NCLR should be more active in establishing closer relations with the institutions and Projects operating with regulatory issues to efficiently share the relevant information. 2. Low quality information of provided/ missing LAs/Low responsiveness by the Ministries/State Agencies for engagement into the Project i.e. identification of Regulatory Reform directions and measures. Lessons learned: Hold consultative seminars, workshops, meetings, or other forms of communication between the NCLR and Ministries/State Agencies to activate their participation in the process of the regulatory Reform. 3. Media, communications campaign and visibility of the Project Although all technical possibilities of communication and Project visibility are established the feedbacks of General public and businesses are lower than expected which affect the visibility of Project. Media activity of the Project is not equally distributed in time due to the cyclic character of the NCLR operations which affects the Project visibility. Though several promotional materials (PSA, documentary) to call for cooperation are created, the broadcast on TV is limited which affects public participation in the Project. The communication campaign for the future Project should be aimed at substantial increase of the feedbacks from the businesses and public, as well as more equal distribution of the media activities to increase the visibility of the Project. Lessons learned: 1 Re-design communication strategy and action plan to enhance the public awareness of regulatory Reform Project objectives, expected results and impacts. 2 Organize public appearances and exhibits; arrange meetings with them to increase Project awareness and to promote pro-active participation of businesses and civil society. 3 Promote public outreach and civic engagement through social media and other instruments Inform and encourage input from organizations such as the business group, and other stakeholders in the review of legal norms, and organize consultative seminars, workshops, meetings, or other forms of communication as needed to ensure transparency in the process of the Reform. 4 Develop and establish public interactive communication network using different communication forms: forums, call center, etc. 5 Develop a much more publicly engaging website. VI. OBJECTIVES FOR THE NEXT PHASE 1. Continue the Regulatory Guillotine Reform in Armenia. 2. Make the results of the Guillotine Reform sustainable by: a. Establishing Positive Security for the upgraded ARLIS database and e-guillotine database; b. Implementing the Regulatory Impact Assessment approach on all new regulatory legal norms before they can be adopted. 8

9 c. Suggesting changes in Decision making process aimed at increasing the role of professional, labor, entrepreneurship organizations (chambers) and creating more balanced approach among the participants in decision making process (to integrate a corporatism approach and tripartite Chambers system in Armenian decision-making structure). 3. Improve participation of the Ministries/Sate Agencies/Stakeholders in the review process. 4. Invest more in public engagement and communication: Revise the communication strategy and increase public engagement in the Reform; Communicate the Reform to build trust and engage private sector and public in the Inventory and review process of Legal Acts and Business Processes. 5. For the NCLR Management: Increase monitoring and evaluation capacity to ensure more efficient implementation; Increase productivity by more flexible workload distribution. 6. For the NCLR Reviewers: o Focus on economic freedom as much as business procedures. 7. For Impact Assessment Team: Be more pro-active in seeking 50% cuts with reviewers; Find ways to include corruption costs in the Cost Impact Assessments; Validate more data with the Ministries/State Agencies/Businesses; Shorter timelines for Ministries/State Agencies in data letters; Organize discussions on how to handle search costs and corruption. For more details and information, please contact: National Centre for Legislative Regulation Staff of Government of the Republic of Armenia Heghine Manukyan hmanukyan@regulations.am Phone: (0) (114) 9