Optimizing the Regulatory Environment (Fiorina Mugione)


From a regulatory perspective, the UNCTAD’s
Entrepreneurship Policy Framework focuses on key issues
which have the greatest relevance for start-up activities. The underlying assumption is that the regulatory environment should be optimized. It goes beyond simplification of procedures. It should create a framework to encourage
entrepreneurs to set up their own business, to try new business
ideas and to take on calculated risks, keeping administrative
burdens to the minimum required to support public policy
and sustainable development objectives. A checklist may assist stakeholders in the
process at the policy design stage to gather information
on the baseline, and monitor progress against it regularly. Let’s have a close look
at each component of the framework. Examine regulatory requirements for start-ups.
The first step in assessing if your country’s regulatory
environment is conducive to business is to understand the
extent to which existing rules and procedures may hold back
entrepreneurial activity. This implies distinguishing between
regulations that are essential for the functioning of businesses but can be simplified. Others that produce more costs than benefits
should be abolished. The tools to carry out this assessment may
include: Benchmarking – This can draw on numerous systems of indicators that are published on an annual basis by international organizations such as the World Bank “Ease of Doing Business”. It is also important to set
up regular national surveys, introducing national indicators and benchmarks. Evaluating specific sectors and regions and assess whether specific licensing or administration
requirements are justified or not. Again, it is useful to
compare such requirements against international experiences, or between regions or sectors. Rankings alone, however, tell little about optimal levels of
regulation, because country conditions vary considerably and services and governments have different preferences with regard to regulation. It is therefore necessary to
obtain feedbacks directly from users, the Entrepreneurs. Developing a public-private dialogue on the costs and benefits of regulations. This should conduce to establishing a public-private
committee or forum that can incrementally develop a
shared understanding and step-by-step weed out unnecessary regulations and improve the remaining ones. At the European Union, the Lisbon European
Council, as part of the new open method of co-ordination,
called for a formal programme to benchmark the time and costs involved in setting up an enterprise including:
Headline Benchmarks: The outcomes of the business registration process, especially
the time, cost and capital needed to complete mandatory
procedures. Operational Benchmarks: Measures of the
administrative process, such as the number of
procedures, documents and forms. Performance Drivers: Indicators of the
underlying causes of the outcomes, such as Information and Communications Technology
(ICT) and Management Processes. Qualifications, Licenses and Permits: The
sector-specific qualifications and qualifying standards; the activity-specific licenses;
and the employment-related licenses that an entrepreneur
must obtain whilst setting up an enterprise. Discretionary (‘non-mandatory’) Activities:
The other non-mandatory activities that a prudent
entrepreneur undertakes while setting an enterprise, such as developing a business plan and obtaining finance Minimize regulatory hurdles for businesses start-ups plan. Many countries continue to work to reduce or eliminate obstacles to business including bureaucratic
procedures and transparency issues such as lack of accurate
information, or costly and time-consuming customs procedures. Often, procedures for start-ups can be abolished
without any negative side effects. Three measures have shown to be particularly
successful in this regard. They are introduction of fast-track mechanisms,
one-stop-shops to bundle procedures and the introduction of ICT-based procedures for businesses registration
and reporting. For example, modern e-solutions make setting up and running a business in Estonia quick and easy. They include digital signatures, electronic
tax claims, an e-Business Register. Estonia is one of the countries with the highest number of startups per capita
are launched in Europe. Similarly, by introducing the UNCTAD’s e-registration system, the Government of El Salvador has put entrepreneurs at the centre of eGovernance,
offering them an online database where they can register, save
and consult all documents related to their business identity. Build entrepreneurs’ confidence in the regulatory environment. A sound regulatory framework is one that operatesbased on predictability and transparency, as well as proper enforcement mechanisms. It is important to emphasize the importance of the quality of regulatory enforcement, which remains a challenge for a number of national
regulators. Another main element is related to entrepreneurs’ awareness, educating entrepreneurs and guide
them on how to comply with laws and regulations. A good example of an institution set up to
create an enabling environment and build trust among all stakeholders
is the Rwanda Development Board (RDB). It was set up by bringing together all the
government agencies responsible for the entire investor experience under one roof. This includes key agencies responsible for
business registration, investment promotion, environmental clearances, privatization and
specialist agencies which support the priority sectors of ICT and tourism as well as SMEs
and human capacity development in the private sector. The RDB is independent and influential. It reports directly to the President. The RDB is built with global expertise. It is modelled on international best practice
examples such as Singapore and Costa Rica. it has an advisory board and hands-on support from
global entrepreneurs and experts from Singapore Development Board, World Bank, IFC and the
Office of Tony Blair. Guide entrepreneurs through the start-up administrative process The complexity of many aspects of business
regulation makes it important to put in place effective mechanisms
to help entrepreneurs through administrative procedures for starting their business. This is very important for start-ups, because new entrepreneurs are not familiar
with common processes and often have to go through many
initial administrative procedures for registering
their business, obtaining licenses and authorizations, exactly at the time when they are struggling to build their new
business. In January 2006, Macedonia has introduced
a one-stop- shop system that enables investors to register
their businesses within 4 hours. One can register a company in Macedonia by
visiting one office, obtaining the information from a single
place, and addressing one employee. The one-stop-shop system operates within the
Central Register via 32 electronically integrated
offices located throughout Macedonia. As part of the policy review process in The
Gambia, Unctad found that the institutional capacity to measure and benchmark administrative efficiency is weak. Although company registration in The Gambia
has been made simpler, the one-stop shop automated registry is
only available in Banjul and the Kanifing municipality and this
fast track service is not accessible to the public online. As a result, registration is still very costly and it requires many steps even though the Gambia reduced registration fees and cancelled the tax deposit. To reverse the constraints identified, the new entrepreneurship policy in The Gambia identified useful measures including: To introduce the Customers’ Charter, a
short statement describing the level of service
a customer can expect from a governmental agency. To enact a bankruptcy law to help viable
companies survive while safeguarding the interests of
creditors, reducing the regulatory and administrative
hurdles to close a business. To develop a e-regulations system, a web-based
e- Government system (www.businessfacilitation.org)

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