Can a revived Regulatory Reform Commission end bureaucratic nightmares for businesses?

In February, in its report submitted to Chief Adviser Dr Yunus, the economic reform task force recommended creating a Regulatory Reform Commission (RRC) to address the pervasive issues of over-regulation and red tape.

The report mentions that the RRC will be continuously monitoring, evaluating and streamlining the rules and regulations affecting all aspects of economic governance, including business operations, taxation and trade.

However, the idea is not entirely new for Bangladesh. 

In 2007-08, during the caretaker government led by Fakhruddin Ahmed, such a commission was formed for a two-year term. But after the Awami League government came to power, it gave no attention to the commission and that was the end of it.

Now as the interim government works on state reforms, how could a revived commission function? 

When line ministries are given the responsibility to reform regulations, it tends to progress very slowly in most cases. This was the case in 2008 and is still the case today. As a result, reforms are often ineffective, and investors lose interest, among other consequences.

"During the consultation of our task force, business owners emphasised issues related to taxes and regulations. We felt that if left in the hands of the line ministries, it wouldn't be effective. Therefore, we need to set up a Regulatory Reform Commission again," said economist Dr Syed Akhtar Mahmood, former lead private sector specialist at the World Bank Group and also a member of the task force.

The success of Bangladesh's development strategy, as it strives for a middle-income status, will hinge on increased private investment and innovation. 

However, entrepreneurs in Bangladesh continue to raise concerns about the difficulties and delays when dealing with the regulations, particularly the discretionary application of rules and regulations. 

Perceptions of unpredictable and opaque administrative processes, as well as the uneven enforcement of regulations, can deter firm creation and investment, and impede productivity. Entrepreneurs seeking to introduce new ways of doing things often face additional regulatory barriers since regulators usually lag behind when it comes to innovations in the economy.

The RRC could proactively identify these regulatory bottlenecks. By bringing these issues to the attention of the government and relevant ministries, it could help bring reforms that make doing business easier.

"In terms of regulations, we face two types of issues. Many of our regulations are outdated and are no longer relevant in the current context. On the other hand, we also lack many regulations. If a new type of technology or business model emerges today, we are not prepared to regulate it," Dr Mahmood continued.

Given past experience, a key question arises: how can we keep the Regulatory Reform Commission free from political neglect? Dr Mahmood believes the interim government must lead by example here — showing through its actions just how vital this commission is — so that no political party can afford to ignore it in the future.

"Almost all political parties support a market-oriented economy. So, whichever party comes to power, it can't move forward without the business community. And whenever they speak to business owners, regulatory challenges are one of the first things they raise. They will naturally feel a pressure to reform this area," he noted.

That's why, he suggests, the interim government should take this opportunity to show that a Regulatory Reform Commission can accomplish things that line ministries typically cannot.

South Korea and Mexico are two prime examples where similar commissions have been established. Even in India, the recent budget proposed the formation of a Regulatory Reform Committee. "Other countries are shifting from ad-hoc approaches to central and strategic approaches for regulatory reform. It's time we do the same," Dr Mahmood noted.

Dr Hossain Zillur Rahman, economist and executive chairman of Power and Participation Research Centre (PPRC), had been an advisor in the 2007-08 caretaker government.

Reflecting on his experience from that time, he says, "The commission was also linked to the Bangladesh Better Business Forum (BBBF). This public-private platform helped identify where the demand for reforms was coming from. On the other hand, Akbar Ali Khan led the commission and took specific actions accordingly. So, it functioned as an ecosystem."

For regulatory reform, he proposes a three-tier ecosystem: first, identifying areas for reform through dialogue; second, formulating concrete measures to address those needs; and finally, developing clear processes and initiatives to implement them.

The formation of the Regulatory Reform Commission was implemented quite swiftly in 2008. 

"We haven't yet seen any strong initiative to actually establish a regulatory reform commission. If the proposal remains only on paper, we won't achieve expected results," Dr Rahman warns.

Sketch: TBS