E-registry of Rules, Regulations and Licenses
Mohammad Azad Rahman explains and actualised step towards a digital Bangladesh
Do you know what rules and regulations apply to your business?
Abdur Raquib is a young entrepreneur who wants to open a feed mill in Gazipur. He participated in training at Jubo Unnayan Academy on poultry rearing and from there he got the idea of starting the business because demand for good quality feed is high.
Selina Raihan is a successful fashion designer. She has a small garments company producing her own brand. Recently she met some international buyers who liked her work and wanted to place an order.
Both Raquib and Selina need to get licenses from authorities. Raquib knows that he needs a trade license but he also heard that there are other licenses required to run a feed mill. He needs complete information from a reliable source. Though Selina has a trade license, pays her taxes regularly and provides good working conditions as per the labor law for her workers, she does not know anything about exports. She needs information on the regulations and requirements.
Talking to friends and government officials has only made them more confused: there is no single place they can go to access all the required information. After a few months of frustration, they are now considering abandoning the opportunities that had so excited them.
The problem: regulatory uncertainty
The absence of a complete and officially sanctioned inventory of existing business regulations creates a feeling of regulatory policy uncertainty for businesses and investors in Bangladesh. Accessing the latest business- related rules and regulation is a challenge. The frequent changes in existing rules and regulations make it challenging for even willing businesses to comply with the law. This creates informality, corruption and regulatory hassles.
Currently business-related rules, laws and regulations are published in government gazettes that are difficult to access for most businesses both at home and abroad. Businesses have to incur costs just to know what rules and regulations are currently enforced. A host of private and partial compilations of business regulations exist, but none comprehensively provide the certainty businesses and new investors need. Often, business intermediaries who provide support services do not know which regulatory requirements are enforced and which are not.
As a result, many businesses in Bangladesh, often SMEs with a lack of resources to spend on expensive lawyers, shy away from formality and end up paying unofficial fees to regulatory supervisors to avoid penalties. Foreign investors get frustrated and lose interest in investing in Bangladesh. The absence of an easily accessible inventory of regulations also hinders positive reforms such as the elimination of redundant regulations, the streamlining of existing regulations and the formulation of new, necessary regulations. This leads to the present regulatory burden on businesses.
Light at the end of the tunnel: e-registry
An electronic registry is a website where the latest versions of all laws, acts, rules and regulations, licenses and related forms are listed and available in a searchable way.
Electronic registers for laws and regulations are becoming increasingly common in developed countries. Bangladesh is about to join the small number of developing countries that have established e-registries!
A common feature and goal of e-registers is to centrally collect and publish information about regulatory requirements imposed on businesses and citizens. Electronic regulatory registers help reduce regulatory transaction costs and risks, improve transparency and accountability, and provide a platform for further regulatory reform.
Spreading the word
The vision of Digital Bangladesh is especially meaningful for a country like ours, where millions of people are unable to afford basic services. The e-registry will make it possible for small businesses located in remote rural regions to search out the regulations that apply to them, something they may never have been able to do otherwise. However, the success of such an initiative depends largely on how many people come to know of it and how to use it.
Zobaer Hossain Sikder
In order to make the e-registry accessible to areas outside the capital, urban, semi-urban and rural areas, various channels can be used. Though not too many people own computers, internet penetration in the country -- usage, familiarity and accessibility to the internet -- has been significantly improved via mobile web, telecenters and Community Information Centers (CICs) in the private sector and SME helpdesks with computers and internet connections in the chambers of commerce and Bangladesh Small and Cottage Industries Corporation (BSCIC) estates.
These centers have qualified operators who help users find information for a nominal fee. These service providers serve a wide range of citizens and businesses. Other innovative service providers, such as "infomediaries" (information intermediaries, mostly trained women, similar to Grameen Phone ladies) working in the rural areas, go house to house collecting the information needs of rural households, especially women, then return to the information centers to collect and compile the required information.
To increase the outreach, center operators and the infomediaries will be informed about the e-registry, its functionality and benefits. They could be trained on how to search and find relevant regulation and license information. Regular media events to highlight the uses of the e-registry can be hosted by business associations and district chambers.
Benefits to Bangladesh manifestation of digital bangladesh
The e-registry will have useful information and communication technology to make regulatory information available to businessmen and citizens, making it one of the first initiatives aligned with the current government's mandate for a digital Bangladesh.
Improved interface between government and private sector
A central registry can be a virtual one-stop shop for the business sector. This means businesses can carry out a host of regulatory transactions through "one window," thereby reducing the time and cost of interacting with regulating agencies.
Existing one-stop shops such as the Registrar of Joint Stock Companies and Firms (RJSCF) and Board of Investment (BoI) online registration can increase their range and efficiency of services by linking to the e-registry to provide better support to businesses. In Bangladesh, many virtual one-stop shops are coming up which will lead to confusion. The e-registry can link all those one-stop shops in an intelligent manner so that the user only gets so see what s/he needs.
The e-registry can improve and supplement the transparency of legal gazettes by adding/including information about the regulations that are in effect (not just the new or marginal revisions). It can also supplement an official gazette by including measures that are not usually mandated to be published (e.g. ministerial decrees, forms, etc).
A registry adds further value through the quality of more user-friendly and precise access, such as search functions.
Access to information
The e-registry will ensure access to regulatory information for all levels of business and civil society. The registry is uploaded to the internet and anyone can access it to download regulatory information or electronic copies of actual gazette notifications.
The e-registry has advanced search features so that users can search for particular pieces of regulations. Regulations are organised and searchable against their parent law, ministry, agency, sub-agency, date of publication, sector and purpose. Users can do a free text search as well.
The registry will contain both Bangla and English texts to ensure accessibility for both Bangladeshis and foreigners. Regulations are organised in such a way that users will be able to view the latest version of the regulations and the amendment trail of that particular regulation.
Reduced regulatory costs
The fact that all legal measures and their substantive information are available at a single source reduces transaction costs for regulated entities. The "centrality" of a register reduces the costs for businesses of searching and comparing different sources. This centrality is also crucial to reduce the costs to the government of updating the registry, allowing the applicable legal measures to be maintained up to date.
Reduced regulatory risks
A key benefit of a regulatory registry is the certainty it provides to regulated entities. They should be able to rely on the information in the registry as precise and exhaustive. The frequency with which the register is updated is also of importance. Long intervals reduce the reliability and hence value of the electronic registry for current users.
The legal value of data in a register can typically vary from being purely informational to providing full legal security. "Positive legal security," as implemented in Mexico and Korea, means that regulations that are not in the registry are not legally binding and cannot be enforced.
In countries like Singapore, the e-registry is known as the OBLS (Online Business Licensing System). A business can log into the site and search for licensing requirement information. The OBLS requires all information within a single form that then is processed at various agencies so the user gets all the necessary licenses from that one form after a predefined time. However, not all the agencies in Singapore provide automated licensing, but the OBLS provides their web links and instructs users on how to obtain those licenses.
Zobaer Hossain Sikder
Improved accountability and reduced corruption
E-registries have also proven to be a powerful tool to ensure the public accountability of regulators, reducing corruption opportunities. Accountability can be achieved through the "positive legal security" mentioned above. If the register prescribes regulatory transaction processes in great detail, it will support the reduction of "excessive discretion" that has often been abused by administrators and inspectors. Such "details" can include response time, information requirements, documents to be attached, etc. as well as the exact fees and administrative procedure to be followed. Once fully operational, the upcoming e-registry in Kenya aims to establish such requirements.
Basis for regulatory review
The e-registry can be an important part of broad regulatory reviews. The (re-)registration of regulatory measures in a registry allows for a thorough scrutiny before the regulations are "allowed to enter" the registry. Through the re-registration mechanism, reformers can ensure that regulations that do not comply with generally accepted criteria of good regulations are not included in the register, and therefore automatically annulled. In this context, a registry can become an integral part of a staged repeal or guillotine review.
The obligation to register regulatory requirements will encourage reformers to analyse every requirement in a systematic way. Often the process of populating the registers leads to the identification of inconsistent, duplicative and incoherent regulatory requirements. The registration exercise can therefore help harmonise regulatory requirements including fees under the registry's common data definitions.
An e-registry can also help improve the scope for inspection of reforms by exhaustively registering the list of enforceable requirements.
Basis for continuous monitoring of regulatory performance
The simple act of registering all requirements has the additional advantage of encouraging a prior check to see if the degree of discretion and the scope for enforcers' interpretation is justified and adequate. In Mexico, a targeted regulatory impact analysis was established to test if the authority promoting new (or amendments to existing) information collection was justified. A similar requirement is being planned for Kenya.
Proper management of the registry will enable the government to develop management tools and procedures to maintain a high quality regulatory framework. The e-registry can help the regulatory authority set up indicators and scoreboards, providing a real-time comprehensive picture of the state of the regulatory framework and initiatives. These indicators can be used to organize and target the regulatory reform program, i.e. a 25% reduction of administrative burdens as in the case of Bangladesh. Thus, the e-registry can become the backbone of reengineering initiatives of administrative processes.
How the e-registry in Bangladesh came about
In 2008, the Caretaker Government announced the establishment of an electronic registry as part of its reform agenda. They commissioned support from the Bangladesh Investment Climate Fund, a facility managed by IFC, in partnership with DFID and EC, in May 2008, to scope out the regulatory framework of the country and suggest a detailed plan on how to establish and maintain an e-registry.
The scoping mission report was submitted to the Regulatory Reform Commission (RRC) and the concerned government agencies. In the eighth meeting of the RRC in July 2008, the commission recommended the establishment of a business related e-registry at the Board of Investment (BOI).
The establishment of an e-registry requires buy-in from all the stakeholders. Next, it requires the compilation of all the parent acts, rules, regulations, subordinate regulatory orders, policies, procedures, directives, executive orders, forms etc. Next, there is a need to index all of the above to find out which ones are current. Software needs to be developed, and so on.
Key milestones achieved so far
-May 2008: E-registry scoping mission
-June 2008: Scoping report submitted to the RRC
-July 2008: RRC recommends establishing business related e-Registry at BOI
-February 2009: BOI establishes e-registry cell
-May 2009: Software firm starts developing the e-registry
-August 09: Presentation of the demo site before the BOI Executive Council
The e-registry website and application is in the final stages of development. Approximately 10,500 subordinate rules and orders have been scanned, indexed and uploaded on the site. The BOI is planning to launch the e-registry website in December with information on rules and regulations under the core business related laws.
The e-registry of rules, regulations and licenses will come out as a multistage project (see diagram below). In the first stage, information on rules and regulations will be launched. This should happen in the next couple of months. Phase 2 is expected to be ready by mid-2010. Phase 3 and 4 depends on the automation of agencies. As agencies are automated, their forms will become available during phase 3. RJSC has already been automated, so its forms will be readily available from the start.
Mohammad Azad Rahman is an Investment Policy Analyst at the Bangladesh Investment Climate Fund.