Experience of Moldova in implementing structural reforms

1

• Experience of Moldova in implementing structural
  reforms
• Eugen Osmochescu
• Head, RIA Secretariat
• Geneva, 23 October 2007

2
Content

• Priorities
• Approach
• Strategy
• Legal Framework
• Institutional Framework
• Phases of Implementation
• Results after 3 Phases
• Enacting the Guillotine
• Lessons Learned
• Next Measures
• Lessons Learned

3
Priorities in Policy and Regulatory Reform
Rendering paid services for entrepreneurs
Optimization of authorization system at the
start-up stage of business
Improvement of the activities of
controlling/ inspection organizations
Regulatory Reform
Fiscal Accounting Reporting through a
simplified fiscal system
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Strategy in Policy Regulatory Reform
Task/Activities
Main tools
Implementation of Guillotine Law RIA
National Working Group (NWG)
Regional Working Groups (RWGs)
Establishment of RWGs, and OSSs
Best inter. practice, Training
TA to MET, NWG and RWGs
Workshops, roundtables, int. forum
Development of RIA Module
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Legal Framework (I)

• 17 February 2004
• Governmental Decision on Reform of State
  Regulation of Entrepreneurship Activity
• The Concept of Reform has been approved.
• Inter-ministerial Commission created as a
  political body to coordinate the Reform.
• The National Working Group (NWG) created as a
  working entity to propose to the
  Inter-ministerial Commission modification to the
  legal framework on regulating entrepreneurship
  activity.

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Legal Framework (II)

• 16 December 2004
• Law on reviewing and streamlining the normative
  regulatory framework for business activity
  (Guillotine Law I) passed by the Parliament of
  Moldova by a near unanimous vote including the
  opposition.
• NB Under the Guillotine Law did not fall laws
  and decisions of the Parliament

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Institutional Framework

• State Commission on Regulatory Reform
• National Working Group on Regulatory Reform
  (NWG)
• Secretariat of the NWG (based on a Memorandum
  signed between MoET and USAID BIZPRO/Moldova,
  and as of July 3, 2006 overtaken by the WB
  Competitiveness Enhancement Project)
• 9 Regional Working Groups.

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Phases of Implementation

• Phase I 7 February -22 March 2005
• Phase II 22 March 22 June 2005
• Phase III 22 June 22 July 2005

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Phase I 7 February -22 March 2005

• All public authorities revise official acts in
  respective field of activity.
• Based on the revision, each authority elaborates
  a List of official acts.
• The List of official acts and every single
  official act are presented to the NWG and its
  Secretariat
• Each official act is presented with an
  informative note

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Phase II 22 March 22 June 2005 (I)

• Assessment by the NWG of official acts and
  informative notes presented by public
  authorities
• NWG takes the decision to include or not include
  the official acts into the Registry
• Appeals by the public authorities at the State
  Commission.

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Phase II 22 March 22 June 2005 (II)

• 9 sub-groups of the NWG created
• 12 independent expert consultants hired
• 15 sessions scheduled for the NWG.

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Phase III 22 June 22 July 2005

• Public access to the elaboration of the final
  version of the Registry
• Elaboration and approval of the final version of
  the Registry
• Presentation of the draft Registry to the
  Government
• Abrogation of official acts not included in the
  Registry.

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Results after 3 phases

• 1130 regulations have been revisedgt
• 426 regulations shall be included in the
  Registry
• 285 regulations shall be amended and
• 99 regulations shall be discarded
• Other considered not to regulate entrepreneurial
  activity.

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Enacting Guillotine I (I)

• Government Decision 30 August 2005
• Approving the Nomenclature of Authorizations,
  Permits and Certificates Issued by Central Public
  Authorities and Subordinated Units for
  Entrepreneurial Activity of Physical and Legal
  Persons
• Results
• from around 400 permits only 128 remained, of
  which only 47 are issued against charge
  (reference to a law or international agreement
  Moldova is part of)
• have to be issued within 10 days (unless
  otherwise provided by a law or international
  agreement).

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Enacting Guillotine I (II)

• Government Decision 3 October 2005
• Approving the Registry of formal acts regulating
  business activity
• Results
• List 1 Acts to be included in the Registry
• List 2 Abrogated Acts
• List 3 Acts proposed to be abrogated by
  independent agencies
• List 4 Acts to be modified and published in
  the Official Gazette (authorities have to present
  to the NWG modifications to the respective acts
  within a 3 months period. In case if it is not
  done, unmodified acts will be abrogated as of
  January 1, 2006).

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Lessons Learned (I)

• Underestimation of potential number of acts to be
  revised
• Inclusion for revision and assessment of local
  public authorities acts. In this case the work
  load is not real taking into account 6 months and
  available financial and human recourses
• Lack of real communication strategy of the
  central level with local levels, where most of
  business in need is and
• Low quality involvement in the exercise of
  private sector representatives from the capital
  city where 70 of business is, except foreign
  investors
• Lack of financial and human resources from the
  side of the Government, fact leading to a need of
  foreign TA

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Lessons Learned (II)

• Part of the members of the NWG did not took the
  exercise in serous
• Old mind set in case of most ministries. It took
  a while to educate them which led to time
  loosing and low quality of the interaction
  between the ministries and NWG, which resulted on
  extra work load for TA
• An education/communication/branding campaign
  needed before the technical process starts, so
  that ministries would take more serous the
  obligations inserted in the law

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Next Measures

• Law on Basic Principles Regulating
  Entrepreneurial Activity (11 August 2006)
• Guillotine of laws
• Most regulations to be adopted by law
• Market criteria for assessment
• RIA
• Medium Term Strategy for Regulatory Reform
  2006/2009
• RIA Methodology
• SMEs Strategy

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Law on Basic Principles Regulating
Entrepreneurial Activity

• The Law sets the following principles
• Predictability of regulations
• Transparency in decision-making and regulation
• Regulatory Impact Assessment
• Material and procedural regulations on business
  start up, business development, and business
  close up only by laws
• Proportionality.

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Phases of Implementation

• Phase I 11 Aug. -26 Nov. 2006
• Phase II 26 Nov. 2006 26 Feb. 2007
• Phase III 26 Feb. 26 May 2007
• Phase IV until 30 Nov. 2007

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Phase I 11 Aug. -26 Nov. 2006

• Public authorities develop draft modifications
  and amendments to the normative acts in their
  area of activity.
• Authorities submit to the Commission/NWG/RIA
  Secretariat drafts and information notes for
  review, and concomitantly present to the
  Parliament a report on the results of review of
  normative acts at the respective stage.

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Phase II 26 Nov. 2006 26 Feb. 2007

• State Commission examine the drafts and submit
  its review to the authorities.
• State Commission presents to the Parliament a
  report on its review of normative acts.

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Phase III 26 Feb. 26 May 2007

• Authorities develop, based on the State
  Commissions review, the final draft and
  information notes, and adopt or submit them for
  adoption in accordance with the law.

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Phase IV until 30 Nov. 2007

• Revision by the Parliament, and adoption of
  modifications as well as abrogation

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Lessons Learned (I)

• Low quality involvement in the exercise of
  private sector representatives, except foreign
  investors
• Lack of financial and human resources from the
  side of the Government, fact leading to a need of
  foreign TA

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Lessons Learned (II)

• Old mind set in case of most ministries. It took
  a while to educate them which led to time
  loosing and low quality of the interaction
  between the ministries and NWG, which resulted on
  extra work load for TA
• An education/communication/branding campaign
  needed before the technical process starts, so
  that ministries would take more serous the
  obligations inserted in the law