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Gridlock No More How Regional Cooperation Accelerate Regulatory Reform

Gridlock No More How Regional Cooperation Accelerate Regulatory Reform The Case of Passenger Transport Sector. Pich Nitsmer, Ph.D. Fiscal Policy Research Institute, Thailand. 26 February 2007. 1. perhaps with the support of …. Presentation Outline. Policy and Regulatory Process

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Gridlock No More How Regional Cooperation Accelerate Regulatory Reform

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  1. GridlockNoMore How Regional Cooperation Accelerate Regulatory Reform The Case of Passenger Transport Sector Pich Nitsmer, Ph.D. Fiscal Policy Research Institute, Thailand 26 February 2007 1

  2. perhaps with the support of … Presentation Outline • Policy and Regulatory Process • Why sub-optimal? • How to reform? • Regional Cooperation • Which forums and channels? • What to be gained? 2

  3. Thailand’s Policy Process: Top-down 5-year National Plan National Economic and Social Development Board Transport 1) Transport Ministry 2) A Ministry … 20) B Ministry Transport & Traffic Policy & Planning Office A Policy & Planning Office B Policy & Planning Office Sub-optimal Outcome Incompetence ≠ Transport 5-year Plan Implementation Policy X Policy Y Policy Z Interference 3

  4. Regulatory Process:Non-linear, Multi-agent Department (e.g. Land Transport Dep.) • Commission • (e.g. Land Traffic Commission) • Transport Permanent-Sec. • Land Transport Director-General • Police Commissioner-General • Bangkok Governor External Internal: Safety, security & scheduling External: Price, coverage & social requirement Internal External Reg. ActionImposed on Operators Can’t serve as check & balance tool b/c conflict of interest • Problems • Limited regulatory expertise • Lack of inter-ministerial cooperation • Resistance from vested interest • Interference from rent-seeking public officials 4

  5. Regulatory Reform: Competition Enhancement • Risks of Privatization w/out Effective Regulatory Regime • Shares majority-owned by govt  continued govt interference • Share distribution through IPO ‘unfair’  capture & rent-seeking • Operation unregulated imbalance of economic & social ends • Short-term Implications • To facilitate competition before privatization (e.g. quality standard & target for phasing out subsidy) • To strengthen regulatory musclesregardless of privatization How? 5

  6. Reform: Independence and Other Conditions • Regulatory Independence: Separation from Operation & Policy • Commission: Centralised? • Enabling factors (e.g. regulatory capability): How? Regulatory Check-and-Balance • Regulatory Impact Assessment (ex-post & ex-ante) • Transparency & Accountability 6

  7. Regional Cooperation: the Case of APEC • Expected Benefits from Regional Forum • Capacity building: Experience & expertise sharing (existing) • Regional institutional building: Developing regional vehicle for independent policy evaluation (not yet materialised) • Bangkok Conference (2007) Proposal • Hadi Soesastro: ‘Establishing an ongoing APEC Productivity and Efficiency Commission … that has the capacity to respond to requests by APEC and member economies for analysis of micro- policy and regulatory issues’. Existing Mechanisms? 7

  8. Organisational Structure Leaders’ Meeting Business Advisory Council Ministerial Meeting Sectoral Ministerial Meeting Trade & Investment Committee Working Groups (11) - Transportation Economic Committee Experts Groups (11) - Competition & Deregulation APEC Channels: Existing Mechanisms Possible Interactive Channels Economic Committee (Issue-specific - focusing on reform) Transportation Working Group (Sector-specific) Trade & Investment Committee (Issue-specific - focusing on deregulation) Business Advisory Council (Facilitator) 8

  9. Economic Committee: Issue-specific LAISR Thematic Work Plan all relevant to transport 9

  10. Trade & InvestmentCommittee: Expert Group Expert Group in Competition Policy and Deregulation Function Overlapping? 10

  11. Transportation Working Group: Sector-specific Very sector-specific but unrelated to the realm of regulation? How to integrate sector-specific with issue-specific mechanisms then? 11

  12. Conclusion: Implications for Transport Value Chain mostly state-run what about here? regulated system integration Capacitybuildingthroughregionalcooperationisalsoneededforprocurementprocess to reduce interference & develop local suppliers along the chain.

  13. Ari Skytrain Station – 10 minutes from the FPRI End of Presentation … Thank You 13

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